The Fusaka Upgrade:
Scaling Meets Value Accrual

Key Insights

• The Fusaka upgrade introduces a more focused and strategically aligned roadmap for Ethereum.

• Ethereum's rollup-centric roadmap is evolving to support both Layer 1 and Layer 2 scaling with economic intent.

• Prioritization of Layer 1 scaling enhances direct value accrual to ETH holders.

• The upgrade reflects Ethereum's maturation toward a cash-flowing platform with growing pricing power across its product suite.

• There are signs of a potential shift in the Layer 2 landscape that could significantly increase the future revenue generation from this cohort.

• Investors should be mindful of the trade-offs associated with prioritizing value accrual and their potential impact on network adoption.

Ethereum’s Strategic Realignment

The Fusaka upgrade marks a pivotal moment in Ethereum’s evolution by introducing a roadmap shaped with clearly defined strategic priorities. This shift signals a maturation in Ethereum’s governance, moving from a fragmented decision-making model toward a more cohesive and focused protocol development process.

Ethereum’s development roadmap has historically reflected the diverse priorities of its broad base of stakeholders. This diversity, while a strength, has often led to upgrades that lacked a cohesive focus. However, that dynamic is changing with the Fusaka upgrade.

For the first time in Ethereum’s history, an upgrade is being shaped by a narrower, more unified set of strategic initiatives. This realignment reflects a growing consensus around scalability, usability, and—perhaps most importantly—value accrual.

Although value accrual is not explicitly listed as a core initiative, it is arguably the most widely shared goal across the Ethereum community. This shared incentive is the connective tissue between developers and investors and appears to be increasingly influencing protocol-level decisions. 

The Fidelity Digital Assets® Research team believes Ethereum’s pivot toward rational, cash-flow-oriented development may be its most compelling narrative. However, it does come with a set of trade-offs investors should monitor. 

Strategic Initiatives

Source: Fidelity Digital Assets® Research via https://protocol.ethereum.foundation/strategic-initiatives

Fusaka’s Strategic Alignment

The Fusaka upgrade demonstrates a concentrated effort to align Ethereum’s development with its newly defined strategic initiatives. To illustrate this, the Ethereum Improvement Proposals (EIPs) included in the upgrade have been categorized below according to how they align with key priorities.

Several of the EIPs span multiple buckets, but this only strengthens the case of a focused upgrade. From a high-level perspective, scaling Layer 1 appears to have taken precedence based on the total number of related changes, marking a significant shift in Ethereum’s roadmap prioritization.

Scaling Layer 2s is arguably the most involved change in this upgrade, highlighted by PeerDAS and EIP-7918: Blob Base Fee Bounded by Execution Cost.

Notably, almost every EIP in this upgrade has the potential to drive more revenue to token holders. The Fidelity Digital Assets Research team views this upgrade as one shaped by economic sustainability and investor relevance—both of which contribute to a positive investment outlook.

Value Accrual as an Emerging Theme

Ethereum’s strategic initiatives could evolve Ethereum into a platform capable of generating meaningful economic value for ether token holders.

Scaling Layer 1 stands out as the first of three core initiatives as it offers particularly accretive potential. Layer 1 transactions direct significantly more value to ETH investors than those on Layer 2, suggesting that increased Layer 1 activity could translate to greater value for token holders.

Fusaka signals a strategic shift in Ethereum’s rollup-centric roadmap: Developers are now prioritizing both Layer 1 and Layer 2 scaling, with a focus on long-term revenue generation.

The following EIPs are central to this Layer 1 value thesis:

These changes collectively enhance Ethereum’s most valuable product: Layer 1 block space. By increasing throughput and improving predictability, they lay the groundwork for more consistent and scalable value capture.

Rollup-Centric Roadmap: The Inflection Point

The Fusaka upgrade marks a critical inflection point in Ethereum’s rollup-centric roadmap, particularly in how the protocol approaches data availability and Layer 2 economics. While Ethereum has long emphasized rollups as its scaling solution of choice, Fusaka introduces meaningful changes that more directly tie Layer 2 usage to the ether token.

Historically, data availability was essentially a subsidized product. The fees generated from Layer 2 platforms came mostly from the Layer 1 transaction that Layer 2s submit along with their blob data.

