Ethereum's Fusaka Upgrade Poised to Be a Game-Changer, Analyst Predicts

As Ethereum prepares for its upcoming Fusaka upgrade on December 3, a well-known analyst has ignited a fresh discussion about its potential impact. According to crypto expert Kira Sama, this upgrade might be the most advantageous event for Ethereum (ETH) as it could lead to Layer-2 networks becoming substantial ETH burners.

Key Takeaways

Ethereum's Fusaka upgrade on December 3 is expected to significantly impact the asset's economics.
The proposed EIP-7918 will connect Layer-2 fees more closely to mainnet costs, potentially increasing ETH burning.
Current and planned corporate L2 solutions could lead to substantial ETH burns, reducing ETH inflation.
The Fusaka upgrade is being compared to the previous upgrade that introduced ETH burning, signaling potential market movements.

Ethereum price news

In a recent post on X, Kira described the Fusaka upgrade as a critical change in Ethereum's fee structure, primarily driven by the implementation of EIP-7918. "Price-wise, the Ethereum Fusaka upgrade on December 3 will be the most bullish upgrade for ETH ever. One key reason: 'EIP 7918,'" Kira noted, highlighting this proposal as a significant catalyst for ETH burn.

Enhanced Burning of ETH via Layer-2 Technology

Kira's insights focus on Ethereum's current approach to Layer-2 (L2) solutions. Since the rollup-focused roadmap began, Ethereum's mainnet has effectively subsidized L2 data accessibility. In Kira's words, "for a long time, ETH L1 charged zero base fees to L2s, while L2 deployers made millions of profits. So L2s haven’t burnt any meaningful ETH." This subsidy has led to rapid L2 growth but has also constrained the extent to which L2 usage translates into ETH burn.

EIP-7918 aims to change this situation by linking L2 data costs more closely to the gas prices on the main network. Kira explained, "L2 fees will be bounded by the execution cost, which will help achieve L2 fees price discovery more quickly. It also helps maintain fees during spikes, preventing L2 users from facing extreme transaction fees. It's a win-win." Essentially, this means that rollups must adhere to a minimum fee structure enforced by the protocol when they post their transaction batches to Ethereum.

For ETH holders, the significance of these fees is that they are paid in ETH, with a portion intentionally burned under the EIP-1559 framework. Kira predicts that as L2 transaction volumes increase, this will play a crucial role in ETH burn dynamics: "They will just pay their fair share to Ethereum L1 and burn meaningful ETH. Initially slow and steady, this will ultimately lead to the burning of millions of dollars worth of ETH over the long term, with L2s being the main force behind making ETH deflationary."

The discussion intensifies when Kira considers corporate and institutional rollups. He mentions several current and upcoming L2 solutions and asserts that "Coinbase’s base will burn ETH, Robinhood’s L2 will burn ETH, OpenAI’s Worldchain will burn ETH, Sony’s Soneium will burn ETH, Alibaba’s Jovay will burn ETH, UAE’s ADI chain will burn ETH, Kraken’s Ink will burn ETH, Lighter will burn ETH, Deutsche Bank’s Memento chain will burn ETH, Arbitrum will burn ETH, and so on." He believes these corporations will increasingly contribute to ETH burning.

Kira extends this idea further, suggesting an overarching, optimistic outlook: "Every company in the world will launch their own Layer-2. Every alternative Layer-1 will transition to L2 and begin burning ETH. As a result, ETH inflation will decrease." Although such sweeping claims exceed what the upgrade guarantees, they encapsulate the essence of the bullish narrative: if sufficient economic activities shift onto L2s secured by Ethereum that will incur non-negligible base fees, Ethereum will become the foundational settlement and value-capture layer supporting corporate and institutional chains.

Kira explicitly likens the Fusaka upgrade to the London hard fork, which introduced EIP-1559 in 2021. "When Ethereum implemented the burn mechanism through EIP-1559, it boosted the entire market," he remarked. "This time, everyone will be caught off-guard again. L2s burning ETH are on the way. Bullish ETH. Bullish L2s." As we approach December 3, Kira is adamant about his sentiment: "Tick-tock, the ticker is ETH."

As of now, ETH is trading at $3,022.

Ethereum price Ether's performance against the 100-week EMA, 1-week chart | Source: ETHUSDT on TradingView.com