Ethereum's newest upgrade is getting love from two groups that don't always agree: the developers building on the blockchain and the traditional finance crowd increasingly betting on it.
The Fusaka upgrade to Ethereum (ETH) rolled out Wednesday, and crypto investors are treating it as a strategic milestone. Fidelity Digital Assets called Fusaka "the most compelling upgrade in years," describing it as a "strategic and economic turning point" for the world's leading blockchain platform.
VanEck's crypto research team put it this way in an Oct. 3 note: Fusaka's role in scaling Ethereum's ecosystem is "entering its next phase. The Fusaka upgrade is designed to relieve one of the network's most pressing bottlenecks: data availability for rollups."
If you're unfamiliar with rollups, think of them as faster, cheaper "mini-blockchains" built on top of Ethereum. They bundle transactions together and settle them securely on the main blockchain, which in this case is Ethereum. The whole architecture depends on data flowing smoothly between these layers.
Here's why developer sentiment matters: if the people actually building on Ethereum aren't happy, investors will bail for alternatives. There are plenty of competing blockchains promising faster speeds and lower costs.
"Fusaka represents meaningful progress toward Ethereum's giga-gas future, pushing the gas limit from 45 million to 60 million (units of computation)," said Mo Dong, a computer scientist PhD from the University of Illinois Urbana-Champaign and current CEO and Co-Founder of Brevis. "As throughput scales, zkVMs (zero knowledge virtual machines) become essential infrastructure." Brevis operates a zero-knowledge data-proof and computation platform.
Zero knowledge virtual machines sound complicated, but the concept is straightforward: they're computer systems that verify whether a set of instructions executed correctly. Developers can take computer code, run it through a zkVM, and prove that the output is legitimate without revealing the underlying data.
Justin Drake, a senior researcher at the Ethereum Foundation (the nonprofit leading much of Ethereum's long-term development), recently demonstrated at the ETHProofs Day event that ZK virtual machines can power "a new kind of consensus client on Ethereum."
"Fusaka marks an era of increased focus within Ethereum on improving and expanding Layer 1 capacity," said Felipe Argento, co-founder of Cartesi (CTSI).
Ethereum's price has climbed since the upgrade launched Wednesday.
The 17th Major Overhaul, With More Coming
Ethereum's naming conventions can be quirky. "Fusaka" combines the execution-layer update called Osaka with the consensus-layer update called Fulu. This marks Ethereum's 17th major network overhaul and the second one this year, following the "Pectra" upgrade in May. Investors who predicted all-time highs after Pectra and stayed long ETH through the summer were rewarded.
The latest update focuses on scaling and efficiency, addressing a perennial complaint from Web3 developers. It doesn't dramatically change staking rules or the user experience. Instead, it boosts the blockchain's "backend" capacity.
According to ConsenSys, Fusaka removes the requirement that every node download all so-called "blob data" through a new Peer Data Availability Sampling (PeerDAS) mechanism. It also raises the block gas limit to around 60 million gas while capping per-transaction gas at roughly 16.78 million to prevent denial of service attacks.
Other developer-friendly changes include hardware-signing passkey support for wallets and new Ethereum Virtual Machine "opcodes" (the basic command language of Ethereum) to make smart contracts cheaper to deploy and run.
For Ethereum, Fusaka is about giving developers more data power and lower costs in preparation for its rollup-centric future. The vision here is that Ethereum's main chain (Layer 1) focuses on security, data availability, and transaction settlement, while most user activity like decentralized applications, gaming, and DeFi takes place on rollups rather than Ethereum's base layer.
Tom Lee Sees Major Upside Ahead
Financial analysts view Fusaka and the broader rollup strategy as a net positive for Ethereum's valuation.
Fundstrat Global Advisors founder Tom Lee is predicting a substantial rally next year that could double Ethereum's price from current levels around $3,150.
BitMine Immersion Technologies (BMNR), where Lee serves as Chairman, disclosed in a Nov. 17 press release that their crypto holdings include 3,559,879 ETH, 192 Bitcoin (BTC), and a $37 million stake in Eightco Holdings (ORBS), a roughly $3 per share fund that speculates on "moonshot" crypto positions.
Ethereum continues to see tailwinds partly due to the Fusaka upgrade, BitMine noted in last month's press release. But that's not the only catalyst. Their Ethereum bullishness stems from the continued surge in stablecoins and the advancement of tokenization for stocks, bonds and real estate on the Ethereum blockchain.
"I think all the scalability gains we will get with this latest upgrade will make both the layer one and layer two blockchains cheaper," said Argento. "This will also force the rollups that are essentially just cheaper copies of Ethereum L1 to finally differentiate. The future looks bright."
Whether Fusaka truly puts a floor under Ethereum prices remains to be seen, but the upgrade appears to be delivering what developers want: more capacity, lower costs, and a clearer path forward for building decentralized applications at scale.
