Ethereum Fusaka Upgrade Explained: What It Means For Layer 2s, DeFi And Bitcoin Holders

Introduction

Ethereum’s Fusaka upgrade has now gone live on mainnet without drama, activating a bundle of 13 EIPs that focus on one thing above all… scaling data and execution so Layer 2s can grow without breaking the network.

Around the upgrade window ETH pushed back above three thousand dollars with a strong move from the prior local lows, major altcoins rallied, and early reports from infrastructure providers show Layer 2 data costs already starting to fall. The ETH BTC pair, which had been sliding for roughly three months, is trying to reverse that trend as traders re-price Ethereum’s scaling path.

This guide explains what Fusaka actually changes, why it matters for Layer 2 fees and DeFi liquidity, how it feeds into ETH staking and burns, and what Bitcoin holders should take from the latest ETH BTC rotation.

What Is The Ethereum Fusaka Upgrade?

Fusaka is Ethereum’s December 2025 mainnet hard fork, combining an execution layer upgrade nicknamed Osaka with a consensus layer upgrade known as Fulu. It is the second major network upgrade of the year after Pectra and sits squarely in the “Surge” phase of the roadmap… the part focused on rollup scaling and data availability.

In broad terms, Fusaka:

• Adds Peer Data Availability Sampling (PeerDAS) so nodes no longer need to download all rollup data.
• Raises the block gas limit and caps gas per transaction to improve throughput without risking denial of service.
• Introduces Blob Parameter Only (BPO) forks so blob capacity can be raised more frequently between big upgrades.
• Tightens the fee link between Layer 2 blob usage and ETH, supporting a more robust burn mechanism.
• Improves user and developer experience with features like native secp256r1 passkey support and new EVM opcodes.

For a normal investor, the important takeaway is simple… Fusaka is an infrastructure upgrade that makes it easier and cheaper for Layer 2s to settle on Ethereum, without forcing node operators into extreme hardware.

The Five Biggest Practical Changes In Fusaka

1. PeerDAS: Bigger Data Without Crushing Nodes

PeerDAS (EIP-7594) changes how Ethereum handles rollup blob data. Instead of every full node downloading the entire payload, rollup data is split and encoded so validators only need to sample small, random fragments while still guaranteeing that the full data is available.

That means:

• Much lower bandwidth and storage per node.
• Room to raise blob limits over time without centralising hardware.
• A realistic path to something like an eight-fold increase in blob capacity as the roadmap progresses.

In practice, this is the core scaling step that lets Ethereum carry far more Layer 2 traffic without sacrificing decentralisation.

2. Block Gas Limit Raised To 60 Million With A Per-Transaction Cap

Fusaka raises Ethereum’s default block gas limit to 60 million units, up from previous lower levels, increasing the amount of computation that can fit in each block. At the same time, a new gas cap prevents any single transaction from consuming more than around 16.7 million gas.

This combination:

• Increases throughput for ordinary transactions and complex DeFi operations.
• Stops one heavy transaction from clogging an entire block.
• Lays groundwork for future parallel execution work, which relies on predictable per-transaction footprints.

For users, it translates into more room for activity on mainnet and a better buffer against sudden congestion spikes.

3. Blob Parameter Only Forks: Scheduled Capacity Increases

Blob Parameter Only (BPO) forks are a new mechanism that allow Ethereum to raise blob targets and limits with small, focused upgrades between major hard forks.

Two BPO forks are already lined up after Fusaka, each incrementally increasing the number of blobs per block that rollups can use. Instead of waiting many months for a full hard fork just to add capacity, the network can now adjust blob parameters more frequently based on actual Layer 2 demand.

For Layer 2 users this means a clearer, more continuous scaling path rather than a step function.

4. UX And Developer Quality Of Life

Fusaka also introduces several protocol changes that improve wallets and on-chain computation:

• A secp256r1 precompile allows smart contracts to verify signatures on the same curve used by most phones, laptops and FIDO devices. This is the cryptographic foundation for passkey-style wallets that use secure enclaves instead of seed phrases.
• Revised pricing and limits for the modular exponentiation (ModExp) precompile make heavy cryptographic operations cheaper and safer, which is especially important for zero knowledge rollups and proof systems.
• A new CLZ (count leading zeros) opcode gives developers a more efficient primitive for a range of bitwise and math operations.

These are not features a casual user will notice directly, but they make it easier for wallet builders and DeFi protocols to offer smoother experiences on top of Ethereum.

5. Stronger Link Between Blob Activity And ETH Burns

Several fee updates in Fusaka adjust how blob base fees behave and how they interact with the broader fee market. In essence, the changes:

• Keep blob fees economically meaningful even as capacity rises, rather than letting prices collapse close to zero.
• Make it easier for high Layer 2 usage to translate into sustained fee income and EIP-1559 burns at the L1 level.

If rollup activity continues to grow, this tighter link can push more ETH into the burn mechanism during busy periods, supporting the longer term “ultra-sound money” thesis without relying purely on mainnet DeFi.

How Fusaka Changes Layer 2 Costs And DeFi Liquidity

Rollups now carry the majority of Ethereum’s transaction count and a significant share of fee revenue, but they are constrained by how much data they can post back to mainnet and what it costs.

Fusaka directly targets that bottleneck:

• PeerDAS reduces the data burden per node, allowing blob limits to increase.
• BPO forks schedule further increases in blob targets and maxima.
• Gas and block size limits are tuned so rollup batches can be larger without risking denial of service.

