Ethereum — the network that unleashed smart contracts on the world — moves on to the next chapter with today's Pectra upgrade, but what does it really mean?

Pectra, the upcoming Ethereum (ETH) upgrade, is set to introduce several noteworthy changes to the network, including smart account functionality, increased validator staking limits, and enhanced layer-2 scalability.

Scheduled for deployment on May 7 at approximately 10:00 am (GMT), Pectra will mark the beginning of epoch 364032. The upgrade comprises three main Ethereum Improvement Proposals (EIPs): EIP-7702, EIP-7251, and EIP-7691.

EIP-7702 grants externally owned accounts the ability to operate as smart contracts, covering gas expenses and payments in tokens other than Ether (ETH). Meanwhile, EIP-7251 increases the validator staking limit from 32 ETH to 2,048 ETH, aiming to simplify operations for large stakers.

Furthermore, EIP-7691 will expand the number of data blobs per block, which is expected to enhance layer-2 scalability and potentially lead to a significant reduction in transaction fees.

Highlighting the implications of Pectra, Sergej Kunz, co-founder of the decentralized exchange (DEX) aggregator 1inch, noted that the upgrade introduces "smart account functionality" at deeper protocol levels and improves Ethereum's scalability through layer-2 solutions.

"It also paves the way for native gasless transactions and simplified user flows," Kunz added.

At Base Ethereum layer-2 DEX Alien.Base, lead developer 0xAw observed that EIP-7702 is a potentially excellent addition for Ethereum.

"It's an efficient way to get account abstraction on the protocol level without forcing users to switch wallets," 0xAw stated.

The developer highlighted the positives of adopting such a solution, including "getting rid of approval flows, not having to sign each transaction, segregated permissions and actions, and automations on behalf of the user."

Following the update, developers will have an easier time implementing the features, while users will have a better understanding of what they are signing, 0xAw noted.

While account attraction "won't magically result in mass adoption," it still "does remove a significant barrier to entry for new people," the developer added.

The update will also introduce changes to the way users interact with decentralized applications (DApps).

"There will be no more infinite ERC-20 approvals, and users won't need native currency like ETH to pay transaction gas fees," said Ivo Georgiev, founder and CEO of the self-custodial smart wallet Ambire.

However, the change is not without its downsides. According to 0xAw, it gives "users have one more dangerous thing they could sign, which would be even more damaging than an approval to wallet drainers."

"Drainers proved that users will sign 'harmless' messages in cloned DApps," explained Mike Tiutin, chief technology officer at the onchain compliance protocol PureFi. Now, the risk will get worse: users will be able to easily clone DApps and add malicious code to steal funds."

Georgiev remains optimistic, believing that there will not be a tangible increase in risk.

"By this point, the industry knows how to create a secure contract, especially with such a minimal scope as an EIP-7702 delegation," Georgiev noted.

Moreover, Pectra will bring about a change in the way users interact with validator deposits.

"This will make institutional staking much easier to integrate without taking too much risk," said Artemiy Parshakov, vice president of institutions at the Ethereum staking service P2P.org.

Parshakov's firm's clients had to obtain a signed message from their service provider to be able to exit and store it securely for later use.

Until Pectra, it was impossible for a staker to exit without the participation of the service provider. The messages also couldn't be generated until about 13 hours after starting staking, which will now be decreased to about 13 minutes.

Another notable upgrade is EIP-6110, which will make the execution-layer block carry data about new validator deposits to the consensus layer.

Validator deposits are new validators joining Ethereum's staking protocol. Until Pectra, consensus clients waited for block proposers to vote on a Merkle root that summarized deposits. Now, the execution-layer block includes (supplies) a list of new verifier deposits.

This change is very deep into Ethereum's consensus layer, and its introduction follows client bugs breaking the Holesky and Sepolia Ethereum test networks.

However, Parshakov noted that his firm's biggest concern are client bugs, which they trust will be prevented by the respective teams and the Ethereum Foundation.