Haciyev Reşit 
Recent improvements in technical and on-chain data on the Ethereum network have created cautious optimism in the markets. However, JPMorgan, one of Wall Street’s leading financial institutions, has stated that there are question marks over whether this positive outlook is sustainable in the long term. While the bank acknowledges that recent Ethereum upgrades have delivered a short-term boost, it warns that structural issues remain unresolved.
Fusaka Upgrade Boosted Activity
In a note shared with clients, JPMorgan stated that the Fusaka upgrade, rolled out in December, significantly expanded Ethereum’s data capacity. According to the bank, this technical update eased data flow on the network, led to a rapid decline in transaction fees, and generated a short-term increase in both transaction volume and active addresses.
The Fusaka upgrade increased the number of “blobs” that can be written per block, aiming to reduce costs particularly for layer-2 (L2) networks that rely on Ethereum mainnet for data availability. This change partially alleviated the capacity bottlenecks that emerged after previous upgrades, reducing congestion on the network. JPMorgan analysts note that while this improvement is technically positive, it remains unclear whether its impact will be sustainable over the long term.
According to the report, Fusaka builds on the Pectra upgrade introduced in early 2025. Pectra had partially revived mainnet activity, which weakened after users migrated to L2 networks following the Dencun upgrade. However, JPMorgan analysts point out that similar technical improvements in the past have tended to lose their effect over time. A team led by chief analyst Nikolaos Panigirtzoglou emphasizes that successive Ethereum upgrades have historically failed to generate a lasting increase in network activity.
L2s and Competing Networks Increase Pressure
According to JPMorgan, the pressure on Ethereum is not limited to the mainnet. The report highlights that network activity continues to shift toward layer-2 solutions such as Base, Arbitrum, and Optimism. In particular, Base’s rise as a major revenue generator within the L2 ecosystem signals weakening economic activity on the mainnet.
At the same time, competition from faster and lower-cost blockchains like Solana is intensifying the pressure on Ethereum. JPMorgan analysts note that speculative trends—such as NFTs, memecoins, and ICO-driven activity—that previously supported network demand have largely faded, leading to declines in transaction volume and user activity. Taken together, these factors raise further doubts about the durability of Ethereum’s current recovery.
Capital Fragmentation and the ETH Supply Issue
Analysts also warn that the shift toward application-specific chains poses a significant risk for Ethereum. Major projects such as Uniswap and dYdX migrating to their own chains have led to liquidity and revenue moving away from the Ethereum ecosystem. As a result, burned transaction fees have declined, ETH supply has increased, and total value locked (TVL) measured in ETH terms has fallen.
JPMorgan acknowledges that the Fusaka upgrade has delivered a clear short-term revival on the Ethereum network. However, the bank stresses that structural challenges persist and urges caution in interpreting the recent increase in activity as a sign of a lasting transformation. Ethereum’s long-term performance will continue to depend not only on technical upgrades, but also on the competitive landscape and broader ecosystem dynamics.
You can also freely share your thoughts and comments about the topic in the comment section. Additionally, don’t forget to follow us on our Telegram, YouTube, and Twitter channels for the latest news and updates.