The highly anticipated Fusaka Upgrade for Ethereum is on the verge of going live on Wednesday, heralding significant enhancements to the network’s overall functionality. 

Analysts contend that this pivotal development could usher in a considerable supply crunch for ETH, potentially boosting its price during a challenging period for the broader cryptocurrency market.

Layer 2 Solutions To Boost ETH Burn

According to analysts at Bull Theory, the Fusaka Upgrade integrates components from previous upgrades—Osaka, Fulu, and PeerDAS—but its most impactful feature is its resolution of one of Ethereum’s biggest challenges. 

Layers 2 (L2) solutions have long utilized Ethereum’s security while contributing minimal fees back to the network. Despite L2 solutions like Base, Arbitrum, Optimism, and zkSync generating millions in fees from users, the fees recorded on Ethereum tended to diminish to nearly zero when they posted their data. 

Consequently, this meant that significant L2 activity did not result in substantial ETH being burned, even though approximately 85% of Ethereum transactions now occur on these Layer 2 solutions.

The Fusaka Upgrade fundamentally changes this dynamic. A key enhancement is EIP-7918, which mandates that Layer 2 transactions pay real fees to Ethereum. 

This adjustment ensures that every L2 transaction will contribute directly to the burning of ETH—something that was not previously guaranteed. The analysts assert that this feature represents one of the most significant value shifts since the introduction of EIP-1559.

Post-Fusaka Projections

The upgrade is further expected to broaden the scope of ETH burn from being predominantly derived from Layer 1 (L1) transactions to encompassing all L2 activity. 

Historically, most ETH burn has originated from mainnet transactions; thus, the network saw slight inflation in 2024–2025 as Layer 2s made transactions cheaper, leading to a decrease in ETH burn while staking continued to issue new ETH. 

Post-Fusaka, every L2 blob will incur a minimum cost, which will be burned. As Layer 2 adoption increases, the rate at which ETH is burned will also rise, contributing to increased scarcity of ETH.

This enhancement positions Ethereum to shift back towards deflation for the first time in several years. Currently, ETH issues around 620,000 new tokens annually for stakers while burning approximately 350,000 tokens. This results in a net slight inflation. 

However, projections following the Fusaka Upgrade, even with conservative estimates, suggest that the additional burn from L2 activity could range from 200,000 to 400,000 ETH per year. 

Combined with existing burn rates, this could bring the total to over 600,000 ETH, leading to a net neutral or slightly deflationary state for ETH. 

More bullish models predict that if L2 adoption flourishes and demand for blobs rises, burn rates could soar to between 900,000 and 1.2 million ETH annually, resulting in a supply decrease of 200,000 to 300,000 ETH each year. 

Monetary Transformation For Ethereum?

Another notable aspect of the Fusaka upgrade is PeerDAS, which enhances Layer 2 growth by reducing bandwidth requirements by 85%. This efficiency allows L2 solutions to publish more blobs at lower costs, resulting in increased fees and, consequently, more ETH burned.

The upgrade also increases the block gas limit from 36 million to 60 million, allowing more transactions to fit within each block. This increase means that more transactions can occur, leading to higher fees collected and a corresponding rise in burning. 

Furthermore, lower fees for transactions—such as swaps, bridges, on-chain gaming, and social applications—will likely drive more usage, resulting in increased transactions and higher ETH burn.

Ultimately, the analysts believe that the Fusaka Upgrade represents a significant monetary transformation for Ethereum, indicating that the network is not only scaling but also beginning to monetize that scaling effectively.

Featured image from DALL-E, chart from TradingView.com

Over the past few weeks, the price of Ethereum has been on a downward trend due to a highly volatile market environment. ETH’s bearish action appears to have hampered on-chain activities, as evidenced by a decline in its total transactions carried out within a monthly period.

A Quiet Month For The Ethereum Network

Ethereum’s on-chain activity appears to have slowed down alongside the ongoing decline of ETH’s price. The blockchain, which is typically bustling with contract calls, exchanges, and transfers, now feels a little more roomy, suggesting a cooling pulse beneath the surface.

After examining the Transactions on the Ethereum Network metric in the monthly time frame, Everstake.eth, a market analyst and the head of the ETH segment at Everstake, revealed that the blockchain has recorded its worst month of the year. While price has declined, ETH’s total transactions executed in a month, particularly November, experienced a cool-off.

