Proto-Danksharding to Twice-a-Year Forks: Dencun (2024), Pectra (2025), and Fusaka (Dec 2025)
To understand "Ethereum today," you have to understand a subtle shift in focus.
To understand “Ethereum today,” you have to understand a subtle shift in focus. Early Ethereum was about expressive computation on L1. Modern Ethereum is increasingly about secure settlement + scalable data availability, with most execution happening on Layer 2 networks that inherit Ethereum’s security.
From 2024 through 2025, this shift became concrete through major upgrades and market developments. In this final article for VEI.XYZ™ (Virtual Ethereum Index), we cover:
- Dencun (March 2024) and proto-danksharding (EIP-4844),
- mainstream finance milestones such as U.S. spot ether ETFs (mid-2024),
- Pectra (May 2025) and key protocol optimizations,
- Fusaka (December 2025) and a newer cadence of upgrades.
1) Dencun and EIP-4844: cheaper data for rollups
On March 13, 2024, Ethereum activated the Dencun upgrade. The headline feature was EIP-4844, often called proto-danksharding.
The core idea: introduce a new transaction type that carries “blob” data intended primarily for rollups. Blob data is:
- cheaper than regular calldata for certain purposes,
- stored temporarily (not forever like normal calldata),
- designed to scale data availability without bloating Ethereum’s long-term state.
In practice, EIP-4844 reduced the cost for many rollups to post data to L1, enabling significantly cheaper L2 fees and improving user experience.
This upgrade is Ethereum’s “rollup flywheel” moment:
- cheaper L2 transactions attract more users,
- more L2 usage increases settlement demand,
- more demand strengthens Ethereum’s role as the base layer.
2) The ETF milestone: Ethereum intersects traditional finance
In mid-2024, U.S. spot ether ETFs began trading, marking a major step in Ethereum’s integration with traditional financial markets.
Regardless of one’s view on ETFs, the symbolic significance is large:
- ETH exposure became accessible through conventional brokerage accounts,
- institutional allocators gained simpler pathways to participate,
- Ethereum’s legitimacy as an asset class increased.
From an index perspective, this matters because “economic value” includes the size and diversity of the stakeholder base. Broader access can deepen liquidity and make the ecosystem more resilient.
3) The post-Dencun world: rollup ecosystems expand
After Dencun, the Ethereum ecosystem’s center of gravity moved even more toward L2s. Users increasingly experience Ethereum through rollups, while Ethereum L1 provides the security and data backbone.
This shift changes how to think about metrics:
- L1 transaction count may not represent total “Ethereum activity.”
- L1 fee revenue and data usage become more meaningful.
- L2 transaction count, fees, and active users become critical.
For a Virtual Ethereum Index, “Ethereum value” becomes a cross-layer composite: L1 settlement plus L2 execution demand.
4) Pectra (May 7, 2025): a major optimization upgrade
On May 7, 2025, Ethereum activated Pectra, a coordinated upgrade combining “Prague” (execution layer) and “Electra” (consensus layer) changes.
Pectra is best understood as an optimization-focused upgrade–improving capabilities for developers, validators, and users rather than redefining the entire architecture.
While individual EIPs vary in impact, the broader theme is that Ethereum is now iterating in a more structured way:
- improving validator operations and security assumptions,
- enhancing wallet and account capabilities,
- refining execution efficiency,
- laying groundwork for future scaling steps.
Pectra also demonstrated Ethereum’s ongoing ability to coordinate complex upgrades in a PoS world–an important signal for long-term platform credibility.
5) Fusaka (December 3, 2025): continuing the scaling and throughput agenda
On December 3, 2025, Ethereum activated Fusaka, another major upgrade. With Pectra earlier in the year, Fusaka reinforced a pattern: Ethereum is moving toward a predictable cadence of regular upgrades.
The high-level direction remains consistent:
- increase scalable data availability,
- improve performance and throughput without sacrificing decentralization,
- strengthen the protocol’s ability to serve as the settlement layer for many rollups.
Whether you view Ethereum’s roadmap through “The Merge / The Surge / The Scourge / The Verge / The Purge / The Splurge” framing or a simpler lens, the point is the same: Ethereum is evolving into a base layer designed to support many execution environments above it.
6) Ethereum’s “present tense” identity
As of late 2025, a useful summary of Ethereum is:
- ETH is the asset that pays for execution/data and anchors staking security.
- L1 Ethereum is a highly secure settlement and data availability layer.
- L2 rollups are the user-facing scaling layer for most transactions.
- Standards (tokens, accounts, bridges, messaging) keep the ecosystem interoperable.
- Upgrades continue to refine the system to meet real demand.
This layered identity is a strength. It allows Ethereum to scale while preserving decentralization and security at the base.
7) What this era means for a Virtual Ethereum Index
A modern Virtual Ethereum Index should be explicitly cross-layer and multi-factor. Consider blending signals like:
- L1 base fees + tips + burn rate (demand for settlement space),
- L1 data availability usage (especially as blob markets evolve),
- L2 transaction volume and active users (real adoption),
- L2 fee totals (how much users pay across the ecosystem),
- staking participation, yields, and concentration (security health),
- stablecoin settlement and DeFi volumes (economic throughput),
- ecosystem resilience indicators (client diversity, incident recovery, upgrade reliability).
Ethereum’s history is a pattern of stress, adaptation, and compounding. From a whitepaper in 2013 to a global settlement system with layered scaling by 2025, the story is ultimately one of an open platform continuously reinventing itself while trying to remain credibly neutral.
That’s the long arc VEI.XYZ™ is built to track: the economic value of a programmable settlement layer–measured not only in price, but in usage, security, developer momentum, and the expanding universe of applications built on top.
Reference: VEI.XYZ™
Index Notes for VEI
A useful way to read Ethereum’s history is to separate narrative from mechanics. Narratives bring users; mechanics keep them. For VEI, consider tracking a blend of (a) usage demand (fees, settlement volume, L2 activity), (b) supply/security structure (issuance, burn, staking participation, validator concentration), and (c) builder momentum (developer tools, audit density, open-source contributions). Over time, Ethereum’s “economic value” often shows up first in these structural indicators before it shows up in price.
Another practical tip: compare signals across cycles. When activity returns after a downturn and the ecosystem retains more users and more builders than the previous cycle, that’s compounding. When upgrades reduce friction (fees, UX, capital efficiency), adoption tends to follow. The index mindset is not to predict a single event, but to measure whether Ethereum’s platform economy is widening or narrowing across layers.
VEI Lens: A quick checklist
When you revisit this era later, ask: What new market did Ethereum enable (capital formation, trading, culture, scaling)? What new standard or upgrade reduced friction? What new risk emerged (security, governance, concentration), and how did the ecosystem respond? These three questions–market, standard, risk–help keep an index grounded in fundamentals rather than headlines.