- Ethereum is becoming increasingly attractive to institutional investors following its latest network upgrade, according to analysts at JPMorgan.
- But despite this progress, on-chain activity remains subdued, raising concerns about long-term network profitability.
Pectra Upgrade Boosts Technical Appeal
Earlier this month, Ethereum rolled out its latest network upgrade, dubbed Pectra, which introduced several Ethereum Improvement Proposals (EIPs). These changes focused on improving staking performance, reward distribution, and transaction processing efficiencies—key features aimed at attracting institutional players.
JPMorgan analysts, led by Nikolaos Panigirtzoglou, noted that while the upgrade represents strategic advancement, it has not yet translated into increased daily transactions or user engagement on the network.
Ethereum Embraces Institutional Standards
Ethereum’s efforts to align more closely with institutional finance are also visible in its adoption of token standards like ERC-3643 and ERC-1400, which cater to compliance frameworks such as KYC (Know Your Customer) and AML (Anti-Money Laundering). These standards enhance Ethereum’s compatibility with regulated environments and infrastructure entities like the DTCC (Depository Trust & Clearing Corporation).
Fees Drop, But So Do Engagement Metrics
The expansion of Layer-2 solutions has led to lower transaction fees on the Ethereum network—a win for users, but potentially a blow to the platform’s profitability. Compounding the issue is a rise in Ethereum’s circulating supply since the Dencun upgrade, stoking inflationary concerns as user and transaction growth lag behind.
Institutional Interest vs Retail Momentum
JPMorgan’s research points to growing institutional long positions in Ethereum CME futures, mirroring patterns seen with Bitcoin. However, Ethereum spot ETFs have yet to gain the same retail traction, indicating a disparity between institutional and retail investor demand.
While the total value locked (TVL) in ETH has increased, dollar-denominated TVL has grown more slowly—raising broader questions about Ethereum’s real-world utility and adoption pace in today’s evolving market.
As Ethereum continues to evolve its infrastructure and institutional appeal, all eyes are on whether the network can translate these technical wins into meaningful ecosystem growth.
