Why does JPMorgan question the prosperity after Ethereum's Fusaka upgrade? Sustainability faces a triple test

JPMorgan analysts recently pointed out in a report that although the Fusaka upgrade of Ethereum significantly boosted network activity in the short term, this growth trend may be difficult to sustain in the long run. They believe that historically, multiple Ethereum upgrades have failed to sustainably increase mainnet usage, and the current surge in activity is more of a temporary phenomenon.

Upgrade Effect

The Fusaka upgrade was launched on the Ethereum mainnet on December 3, 2025, marking another important milestone following the Dencun upgrade which introduced EIP-4844. This upgrade increased the maximum data capacity per block from 15 blobs to 21, directly leading to a significant reduction in transaction fees.

After the fee reduction, active addresses and transaction volume on the Ethereum network surged, demonstrating the immediate impact of the upgrade on user behavior. This phenomenon sharply contrasts with the long-standing high Gas fee issues Ethereum faced before the upgrade. Prior to 2026, Ethereum’s limited block space kept fees high, with simple transactions often costing $50 or more during congestion periods.

Technological Innovation

The core technological highlight of the Fusaka upgrade is the introduction of PeerDAS (Peer-to-Peer Data Availability Sampling). This innovation allows nodes to perform sampling verification on only part of the data, without needing to fully download and store all blob data in the block, greatly reducing node operating costs and enhancing network scalability.

The upgrade also plans phased expansion of blob capacity: from about 6/9 to approximately 10/15 on December 17, 2025, and further to about 14/21 on January 7, 2026. For Layer-2 networks, this means being able to store more data at lower costs, significantly reducing transaction fees for users on Rollup networks.

Skeptical Voices

JPMorgan analyst Nikolaos Panigirtzoglou and his team expressed doubts about the sustainability of this activity growth. They believe that historical data shows that Ethereum’s continuous upgrades have not substantially or sustainably increased network activity, and the underlying reasons still exist.

Analysts specifically pointed out that ongoing on-chain activity migrating to Layer-2 networks like Base and Arbitrum is a major pressure source. Data from Gate shows that Ethereum L2 fee revenue is highly concentrated on a few networks. Competitive chains like Solana divert users with lower costs and faster speeds, and the cooling off of speculative activities such as ICOs, NFTs, and Meme coins also weaken the activity on the Ethereum mainnet.

Structural Shift

Ethereum is undergoing a fundamental structural transformation, with Layer-2 networks becoming the execution layer for most retail user activities. This architectural shift now determines how Ethereum scales, how users interact with the network, and how value is attributed to ETH in 2026.

The role of Ethereum Layer-1 is becoming more specialized, mainly responsible for final settlement of Layer-2 aggregations, validator staking and network consensus, security assurance of the entire aggregation ecosystem, and issuance and settlement of tokenized real-world assets.

Currently, Base dominates Ethereum L2 fee revenue, with daily fees approaching $147,000, accounting for nearly 70% of that day’s total Layer 2 fees. Arbitrum and Starknet are the only other Ethereum L2 networks with significant fee activity.

Market Performance

According to Gate market data, as of January 23, 2026, the price of Ethereum(ETH) is $2,960.35, a change of -2.09% in the past 24 hours, and -10.59% over the past 7 days. Its 24-hour trading volume is $431.24M, market capitalization is $357.57B, and market share is 11.26%.

Historical data shows Ethereum’s all-time high price at $4,946.05 and its all-time low at $0.4329. The current circulating supply is 120.69M ETH, with the same total supply, and an infinite maximum supply.

Notably, Ethereum’s average price in 2026 is projected at $2,960.67, with potential fluctuations between a low of $1,865.22 and a high of $4,381.79. By 2031, Ethereum(ETH) could be valued at $5,319.74.

Future Path

Ethereum’s roadmap for 2026 revolves around two main tracks: first, leveraging the Fusaka upgrade and blobs to increase rollup data capacity; second, raising the base layer gas limit to boost execution throughput. The execution path depends on validators shifting from full re-execution of blocks to verifying ZK proofs, supported by proposals like PeerDAS, ePBS, BALs, and broader gas price re-tuning.

As upgrades like Glamsterdam and Hegota advance in 2026, the roadmap also introduces new activities and decentralization risks related to the proof market, bandwidth limits, and validator operations. The Ethereum Foundation’s “Real-Time Proof” roadmap proposes a phased approach, initially running ZK clients in production with a subset of validators.

Only once the vast majority of staked assets are comfortable with this architecture can the gas limit be raised enough to make proof verification on standard hardware replace full re-execution as the standard validation method.

When asked about Ethereum’s future, JPMorgan analysts look beyond the short-term activity peak brought by Fusaka and focus on Ethereum’s more fundamental transformation. They see a network shifting from an “execution chain” to a “settlement layer,” with value capture moving from transaction fees to staking yields and settlement demands. Ethereum’s price hovers around $2,960, with a market cap still firmly at $3575.7B, but daily transaction flows exceeding $431.24M suggest the market is still searching for direction.