The Ethereum Upgrade Era: What Changed, What Broke, and What Comes Next

Enter the World of Ethereum Upgrades | What Has Ethereum Gained and Lost in the Last Five Years?

Ethereum did not stand still.
It actually scaled faster than ever.
But why did the ETH price fall behind?

From 2021 to 2026, the network moved through one of the most aggressive upgrade cycles in financial technology history. It changed its consensus model. It rebuilt its fee structure. It redesigned the user experience. It redefined validator economics. It expanded data capacity. It prepared for quantum risk. It addressed censorship resistance.

Yet ETH trades near $1,800 to $2,050 as of February 2026, roughly 58 percent below its all-time high of $4,878 set in November 2021.

So what happened?

Did Ethereum win the infrastructure race but lose the market narrative?

This article breaks down every major Ethereum upgrade in the past five years, what each brought to the table, what worked, what did not, how the price reacted, and what to expect through 2028.

No hype. No tribal framing. Only structure.

The Merge and the Foundation Reset

Ethereum’s transformation started with The Merge in September 2022. While this article focuses on the last five years, you cannot understand Ethereum today without recognizing that moment.

The Merge shifted Ethereum from Proof of Work to Proof of Stake. Energy consumption dropped by over 99 percent. Block production moved to validators instead of miners.

What Ethereum gained:

• Environmental legitimacy
• Institutional acceptance
• Lower issuance rate
• Staking economy

What Ethereum lost:

• Miner ecosystem support
• Simplicity of narrative
• Some decentralization purity debates

The Merge did not reduce gas fees. Many retail investors expected that. That misunderstanding damaged short-term sentiment.

Price impact:
ETH rallied into the Merge and sold off after. Markets had priced it in. Macro conditions in 2022 also deteriorated sharply due to tightening of monetary policy.

The Merge was foundational. But it did not solve scalability.

That required the next wave.

Shapella 2023: Unlocking Staked ETH

In April 2023, Ethereum activated Shapella, also known as Shanghai and Capella.

This upgrade allowed validators to withdraw staked ETH for the first time since December 2020.

Before Shapella, staked ETH had no exit.

What Ethereum gained:

• Removal of infinite lockup risk
• Institutional confidence
• Staking liquidity normalization
• Mature capital market optics

What critics feared:

• Massive unstaking wave
• Validator exit spiral
• Price collapse

What actually happened:
Withdrawals occurred in phases. Some validators exited. Many restaked. Net staking participation grew over time.

By early 2026, over 30 percent of total ETH supply remained staked. Estimates range between 37 million and 77 million ETH depending on reporting methodology and inclusion criteria.

Shapella strengthened the staking economy instead of weakening it.

Price impact:
Moderate. ETH stabilized. Macro still dominated flows. No collapse occurred.

Shapella reduced structural risk. That mattered more than price in the short term.

Dencun 2024: Proto-Danksharding and the Fee Revolution

March 2024 marked one of the most important upgrades in Ethereum’s scaling journey.

Dencun introduced Proto-Danksharding through EIP-4844. It added “blobs” to store Layer 2 data cheaply.

Before Dencun:
Layer 2 rollups paid high costs to publish data to the Ethereum mainnet.

After Dencun:
Layer 2 fees fell by 90 to 98 percent in many cases.

Some L2 transactions fell as low as $0.001 by early 2026.

What Ethereum gained:

• Massive Layer 2 adoption
• User cost relief
• Throughput scaling
• Ecosystem expansion

What Ethereum lost:

• Burn rate intensity
• Deflation narrative strength

This is where the scaling paradox emerged.

By moving activity to Layer 2, Ethereum reduced mainnet fee pressure. Since EIP-1559 burns part of transaction fees, lower L1 fees meant less ETH burned.

From April 2024 onward, Ethereum’s supply increased by about 0.37 percent. Total supply reached roughly 120.59 million ETH.

Investors who bought the “ultrasound money” narrative felt disappointed.

Network usage hit record highs. Burn rate declined. Supply slightly expanded.

Price impact:
Muted. Dencun improved fundamentals but weakened the deflation story. Macro risk and competition from Solana intensified during this period.

