Is Ethereum positioning itself to remain the leading smart contract platform?
This is the theory of people like Tom Lee, who is loading up on ETH via Bitmine. At the core of this move is the idea that we are going to see a massive jump in utility based upon Real World Assets (RWA) along with stablecoins. Lee is confident that this traffic will find its way to Ethereum.
Of course, there are those who counter that Ethereum has issues. Scaling is the top problem, one the development believes it will solve. Many still remember when traffic was high and the transaction fees skyrocketed.
Is this problem in the process of being solved?
The process is starting with the raising of the gas limit. It is part of a larger shift to scaling the network. The first benchmark level is now reached.
For Ethereum to be a legitimate player in the financial world, transaction throughput is crucial. Traffic congestion can not only lead to delays but also, historically, sent fees skyrocketing. In an era of microtransactions, this is not acceptable. Actually, it becomes infeasible.
The developers are well aware of this. For this reason, a number of upgrades are being undertaken. The next one, Fusaka, is scheduled to go live December 3rd.
In the meantime, the gas limit was increased and adopted by a number of validators.
Ethereum crossed a threshold in execution capacity as its mainnet block gas limit reached 60 million, the highest level the network has seen in four years.
Data tracker Gas Limit Pics showed that in November, over 513,000 validators signaled a 60 million gas limit, pushing the Ethereum network over the threshold needed for the protocol to begin moving the gas limit upward.
This is an important move when we look at the stablecoin market.
With the passage of the GENIUS Act in the United States, we saw the total market cap (i.e. the coins issued) moved from $250B to the present $309B. That is a massive increase in the last 5 months.
What gets very concerning is the fact the major institutions (read banks) are still not involved. That said, we know they are serious about getting into the market. This is pushing calls for many trillions in stablecoins issued.
Here is where the move to higher throughput is crucial.
A higher gas limit allows Ethereum to fit more work into each block, including swaps, token transfers and smart contract calls. In practice, that can ease congestion during busy periods and help the network process more activity at the base layer.
As more than 513,000 validators transitioned from the 45 million ceiling to the higher 60 million configuration, Ethereum’s effective block size began to increase automatically, thereby raising the throughput across the network’s base layer.
The amount of volume that is necessary for processing is going to be huge. Blockchain networks are no different than any other: they are all part of the AI revolution.
There is a huge thirst for compute. Anyone who follows AI develop knows this. Right now the talk is GPUs for training and inference. But there is a lot more that is needed.
Bandwidth is crucial. We are moving towards an agentic future. This means massive automation. What we saw online through bots (mostly social media and email) is just a drop in the proverbial bucket. This is going to explode.
I mentioned microtransactions. To me, this is going to be a core component to the future economy. AI agents will operate non-stop, some engaging in transactions throughout the day. One key element to this is those services will cost fractions of a cent. Of course, money is made since there will be millions of them occurring.
Here is where bandwidth is essential. Regardless of the network, the ability to process large numbers of transactions is critical. Ethereum is already looking at addressing the problem.
Raising the gas limit is one move that appears to be having an impact. With the next upgrade scheduled, it will be interesting to see how this affects the fees on the network.
