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JPMorgan: Ethereum Upgrades Fail to Ignite Network Activity

Jun 3

2 min read

JPMorgan has issued a report indicating that recent Ethereum upgrades, including Dencun and Pectra, have not led to a significant increase in network activity. Despite these technical advancements aimed at improving efficiency and institutional appeal, key metrics such as daily transactions and active addresses have remained largely unchanged.

Ethereum Upgrades: Limited Impact on Network Activity

Investment bank JPMorgan recently released a research report asserting that Ethereum's successive upgrades have not substantially boosted network activity. Analysts, led by Nikolaos Panigirtzoglou, noted that neither the number of daily transactions nor active addresses has seen a material increase following these improvements.

Key Takeaways:

  • Muted Activity Growth: Despite upgrades like Dencun (March 2024) and Pectra (May 2025), daily transactions and active addresses on the Ethereum network have not significantly increased.

  • Institutional Focus: The Pectra upgrade, which streamlines staking and enhances wallet functionality, aims to make Ethereum more appealing to institutions. JPMorgan suggests this strategic shift mirrors Bitcoin's institutional engagement.

  • Total Value Locked (TVL): While TVL on Ethereum increased between the Dencun and Pectra upgrades, potentially due to increased lending and borrowing on decentralized exchanges (DEXs), its growth in dollar terms was less pronounced than in Ether (ETH) terms.

  • Fee Reduction and Layer 2 Adoption: Following the Dencun upgrade, both average and total fees on Ethereum decreased, partly attributed to a shift towards Layer 2 chains.

  • Inflationary Concerns: The circulating supply of Ether increased after Dencun, raising concerns about the cryptocurrency potentially becoming inflationary amidst subdued transaction activity.

  • Institutional Interest in ETH Rally: JPMorgan's report indicates that institutional investors played a significant role in the recent rally of Ether, with futures positioning suggesting increased long positions from this segment.

Institutional Appeal vs. On-Chain Metrics

The Pectra upgrade, which bundled several Ethereum Improvement Proposals (EIPs), was designed to enhance staking efficiency and facilitate faster deposits and withdrawals. These features, according to JPMorgan, make Ethereum more attractive to institutional investors, further supported by the adoption of security token standards like ERC-3643 and ERC-1400. These standards are crucial for regulatory compliance, including Know Your Customer (KYC) and Anti-Money Laundering (AML) checks, making Ethereum compatible with traditional financial infrastructure.

However, despite this strategic pivot towards institutional engagement and the recent surge in Ether's price and market capitalization, on-chain activity remains subdued. JPMorgan's analysis of CME ETH futures positioning shows a sharp increase in institutional long positions, yet spot Ethereum ETFs have seen relatively limited inflows compared to Bitcoin ETFs, suggesting weaker retail participation.

Future Outlook

JPMorgan has historically maintained a less bullish stance on Ethereum, predicting continued intense competition from rival blockchains and Bitcoin's sustained dominance. The bank's latest report reinforces this perspective, highlighting that while technical advancements and institutional interest are positive developments, they have yet to translate into a meaningful boost in fundamental network activity.

Sources

  • Ethereum Upgrades Have Failed to Boost Network Activity in Meaningful Way: JPMorgan, CoinDesk.

  • JPMorgan says Ethereum's recent upgrades haven't meaningfully boosted activity, The Block.

Jun 3

2 min read

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