EIP-4850 and EIP-7691 spark protocol efficiency and value capture as ETH climbs; liquidations hit $221M

According to a new chart report from Matrixport, Ethereum's over 60% price rally can be largely attributed to Vitalik Buterin's vision of simplifying Ethereum's architecture

According to a new chart report from Matrixport, Ethereum's over 60% price rally can be largely attributed to Vitalik Buterin’s vision of simplifying Ethereum’s architecture into a more Bitcoin-like model, as the Pectra upgrade continues to gain traction. But while the performance of ETH is undeniably strong, Matrixport warns there are underlying variables that bear close attention.

Buterin’s proposals include:

• Protocol simplification

• Reduction of redundant computation at the base layer

• Improved synergy with Layer 2 solutions

Two key Ethereum Improvement Proposals (EIPs) are pivoting the ecosystem toward greater efficiency and value capture:

🔸 EIP-4850 introduces a revenue-sharing model with Layer 2 networks, which helps Ethereum retain economic value from off-chain activity.

🔸 EIP-7691 massively increases data block (blob) capacity, which can be used by Layer 2s to lower transaction fees and encourage more transactions to return to the Ethereum mainnet, improving on-chain efficiency and throughput.

These upgrades are making Ethereum more attractive to both developers and institutional investors, which is ultimately supporting its bullish price action.

According to the report, large-scale liquidations were also seen during the recent ETH rally, which is an interesting observation.

"Usually, liquidations are encountered during bear markets or downtrends. However, we saw a surge in liquidations on August 17, reaching $221 million. This liquidation event occurred during a bull market, rendering it an unusual occurrence. It will be interesting to see how this plays out in the coming days."

Overall, Ethereum's strong performance can be attributed to several factors, including Vitalik Buterin's vision for a simplified architecture, the rollout of key EIPs, and the ongoing transition to a more scalable and sustainable ecosystem. However, as the Pectra upgrade unfolds, there are still underlying variables that could impact the crypto's bullish momentum.