On Monday evening, Ethereum’s network saw a major boost in its transaction-handling capacity following the first gas limit increase since 2021, signaling a key milestone in the post-Merge era.

The new gas limit now stands at nearly 32 million units, with the possibility of reaching 36 million units. This adjustment comes after the previous increase in 2021, when the gas limit was raised from 15 million to 30 million units. The change was automatically implemented after a majority of validators voted in favor, meaning there was no need for a hard fork.

Gas, in the Ethereum network, refers to the unit of computational work required to process operations such as transactions or smart contract executions. The gas cost is paid by users according to the computational load each action demands. The gas limit defines the total gas allowed within a block; if this limit is surpassed, transactions are either delayed or must compete for inclusion, based on the gas prices users are willing to offer.

Increasing the gas limit allows Ethereum to handle more transactions and more complex smart contracts within each block, enhancing overall throughput. This improvement reduces network congestion during high-demand periods, preventing users from migrating to more affordable networks like Solana.

The increased capacity could help raise demand for ETH, which has seen a dip in popularity over the last year. In fact, Ethereum recently fell to its lowest value against bitcoin (BTC) since March 2021, with one ether worth just 0.03 BTC in January, a significant decline from the previous year when bitcoin’s value surged.

Moreover, Ethereum’s anticipated Pectra upgrade is set to provide another capacity boost to layer-2 networks—blockchains built on top of Ethereum. This upgrade will double the blob target from 3 to 6, which will improve data storage efficiency in layer-2 networks. Currently, each Ethereum block accommodates 3 blobs, but with the upgrade, this will increase to 6, allowing for greater scalability.