Dencun succeeded technically. It complicated the tokenomics story.

Pectra 2025: Account Abstraction and Validator Reform

In May 2025, Ethereum deployed Pectra. This combined Prague on the execution layer and Electra on the consensus layer.

Pectra introduced three structural shifts.

1. Account Abstraction via EIP-7702
   Regular accounts could act like smart contracts.
2. Gas flexibility
   Users could pay fees in stablecoins. Applications could sponsor gas.
3. Validator cap increase
   Maximum validator stake rose from 32 ETH to 2,048 ETH.

What Ethereum gained:

• Wallet simplification
• FaceID and passkey usability path
• Institutional validator efficiency
• Lower operational overhead

Validator activation time fell from around 12 hours to roughly 13 minutes.

Large institutions consolidated thousands of nodes into fewer operational units.

What Ethereum lost:

• Some decentralization perception
• Retail validator simplicity
• Ideological purity narrative

Account abstraction marked a turning point.

Ethereum began to feel less like crypto infrastructure and more like fintech rails.

Price impact:
Limited immediate response. Macro pressures in early 2025 weighed on high-beta assets.

Pectra improved usability and institutional readiness. Price did not immediately reward that progress.

Fusaka 2025: PeerDAS and Data Scaling

December 2025 introduced Fusaka and PeerDAS.

Peer Data Availability Sampling allowed validators to sample small pieces of block data instead of downloading entire blocks.

Data capacity increased by approximately 8x without raising hardware requirements.

What Ethereum gained:

• Higher data throughput
• Better scaling support
• Hardware accessibility
• Lower barrier to participation

Passkey support also advanced wallet usability. Biometric signing reduced reliance on seed phrases.

Fusaka represented a quiet structural strength.

Price impact:
Minimal immediate effect. Broader crypto markets faced macro volatility in early 2026.

Fusaka did not drive headlines. It strengthened the infrastructure.

Ethereum Network Growth 2023–2026

Despite price weakness, network metrics expanded sharply.

As of February 2026:

• Monthly active addresses reached 15.19 million, up 114 percent year over year.
• Daily transactions hit 2.8 million, up 125 percent.
• Combined ecosystem throughput exceeded 3,700 operations per second across mainnet and L2.
• Layer 2 user growth is projected to exceed 6 million active addresses by the end of 2026.
• Combined L1 and L2 ecosystem monthly active users surpassed 25 million as early as mid-2024.

According to industry reporting and on-chain aggregation platforms, Ethereum hosts over 90 percent of tokenized real-world assets and roughly 60 percent of stablecoin value.

Institutional participation increased. BlackRock reportedly holds millions of ETH for ETF exposure. Fidelity operates significant infrastructure. Robinhood holds around 1.5 million ETH on behalf of users.

Utility expanded.

Price lagged.

Why ETH Price Struggled Despite Network Growth

Several forces converged.

1. Macro pressure
   Recession fears, tariff tensions, and cautious central bank policy pushed capital into defensive assets. Gold rallied. Risk assets underperformed.
2. ETF outflows
   U.S. spot Ethereum ETFs saw periods of net outflows, including more than $327 million withdrawn in a single week in February 2026.
3. Whale distribution
   Long-term holders reduced collective holdings by over 847,000 ETH in early 2026.
4. AI bubble contagion
   Ethereum underpins many AI-crypto projects. A correction in AI equities spilled into related tokens.
5. Competitive pressure
   Solana recorded over 3.6 million daily active addresses by late 2025. Ethereum mainnet averaged around 530,000 daily active addresses.
6. Technical market structure
   Leverage liquidations erased roughly $5.4 billion in long positions over a 72-hour period in February 2026. Death cross patterns signaled bearish momentum.

Ethereum’s infrastructure strengthened. Market structure weakened.

Glamsterdam 2026: Throughput Expansion

Planned for the first half of 2026, Glamsterdam focuses on parallel transaction execution and gas limit expansion toward 200 million per block.

Analysts expect potential throughput near 10,000 transactions per second if implementation succeeds.

