Ethereum’s latest upgrade sparked a burst of activity, but Wall Street bank JPMorgan (JPM) is skeptical it will last.
In a Wednesday note to clients, the bank said December’s Fusaka upgrade expanded data capacity and drove an immediate drop in fees alongside a jump in transactions and active addresses.
Fusaka builds on the Pectra upgrade earlier in 2025, the report said, which helped revive usage after the Dencun upgrade pushed activity toward layer-2 networks. While the combined upgrades lifted network activity over the past year, the bank warned that in the past, similar rebounds have tended to fade.
“Historically, Ethereum’s successive upgrades have failed to meaningfully enhance network activity on a sustained basis,” analysts led by Nikolaos Panigirtzoglou wrote.
Fusaka expanded the network’s data capacity by increasing the number of “blobs” per block, a change aimed at lowering transaction costs and improving throughput, particularly for layer-2 networks that rely on the blockchain for data availability.
By allowing more data to be posted per block, Fusaka helped ease congestion and pushed fees lower, addressing a bottleneck that emerged after earlier upgrades shifted activity away from the main chain.
The layer 2s themselves are adding to the pressure. The analysts pointed to the ongoing shift of activity to blockchains such as Base, Arbitrum and Optimism, noting that Base now generates the majority of layer-2 revenue.
The bank’s analysts also flagged growing competition from faster, cheaper blockchains like Solana, as well as the fading of speculative booms tied to non-fungible tokens (NFTs), memecoins and initial coin offerings (ICOs).
A layer 1 network is the base layer, or the underlying infrastructure of a blockchain. Layer 2 refers to a set of offchain systems or separate blockchains built on top of layer 1s.
Capital is fragmenting across application-specific chains, the analysts said, citing moves by Uniswap and dYdX that have diverted liquidity and revenue away from Ethereum. The result has been lower fee burning, rising ether ETH$2,966.59 supply and a decline in total value locked (TVL) in ETH terms.
Fusaka delivered a clear short-term boost, but persistent structural headwinds leave the bank doubtful that Ethereum’s latest activity surge marks a lasting turnaround.
The world’s second-largest cryptocurrency was trading 2.2% higher at $2,992 at publication time.
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