After the Dencun upgrade in March 2024, Ethereum users are looking towards the Pectra upgrade slated for early 2025. The upgrade will come in two phases, featuring improved wallet experience, an upgrade to the Ethereum virtual machine (EVM), PeerDAS for scaling L2s, improvement of blob capacity, etc.

Forks are upgrades or changes to the codebase/architecture of a blockchain network. Considering blockchain networks have no central governance, forks are only carried out after developers and validators reach a consensus. Hard forks are substantial permanent changes in a blockchain protocol that create two parallel chains – one with the old rules and the new with the implemented changes. Developers can either upgrade their software to build on the new chain or remain on the old chain as a separate network. During a hard fork, users receive an equivalent amount of their tokens on the new blockchain network 1:1. Soft forks, on the other hand, are subtle changes on a blockchain network that are backwards-compatible, meaning the network still operates as a single entity even when some developers don’t implement the new changes.

Famously scribbled by Ethereum co-founder Vitalik Buterin in 22 minutes, Ethereum improvement proposal EIP-7702 is an advanced way of marrying EIP-3074 and ERC-4337 to unlock massive adoption for Ethereum’s smart wallet functionality. Slated to go live in the upcoming Pectra upgrade, EIP-7702 will implement an advanced version of account abstraction enabling features like batching that allows users to pay a one-off transaction fee for multiple actions, sponsorship to enable an account pay gas fees for other users and wallet recovery options if users misplace their seed phrase.

Layer 2 is a collective term for protocols that aim to scale Ethereum by processing batches of transactions off the Mainnet. After performing a series of mathematical computations to ensure their validity, these L2s send a compressed version of the transactions back to the Mainnet for final processing. As a result, Layer 2 networks reduce transaction fees and enhance the Mainnet’s speed while reaping its security. Think of them like several personal assistants that help their boss to process a series of paperworks. These assistants send a summarised version of the paperworks to the boss who confirms and signs on them.

Layer 3 solutions are application-specific blockchains built upon existing Layer 2 networks to offer high scalability and interoperability. For example, an L3 can focus on tackling privacy, increased scalability, gaming, or some complex functionality while still ultimately deriving security from the Layer 1.