What Ethereum aims to gain:

• Direct speed competitiveness
• Stronger DeFi throughput
• Higher L1 demand
• Renewed burn intensity

If L1 activity rises meaningfully, EIP-1559 burn could return Ethereum to deflation.

Bullish projections from institutions range between $4,000 and $8,000 for 2026. Higher estimates exist but require strong ETF inflows and macro support.

Risks:

• Technical delays
• Macro volatility
• Continued Layer 1 competition

Glamsterdam represents narrative repositioning from scaling experiment to infrastructure maturity.

Hegota 2026: Stateless Ethereum

Hegota, scheduled for the second half of 2026, focuses on Verkle Trees and statelessness.

Verkle Trees compress state proofs from hundreds of kilobytes to roughly 150 bytes.

What this enables:

• Stateless clients
• Lower storage requirements
• Faster node syncing
• Reduced hardware burden

State expiry mechanisms aim to prevent long-term state bloat.

FOCIL introduces Fork-Choice Enforced Inclusion Lists. Builders must include valid transactions or risk rejection by the network.

FOCIL strengthens censorship resistance.

Hegota positions Ethereum for long-term decentralization resilience.

It also includes early quantum preparedness discussions.

What Ethereum Gained in Five Years

1. Energy efficiency
2. Institutional staking structure
3. Layer 2 cost collapse
4. Usable wallets
5. Biometric signing
6. Data scaling
7. Censorship resistance roadmap
8. Real-world asset dominance
9. Stablecoin settlement leadership
10. Validator efficiency

Ethereum matured from an experimental chain to a financial infrastructure.

What Ethereum Lost

1. Pure deflation narrative
2. Simple value proposition
3. Retail excitement dominance
4. Perceived speed advantage
5. Clear token scarcity thesis

Ethereum evolved into a complex system.

Complex systems require deeper investor understanding.

Ethereum Roadmap 2026–2028 Explained

Ethereum is no longer in its experimental phase. It is entering an optimization cycle.

Beginning in 2026, the network transitions into a structured biannual upgrade rhythm. Two major updates per year will focus on performance, sustainability, and resilience.

The roadmap from 2026 to 2028 centers on six core pillars:

1. Parallel Execution Maturity

Glamsterdam introduces parallel transaction processing. The goal is to reduce bottlenecks in execution and scale throughput toward high-performance Layer 1 competitors.

If successful, Ethereum moves from modular scaling dependence toward stronger native performance.

2. Gas Limit Expansion

Gas limits are expected to expand toward the 100M to 200M range per block.

Higher limits allow more transaction inclusion per block, increasing L1 demand and potentially strengthening the burn mechanism under EIP-1559.

3. Statelessness and Verkle Trees

Hegota focuses on Verkle Trees and state compression.

This reduces node storage requirements and supports stateless clients, lowering participation barriers and preserving decentralization under higher load.

4. State Expiry and Network Sustainability

State expiry mechanisms aim to prevent long-term blockchain bloat.

This keeps Ethereum lean while transaction volume grows, protecting decentralization over the next decade.

5. Censorship Resistance Hardening

FOCIL enforces transaction inclusion at the protocol level.

This reduces builder-level filtering and strengthens Ethereum’s neutrality under regulatory pressure.

6. Quantum Preparedness

Developers are exploring post-quantum cryptographic upgrades.

While quantum risk remains long-term, early preparation signals infrastructure seriousness.

2026–2028 Outlook

Ethereum now enters a biannual upgrade cycle.

Focus areas:

• Parallel execution maturity
• Stateless client adoption
• Gas efficiency optimization
• Quantum resilience preparation
• Institutional ETF flows
• Tokenized asset expansion

If L1 demand increases meaningfully, burn mechanics could tighten supply.

If macro conditions stabilize and ETF flows return, the price may realign with network strength.

If competition accelerates and macro remains tight, ETH may underperform Bitcoin.

The next two years will test whether infrastructure maturity converts into capital flows.

Conclusion

Ethereum did not stagnate.

It rebuilt itself.

It lowered costs by up to 98 percent on Layer 2. It onboarded millions of new users. It locked a large share of supply in staking. It strengthened censorship resistance.

But it weakened a narrative.