The fees generated directly from the blob data were solely based on the supply and demand of blobs. Therefore, as developers increased the supply of blobs, the fees from this product went to zero and often stayed there for prolonged periods of time. Additionally, Layer 2 platforms have implemented strategies designed to take advantage of this isolated market to keep blob fees as low as possible.¹

EIP-7918 introduces a reserve (floor) price for blob gas fees. It is designed to prevent blob underpricing during periods of low demand. While the core rationale for this change is based on optimizing the blob fee market from a technical lens, it also results in stronger economic ties between Layer 2 usage and fee revenue from blobs.

EIP-7918 is a direct attempt at displaying pricing power in the data availability (DA) market and will potentially prove to be a clear inflection point in Ethereum’s rollup-centric roadmap.

Our analysis evaluates the potential fee revenue impact of EIP-7918 by comparing historical blob fee revenue to a conservatively adjusted model that enforces a minimum fee based on Layer 1 gas costs. It estimates the additional revenue token holders might have earned (estimated revenue delta) had this mechanism been active since blobs were introduced in the Deneb-Cancun upgrade.

Spikes in the estimated revenue delta highlight times when the adjusted blob price would have been higher than the observed blob price either due to Layer 1 fees being elevated or, more commonly, the blob base fee being at or near zero.

As of October 28, 2025, our analysis shows that on 93% of the days since 2024’s Deneb-Cancun upgrade, the adjusted fee would have exceeded the observed fee. This would have generated an estimated additional $78,646,739 (24,641 ETH) in cumulative revenue. This sums includes $9,793,737 (3,037 ETH) since the Prague-Electra upgrade on May 7, 2025. These findings highlight the economic significance of EIP-7918 and its potential to enhance fee stability and network sustainability.

Peer-to-Peer Data Availability Sampling (PeerDAS)

PeerDAS significantly increases the number of blobs Ethereum can support by splitting blob data up across many nodes and collectively verifying its availability. Currently, each node must download all blob data and verify it themselves. This upgrade aims to democratize the validation effort, lowering the total amount of data each node is responsible for.

By combining node resources for a single task, developers can optimize the amount of data each node processes without compromising the quality or security of the product. Therefore, a 10x increase in blob supply over the next year is considered feasible.² Developers have agreed to implement increases to 10 and 14 blobs per block within a month after the upgrade but have not confirmed any additional increases.

Pairing further increases in blob supply with the blob fee floor showcased earlier transforms blobs from a subsidized utility into a potentially scalable revenue stream for all ether token holders.

The table above illustrates this scenario. The combination of the blob fee adjustment and the increase in blobs per block highlights the significant potential revenue impact of these two EIPs. All values are annualized revenue estimates in U.S. dollars.

The “Annual Observed” column uses historical blob fees (either average or median), while the “Annual Adjusted” column applies the adjusted blob fees from our earlier analysis, assuming EIP-7918 has been implemented across various blob supply scenarios. The USD conversion uses an ether price of $3,984 (as of October 28, 2025).

Notably, when using median observed blob fees, annual revenue remains zero regardless of blob count. This highlights why these two EIPs are so complementary: They not only stabilize blob-based revenue but also enable it to scale meaningfully with increased blob throughput.

The trade-off investors must be mindful of is that this additional revenue for ether investors comes from the margins of Layer 2 platforms and/or their users. While this may deter some new Layer 2 launches, it also signals that Ethereum’s DA product (blobs) could be maturing into a monetizable asset.

As Ethereum blobs become more costly, increased DA competition may emerge. Based on the Fidelity Digital Assets Research team’s analysis of EIP-7918, we have calculated the additional cost to Layer 2s on a per blob basis: 

$78,646,738 (additional estimated revenue) / 13,057,849 (number of blobs since Deneb-Cancun) = ~$6.02 additional cost per blob.

Assuming this additional cost, Base (the most active Layer 2 platform) would be estimated to incur about $30.6 million in additional fees paid to ether holders over the course of the year assuming a submission rate of 580 blobs/hour and the above additional cost per blob estimate.³ For reference, Base paid a total of $5.2 million in blob fees over the past year while making roughly $94 million in revenue from user transaction fees.⁴

This analysis shows that the trade-off between value accrual and scaling is non-trivial and raises the core question:

Does Ethereum have the liquidity and network effects to overcome the additional costs put on Layer 2 platforms and their users, or are they increasingly being driven to a more cost-effective DA option?

The Fidelity Digital Assets Research team believes it is clear that Ethereum’s liquidity and network effects offer some value to Layer 2 platforms. However, it is possible this additional cost may hamper newer Layer 2 platforms at the margins or more specifically, force them to increase the costs to their users.

