Ethereum still commands the lion’s share of DeFi, DEX activity, and stablecoin settlement. Yet, its mainnet is showing signs of fatigue. While Layer 2s flourish, Ethereum’s Layer 1 remains underutilised by new users.
The Pectra upgrade was set to solve this, with significant changes to improve staking, usability, and scalability. But with delays pushing back its launch, many are wondering, will Ethereum keep up the momentum, or is it losing relevance where it matters most?
Activity Shifts to Layer 2s as Ethereum L1 Stagnates
Ethereum continues to dominate on paper. It secures over $120 billion in stablecoins, commands 51% of DeFi’s TVL, and leads the charge in tokenised assets. Yet, these figures mask a growing concern, which is that its main layer isn’t attracting new users.
Source: growthepie
Daily active addresses on Layer 1 have stalled around 400,000, with a broader base of 1.87 million monthly users. By contrast, Layer 2 networks like Arbitrum, Optimism, and Base now boast over 8 million combined active addresses.
This divergence is stark. Ethereum’s architecture remains the most trusted for institutional capital, but it’s becoming less appealing for everyday users.
High gas fees, slow transactions, and a dated user experience have made competitors like Solana and Ethereum’s own Layer 2s far more attractive for daily activity. While capital continues to anchor on Layer 1, most actual user engagement has shifted away.
The Pectra upgrade was meant to solve this. Features like account abstraction, gas payments in stablecoins, and validator improvements were designed to make Ethereum more user-friendly and efficient.
But with the upgrade delayed and testnet deployments still ongoing, Ethereum risks falling further behind in terms of user engagement.
The question now is whether Pectra will land in time to reverse the trend or whether Ethereum L1 will remain a settlement layer rather than a true ecosystem.
Can Pectra Deliver on Its Promises After the Delay?
The Pectra upgrade has been marketed as one of the most comprehensive Ethereum improvements to date.
It aims to tackle long-standing pain points around user experience, staking, and transaction efficiency.
EIP-7702 introduces account abstraction, allowing users to pay gas fees with tokens like USDC and enabling bundled transactions, removing a major friction point. For new users unfamiliar with ETH and its quirks, this is a massive UX improvement.
On the validator side, EIP-7251 increases the staking limit per validator from 32 ETH to 2,048 ETH. This means institutional stakers can run fewer validator nodes more efficiently.
The result? Lower operational costs and faster consensus which is particularly beneficial for staking protocols like Lido and Rocket Pool. Combined with EIP-6110, which makes validator onboarding more predictable, Ethereum is positioning itself for institutional scaling.
But all of this is now on hold. The Hooli testnet went live in March, with final testing originally expected before the end of the month. As of now, the mainnet rollout has been pushed to late April or even May 2025.
Developers are understandably cautious, no one wants to repeat the mistakes of rushed Ethereum upgrades in the past. Still, the delay adds uncertainty.
In the meantime, user expectations grow, and Ethereum continues to bleed usage to alternatives. If Pectra rolls out smoothly, it could restore confidence in Ethereum L1 and boost engagement.
But if the upgrade underdelivers or faces more delays, Ethereum may struggle to regain traction among users already used to the speed and simplicity of L2s and alternative chains.
Conclusion
Ethereum remains unmatched in securing capital and supporting real-world financial assets, but its mainnet has become less appealing to users. Layer 2s are scaling, but the core chain risks being left behind.
The Pectra upgrade could change this by making Ethereum faster, cheaper, and easier to use. However, with delays pushing it back, Ethereum’s future now depends on flawless execution.