Investors who value simplicity struggled to model Ethereum’s multi-layer evolution.

Ethereum gained infrastructure dominance.

It temporarily lost price momentum.

The next phase will determine whether that trade reverses.

Frequently Asked Questions

1. What was the most important Ethereum upgrade in the last five years?
   Dencun stands out because it dramatically reduced Layer 2 fees and enabled scalable adoption.
2. Did Shapella cause a price crash?
   No. Withdrawals were orderly. Staking participation ultimately grew.
3. Why did Ethereum become slightly inflationary again?
   Layer 2 scaling reduced mainnet fee burn, lowering the EIP-1559 burn rate.
4. What is account abstraction?
   It allows wallets to act like smart contracts, enabling gas sponsorship and flexible fee payment.
5. How much ETH is currently staked?
   Estimates suggest over 30 percent of supply, with figures ranging between roughly 37 million and 77 million ETH depending on methodology.
6. What is PeerDAS?
   Peer Data Availability Sampling allows validators to verify blocks without downloading all data, increasing capacity efficiently.
7. What is the Glamsterdam upgrade expected to do?
   It aims to introduce parallel execution and higher gas limits to improve throughput.
8. What are Verkle Trees?
   A new data structure that compresses state proofs and enables stateless clients.
9. What is FOCIL?
   Fork-Choice Enforced Inclusion Lists ensure valid transactions cannot be censored by block builders.
10. Can Ethereum return to deflation?
    Yes, if Layer 1 demand rises enough to increase burn beyond issuance.

Disclaimer

This article is for informational purposes only. It does not constitute financial advice, investment advice, or a recommendation to buy or sell any asset. Digital assets are volatile and carry risk. Always conduct independent research or consult a qualified financial professional before making investment decisions.

Sources and References

Ethereum Core Upgrade Documentation

• Ethereum Foundation Blog
  https://blog.ethereum.org
• Ethereum Improvement Proposals (EIPs), including EIP-1559, EIP-4844, EIP-7702
  https://eips.ethereum.org
• Ethereum.org Upgrade Documentation
  https://ethereum.org/en/upgrades/
• Ethereum Consensus Specifications
  https://github.com/ethereum/consensus-specs

Shapella (Shanghai / Capella)

• Ethereum Foundation: Shapella Upgrade Announcement
• Ethereum.org Staking Withdrawal Documentation

Dencun (Proto-Danksharding / EIP-4844)

• Ethereum Foundation Research on Danksharding
• EIP-4844 Specification
• Flashbots Research on Data Availability

Pectra (Prague + Electra)

• Ethereum Core Dev Calls and AllCoreDevs Notes
• Account Abstraction Research (EIP-7702 Draft Discussions)

Fusaka (PeerDAS)

• Ethereum Research Forum: Data Availability Sampling
• PeerDAS Technical Specifications

Glamsterdam (Parallel Execution)

• Ethereum Research Threads on Parallel Execution
• Client Developer Roadmaps

Hegota (Verkle Trees / Statelessness / FOCIL)

• Ethereum Research: Verkle Trees
• Ethereum Stateless Client Roadmap
• Flashbots Research on PBS and Inclusion Lists
• Ethereum Foundation Discussions on FOCIL

Network Data and On-Chain Metrics

• Glassnode
  https://glassnode.com
• Dune Analytics
  https://dune.com
• Etherscan
  https://etherscan.io
• L2Beat (Layer 2 ecosystem metrics)
  https://l2beat.com
• Token Terminal
  https://tokenterminal.com

Institutional and Market Analysis

• BlackRock iShares Digital Assets Research
• Fidelity Digital Assets Reports
• Standard Chartered Digital Asset Outlook
• JPMorgan Digital Assets Strategy Notes
• Citigroup Blockchain Research
• VanEck Crypto Research

Financial and Macroeconomic Context

• Federal Reserve Economic Data (FRED)
  https://fred.stlouisfed.org
• U.S. Bureau of Labor Statistics
  https://www.bls.gov
• Yahoo Finance Market Data
  https://finance.yahoo.com

The Ethereum Upgrade Era: What Changed, What Broke, and What Comes Next was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.