Early reports from research desks and infrastructure providers suggest that, as the new blob parameters roll out, Layer 2 data costs can fall markedly compared with pre-upgrade levels, with some networks already quoting sub-cent transaction fees for simple operations.

For DeFi this matters in several ways:

• Moving collateral, rebalancing positions and rolling over debt becomes cheaper on rollups.
• Complex strategies that rely on frequent state updates can run with less fee friction.
• Smaller users are less likely to be priced out during busy periods, which supports deeper, more stable liquidity.

In simple terms, Fusaka removes a real capacity constraint that was beginning to push DeFi and application developers to look beyond Ethereum for cheaper data.

Staking, Fee Burns And Why Fusaka Matters For ETH Holders

Fusaka does not alter the basic proof of stake issuance schedule, but it sharpens how on-chain activity feeds into ETH economics.

Three points are worth highlighting.

1. More Room For Fee-Driven Burns

By making it easier and cheaper for rollups to post more data back to mainnet, Fusaka is designed to increase the amount of economically meaningful fee flow through Ethereum when demand is high. More rollup batches and more mainnet execution translate into more base fees and, through EIP-1559, more ETH burned.

Over time, if Layer 2 and DeFi usage keep growing, this can make periods of net ETH deflation more common without raising inflation risk for node operators.

2. More Durable Demand From Apps And Layer 2s

Cheaper and more predictable Layer 2 data costs make it easier for long-lived applications to commit to Ethereum as their settlement layer. That stability:

• Encourages DeFi protocols and consumer apps to anchor themselves to Ethereum rather than to alternative data availability networks.
• Deepens the connection between ETH and the broader ecosystem, since rollup usage directly generates fees and potential burns on mainnet.

For holders this is less about short term price targets and more about the credibility of ETH as the asset that secures and monetises the network over many years.

3. Staking And Validator Economics

For validators and stakers, Fusaka rebalances where rewards come from rather than driving a dramatic headline change in yield:

• Higher capacity and more efficient data handling should, over time, increase the share of rewards that come from priority fees and blob-related income. Finbold
• PeerDAS helps keep node requirements within reach of smaller operators, which supports decentralisation and reduces the risk that only large, professional entities can participate. Bitget+1

In other words, the upgrade is designed so that more of the network’s economic upside comes from genuine usage rather than from higher issuance.

ETH BTC Rotation And What It Means For Bitcoin Holders

In the weeks before Fusaka, ETH BTC drifted lower as Bitcoin outperformed and Ethereum lagged. Into and after the upgrade, ETH has begun to outperform, with the ratio stepping off its recent lows and attempting to break a three month downtrend. Analysts and commentary have tied that move to renewed confidence in Ethereum’s execution roadmap and cheaper Layer 2 blockspace.

For Bitcoin focused investors, this rotation can be viewed calmly:

• As a relative value trade… a period where Ethereum-centric activity, DeFi and Layer 2 growth may justify ETH outperformance even if both assets sit in the same macro environment.
• As a risk appetite signal… stronger ETH BTC often coincides with more interest in higher beta assets, from DeFi blue chips to smaller altcoins.

None of this alters Bitcoin’s long term role as a monetary asset. It does, however, suggest that for a time the growth narrative sits more heavily on the Ethereum side of the board, while Bitcoin continues to anchor the wider market.

What Normal Investors Should Actually Do

For most investors already holding ETH, using Layer 2s or staking via DeFi, Fusaka is a moment to review positioning rather than a reason for dramatic action.

If you actively use Layer 2s

• Watch how fees and confirmation times evolve on your preferred rollups over the next few weeks. If they persistently fall and stay smoother, it may make sense to do more of your DeFi activity there.
• Keep security discipline high. Lower fees do not remove smart contract risk, bridge risk or key management risk.

If you stake ETH

• Review whether your chosen staking route still matches your risk tolerance… solo staking, pooled staking, liquid staking and restaking products all sit in different places on the risk spectrum.
• Remember that long term network usage and burn dynamics can matter more than small changes in headline staking yield.

If you mainly hold Bitcoin

• Treat Fusaka as an ecosystem upgrade rather than a threat. It increases the chances that Ethereum can support a large wave of DeFi, consumer and Layer 2 applications without clogging.
• Use ETH BTC as one rotation gauge among many, not as a verdict on Bitcoin itself.

In all cases, keeping allocations and risk at levels you can live with through volatility matters more than trying to time every move around an upgrade.

Mini FAQs

Does Fusaka create a new Ethereum token or a separate chain?
No. Fusaka is an in-place upgrade of the existing Ethereum mainnet. All balances, contracts and assets continue on the same chain; node operators simply upgrade their clients to follow the new rules.

Will Layer 2 fees really stay near zero after Fusaka?
Some rollups have already reported very low effective transaction costs following the upgrade, and the capacity changes make low fees possible at scale. However, fees will always respond to demand… if activity spikes sharply, costs can still rise, though from a lower base than before.

Is Fusaka Ethereum’s biggest moment since the Merge?
Fusaka is the most important scaling upgrade since Dencun introduced blob space, and some analysts do see it as a major milestone in the rollup-centric roadmap. Whether it is “bigger” than the Merge depends on perspective… the Merge transformed consensus, while Fusaka transforms how data and execution scale. Both are foundational in different ways.

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Legal & Risk Notice

This article is for educational information only and does not constitute investment, trading, legal or tax advice. Bitcoin, Ethereum and other digital assets are volatile and high risk. Always do your own research, consider your personal circumstances, and, where appropriate, consult a qualified professional before making financial decisions or using any exchange, wallet or platform.