For the First Time in Over Three Years, Ethereum Raises Gas Limits, Strengthening ETH’s Appeal.

Ethereum’s ability to handle more transactions was further enhanced on Monday after validators approved the first gas limit increase since 2021, marking a key development in the network’s post-Merge era.

The new gas limit was set to nearly 32 million gas units, with the potential to reach 36 million units. This follows the last significant increase in 2021, when the limit moved from 15 million to 30 million gas units. The adjustment was automatically triggered after more than half of the network’s validators supported the change, meaning no hard fork was required.

On the Ethereum network, gas is the measurement of the computational work necessary for executing transactions or smart contract operations. Every transaction has a gas cost, which users pay based on the computational effort required. The gas limit defines the total gas that can be used in a block, and if this limit is exceeded, transactions are either delayed to the next block or compete for inclusion based on the gas prices offered.

The increased gas limit allows Ethereum to process more transactions or execute more complex operations within each block, improving network throughput. This, in turn, facilitates the development of more sophisticated decentralized finance (DeFi) applications with reduced downtime. The higher gas limits also alleviate network congestion during peak periods, preventing users from seeking cheaper alternatives like Solana.

This increase in capacity could help support demand for ETH, which has seen a decrease in investor interest over the past year. In fact, Ethereum recently fell to its lowest level against bitcoin (BTC) since March 2021, with one ether worth just 0.03 BTC in January—about 50% lower than the previous year when bitcoin experienced a surge.

Additionally, Ethereum’s upcoming Pectra upgrade is expected to significantly boost the capacity of layer-2 networks—blockchains that operate on top of Ethereum. The upgrade will increase the “blob” target from 3 to 6, allowing for more efficient storage of data in layer-2 networks. As of Tuesday, each Ethereum block contained 3 blobs, but after the upgrade, the number will be doubled, increasing overall capacity.