Ethereum Upgrade Sparks Activity Spike, but JPMorgan Doubts It Will Last

Why It Matters

The upgrade’s immediate fee reduction could attract short‑term users, but long‑term network health hinges on Ethereum’s ability to retain activity amid growing layer‑2 and cross‑chain competition.

Key Takeaways

• Fusaka upgrade increased block data capacity, lowering fees.
• Transaction volume and active addresses rose sharply after upgrade.
• JPMorgan doubts long‑term activity sustainment despite short‑term boost.
• Layer‑2 solutions and competing chains continue draining Ethereum’s usage.
• Fee burning fell, TVL in ETH terms declined post‑upgrade.

Pulse Analysis

The Fusaka upgrade represents a technical milestone for Ethereum, expanding the number of data "blobs" each block can carry. By increasing on‑chain capacity, the protocol reduces the cost of posting data, a critical factor for roll‑up solutions that rely on Ethereum for data availability. This change not only trims gas fees but also improves throughput, making the base layer more attractive for developers seeking to launch high‑frequency applications without incurring prohibitive costs.

Beyond the protocol level, market dynamics are reshaping where activity occurs. Layer‑2 networks such as Base, Arbitrum, and Optimism have captured a growing share of transaction volume, siphoning demand away from the main chain. Simultaneously, fast, low‑cost alternatives like Solana are pulling developers and users toward their ecosystems. This migration dilutes Ethereum’s fee‑burning mechanism and contributes to a declining total value locked (TVL) measured in ETH, signaling a broader fragmentation of capital across specialized chains.

JPMorgan’s skepticism underscores a recurring pattern: upgrades spark temporary spikes but fail to generate lasting momentum. Analysts point to historical rebounds that quickly dissipated as users gravitated toward more efficient solutions. For investors and stakeholders, the key question is whether Ethereum can translate short‑term technical gains into durable network effects, or if the ecosystem will continue to cede relevance to layer‑2 and competing layer‑1 platforms. Monitoring fee trends, TVL shifts, and the adoption rate of roll‑ups will be essential to gauge the durability of Fusaka’s impact.