According to the data, the overall number of transactions carried out on the Ethereum network in November alone was approximately 32.2 million. Although this figure may seem large, it actually marks the lowest monthly count in the past 12 months.

Such a drop in transactions may suggest the renewed waning appetite for the network. In addition to suggesting a retreat, this delay reads more like a collective pause as users catch their breath, procedures recalibrating, and the market adjusting to its new rhythm. 

Everstake.eth highlighted that this kind of cooldown usually occurs when the market moves into a wait-and-see phase. During this phase, capital is observed sitting on the sidelines while developers continue to build on the blockchain. Despite this trend, the network still records more than 33 million transactions in a quiet month, which reflects its robust strength.

At a time like this, the expert noted that user behavior typically follows the market sentiment. As seen in the past, on-chain activity tends to cool down when volatility drops. However, Ethereum still retains the status as the most reliable network even during slow phases.

With the Fusaka Upgrade set to hit the market, Everstake.eth predicts that ETH transactions will see explosive growth. “If this is the worst month, imagine what the best will look like after Fusaka rolls out. It will be huge,” the expert stated.

ETH Active Transactions Pick Up

The monthly transactions may have slowed down, but the active addresses on the Ethereum network are heating up again. Leon Waidmann, the head of research at On-Chain Foundation, reported that active addresses throughout the entire ecosystem, Layer 1 and Layer 2s, bounced back above 9.5 million this week.

This surge points to a quiet resurgence of interest, utility, or a group readiness for the future. Waidmann highlighted that this marks the first meaningful reversal after several weeks of downside action.

ETH layer 2s such as Base, Arbitrum, Optimism, and World Chain have witnessed a strong rebound following a period of decline. Furthermore, multi-chain activity is starting to stabilize after the drop in Q3. These factors are painting a bullish picture for the network and its price prospects.

The leading Ethereum network is witnessing serious engagement even as its price struggles to undergo a major surge. After a massive wave of both new and old investors, the ETH mainnet utilization has increased drastically, reaching levels of adoption not seen since its inception.

Historic Lift-Off For Ethereum Mainnet Utilization

Ethereum is undergoing a shift in network adoption. In a significant landmark that cements its dominance, the Ethereum Maninnet usage has increased to the point where it feels more like a structural awakening than regular growth. 

Leon Waidmann, the founder of On-Chain Foundation and market expert, reported that the ETH mainnet’s utilization is currently at an all-time high. This kind of spike in network traffic may indicate the return of activity from the periphery to the center of the chain, new applications, or even a resurgence of trust in the network’s long-term prospects.

Data shared by the market expert shows the network’s usage in the past 30 days rose to 1.97mags/s, marking its highest level in history. The chart reveals that the rise to a new peak represents a more than 57% increase in Year-Over-Year (YoY), indicating that ETH is moving with intent once again.

While weak network effects and parasitic Layer 2s are being debated within the community, Waidmann highlighted that the Ethereum Mainnet continues to display strong growth and strength. This robust growth is evidenced by the increase in activity, spiking gas fees, and the surge in the number of ETH being burned.

By combining these key factors about the network, Waidmann claims that ETH could attract more economic load. As a result, the leading altcoin may gradually shed its old skin and take on a more rigid financial function.

Waidmann has declared that ETH could become harder money and a settlement collateral. As a result, ETH is starting to resemble the foundation of a future financial structure rather than just a utility token.

ETH Layer 2s Dominates Network’s Transactions

In the midst of surging network activity and adoption, Ethereum layer 2s are now dominating in terms of transactions at a speed that makes the base layer feel nearly slow in contrast. While the center might still hold, the edges are undeniably where users’ action currently resides.

Last week, Waidmann noted that the total Transaction Per Second (TPS) across the Ethereum network reached over 358.21. Meanwhile, a more significant portion of these transactions was carried out on layer 2 networks. According to the data shared by the on-chain Foundation founder, layer 2s controlled over 95.2% of the overall throughput. 

Such a development implies that execution has largely moved to the layer 2 chains. A major reason for this might be that users, liquidity, and developers are looking for quicker and less expensive channels to carry out transactions, transforming ETH’s scaling stack into the ecosystem’s actual heartbeat.