JPMorgan analysts noted in a recent report that while Ethereum’s Fusaka upgrade has significantly boosted network activity in the short term, this growth trend may be difficult to sustain over the long run. They argue that, historically, Ethereum’s multiple upgrades have failed to deliver lasting increases in mainnet usage, and the current surge in activity is more of a temporary phenomenon.
Upgrade Impact
The Fusaka upgrade went live on Ethereum’s mainnet on December 3, 2025, marking another major milestone following the Dencun upgrade, which introduced EIP-4844. By expanding block data capacity—raising the maximum data per block from 15 blobs to 21—the upgrade directly led to a significant reduction in transaction fees.
With lower fees, both the number of active addresses and transaction volume on the Ethereum network surged, highlighting the upgrade’s immediate impact on user behavior. This stands in stark contrast to the persistent high gas fee issues Ethereum faced prior to the upgrade. Previously, limited block space kept fees elevated through 2026, with simple transactions often costing $50 or more during periods of congestion.
Technological Innovation
The core technical highlight of the Fusaka upgrade is the introduction of PeerDAS (Peer-to-Peer Data Availability Sampling). This innovation allows nodes to verify only a sample of the data, rather than downloading and storing all blob data in each block. As a result, node operating costs drop significantly, and the network’s scalability improves.
The upgrade also includes a phased expansion of blob capacity: on December 17, 2025, capacity will increase from approximately 6/9 to about 10/15, and on January 7, 2026, it will rise further to around 14/21. For Layer 2 networks, this means they can store more data at lower costs, resulting in notably reduced transaction fees for users on rollup networks.
Skepticism
The team led by JPMorgan analyst Nikolaos Panigirtzoglou has expressed doubts about the sustainability of this spike in activity. They point out that historical data shows Ethereum’s successive upgrades have not led to substantial or lasting increases in network activity, and the underlying issues remain unresolved.
The analysts particularly highlight the ongoing migration of on-chain activity to Layer 2 networks such as Base and Arbitrum as a major source of pressure. According to data from Gate, Ethereum Layer 2 fee revenue is already highly concentrated among a few networks. Competing blockchains like Solana, which offer lower costs and faster speeds, are drawing users away, while the cooling off of speculative activities such as ICOs, NFTs, and meme coins has further dampened mainnet activity.
Structural Shift
Ethereum is undergoing a fundamental structural transformation, with Layer 2 networks now serving as the primary execution layer for most retail user activity. This architectural shift is redefining how Ethereum scales, how users interact with the network, and how value will accrue to ETH in 2026.
Ethereum Layer 1 is becoming increasingly specialized, focusing on final settlement for Layer 2 rollups, validator staking and network consensus, security for the entire rollup ecosystem, and the issuance and settlement of tokenized real-world assets.
Currently, Base dominates Ethereum Layer 2 fee revenue, with daily fees approaching $147,000—accounting for nearly 70% of total Layer 2 fees on that day. Arbitrum and Starknet are the only other Ethereum Layer 2 networks with significant fee activity.
Market Performance
According to Gate market data, as of January 23, 2026, Ethereum (ETH) is priced at $2,960.35, reflecting a -2.09% change over the past 24 hours and a -10.59% change over the past 7 days. Its 24-hour trading volume stands at $431.24 million, with a market capitalization of $357.57 billion and a market dominance of 11.26%.
Historically, Ethereum’s all-time high price is $4,946.05, while its all-time low is $0.4329. The current circulating supply is 120.69 million ETH, which matches both the total and maximum supply, as there is no capped maximum.
Notably, Ethereum’s average price in 2026 is $2,960.67, with price fluctuations expected between a low of $1,865.22 and a high of $4,381.79. By 2031, Ethereum (ETH) could potentially reach $5,319.74.
The Road Ahead
Ethereum’s 2026 roadmap centers on two main strategies: first, increasing rollup data capacity through the Fusaka upgrade and expanded blob support; second, boosting base layer gas limits to enhance execution throughput. The execution path depends on validators shifting from full block replays to verifying ZK execution proofs, supported by PeerDAS, ePBS, BALs, and a broader set of gas repricing proposals.
As upgrades like Glamsterdam and Hegota roll out in 2026, the roadmap also introduces new activity and decentralization risks related to proof markets, bandwidth caps, and validator operations. The Ethereum Foundation’s "real-time proofs" roadmap proposes a phased approach, starting with a subset of validators running ZK clients in production environments.
Only when the vast majority of staked ETH is comfortable with this architecture will gas limits be raised to levels where proof verification on standard hardware can replace full re-execution as the primary means of validation.
When asked about Ethereum’s future, JPMorgan analysts looked beyond the short-term activity spike brought by the Fusaka upgrade and focused on Ethereum’s deeper transformation. They envision a network shifting from an "execution chain" to a "settlement layer," where value capture gradually moves from transaction fees to staking rewards and settlement demand. Ethereum price is hovering around $2,960, with its market cap firmly at $357.57 billion, yet daily trading volumes exceeding $431.24 million suggest the market is still searching for direction.