Layer 2 Evolution and the Rise of Based Rollups

Beyond the headline upgrades to the Layer 1 and data availability, Fusaka introduces several enhancements that could result in greater demand and higher value accrual over a longer time frame should these changes have a lasting impact. Specifically, these changes could improve mobile UX and lead to a shift toward based rollups using preconfirmation mechanisms.

Based Rollups: A New Value Accrual Model

EIP-7917 introduces deterministic proposer lookahead, allowing validators and users to know which validator is proposing which block ahead of time. This change supports a larger narrative that allows based rollups to use preconfirmations with guaranteed outcomes. 

Based rollups are a type of Layer 2 blockchain whose transactions are organized (sequenced) by Ethereum validators. Preconfirmations are commitments made by Ethereum validators to Layer 2 users. This commitment guarantees the inclusion of the Layer 2 users’ transactions within blocks sequenced by Ethereum validators supporting preconfirmations. 

The combination of based rollups and preconfirmations removes the need for single sequencers and allows Layer 2s to inherit Ethereum’s decentralization and censorship resistance. This presents a stark difference from today’s landscape in which mostly Layer 2s utilize single sequencers and rely on additional mechanisms to handcuff the sequencer from malicious activity.

From the perspective of an institutional investor, based rollups offer several advantages:

1. MEV and Preconfirmation Tips to Ethereum Validators: Based rollups rely on Ethereum validators for block processing and transaction ordering therefore driving value associated with these markets to the Layer 1 as opposed to being captured at the Layer 2 sequencing level.

2. Greater Data Usage: Based rollups require more metadata than single sequenced Layer 2s, increasing blob consumption and associated revenue.

3. Improved Security and UX: Users benefit from faster confirmations (on par with existing single sequencers) and stronger censorship resistance guarantees, potentially driving increased adoption.

As the prominent based rollup team Taiko Labs noted, “You no longer have to choose between decentralization and usability. Preconfirmations let you have both.”⁵

It appears unlikely that all existing rollups will switch over to a based model. However, if users demonstrate a clear preference toward based rollups using preconfirmations, it could usher in a new wave of scaling solutions that drive more value directly to the ether token as well as higher yields to stakers. 

While still early, the success of based rollups could materially shift the economics of Ethereum’s Layer 2 ecosystem. If adoption grows, ether token holders stand to benefit from increased transaction volume and blob fees while staking yields also increase by assuming the role of sequencing Layer 2 transactions.

This design aligns with Ethereum’s long-term goal of decentralizing Layer 2 infrastructure while monetizing its core services. For investors, it introduces a new path to value accrual that complements the narrative around scaling the Layer 1.

What Investors Should Evaluate

The Fusaka upgrade marks a strategic and economic turning point for Ethereum. For investors, it signals that Ethereum is evolving into a platform with monetizable infrastructure, pricing power, and a roadmap aligned with long-term value creation.

Key Investor Themes

Layer 1 Scaling is the Most Direct Path to Value Accrual

Fusaka prioritizes Ethereum’s most accretive product: Layer 1 block space. Improvements to throughput, gas efficiency, and execution capacity directly enhance Ethereum’s usage and burn.

Data Availability Monetization

EIP-7918 introduces a blob fee floor, establishing pricing power in Ethereum’s DA layer. Combined with PeerDAS, this could turn blobs into a scalable revenue stream, especially as blob supply grows and Layer 2s continue to rely on Ethereum as its foundation for security and liquidity.

Layer 2 Economics Are Shifting

Higher blob costs may compress Layer 2 margins or increase Layer 2 user costs but may also reinforce Ethereum’s dominance as the DA provider of choice. Based rollups and preconfirmations could further shift transaction processing to Ethereum validators, increasing staking yields and value accrual to all token holders.

UX Improvements Support Adoption

EIPs -7951 and -7917 improve Ethereum’s integration with mobile infrastructure and enable more responsive Layer 2 experiences, potentially driving broader adoption and more on-chain activity.

From Speculation to Fundamentals

Fusaka reframes Ethereum’s roadmap around sustainable value accrual. For investors, this opens the door to valuation models rooted in usage, revenue, and protocol-level economics.

Conclusion

The Fusaka upgrade shows that the protocol is optimizing its products, asserting pricing power, and aligning incentives across stakeholders. For investors, this is arguably the most compelling upgrade in years and potentially the beginning of a new era for ETH as a cash-flowing, economically sustainable asset.

To learn more about how this upgrade may impact your investing strategy, get in touch with our team.