Fusaka Upgrade Strengthens Ethereum as Settlement Layer by Raising Blob Fee Floor and Capacity
Bitwise Asset Management says Ethereum’s Fusaka upgrade, scheduled to go live imminently, is a structurally important but underappreciated improvement that strengthens Ethereum’s role as the on-chain settlement layer for finance. Fusaka raises the layer-1 gas limit to 60 million per block (boosting throughput and roughly doubling capacity within a year), and implements PeerDAS to reduce validator data verification burden and preserve node efficiency as rollups scale. Critically, Fusaka introduces EIP-7918: a minimum blob base fee tied to execution fees (approximately execution base fee / 16). That change prevents blob fees falling near zero in quiet periods, stabilizing ETH burn and improving value capture from layer-2 activity—important as stablecoins, DeFi and tokenization migrate to rollups. Bitwise warns upgrades do not always produce sustained ETH price rallies and can see sell-the-news reactions, but argues Fusaka reinforces Ethereum’s institutional appeal and long-term settlement utility. Key implications for traders include potential reduction in fee volatility, a steadier ETH burn trajectory, and clearer long-term value accrual from rollup demand.
Bullish
Fusaka strengthens Ethereum’s fundamentals in ways that matter for value capture and long-term demand. The minimum blob fee (EIP-7918) reduces the chance of zero-fee periods that previously weakened ETH burn dynamics after Dencun introduced blobs; a steadier burn supports supply-side scarcity under continued rollup activity. Raising the gas limit and adding PeerDAS materially improves throughput and validator efficiency, lowering the risk that rollup growth will push node requirements too high—this preserves decentralization and institutional confidence. Historically, protocol upgrades often produce muted or short-lived price moves (and can trigger sell-the-news), so near-term impact may be mixed. However, structurally the upgrade is positive: it should reduce fee volatility, create more predictable ETH burn/revenue streams, and make Ethereum more attractive as a settlement layer for stablecoins, DeFi and tokenized assets. For traders: expect possible short-term volatility around activation (including buy-the-news/sell-the-news swings), but a constructive medium-to-long-term outlook for ETH driven by improved on-chain economics and rollup demand.