Ethereum Increases Gas Limit Above 30 Million: Will It Affect ETH Price In 2025?

Ethereum has raised its network gas limit beyond 30 million for the first time since shifting to the proof-of-stake consensus model. 

The update was activated after over 50% of validators signaled their support, meeting the required threshold for the change.

Ethereum saw one of the biggest liquidations on the market on 3 February after Donald Trump announced tariffs on Canada, Mexico, and China. However, after the gas price increase, the ETH price has recovered slightly, regaining 10% in the past 24 hours.

What is the Ethereum gas limit?

The Ethereum gas limit is like a fuel tank for the Ethereum network.

When you send a transaction or run a smart contract on Ethereum, it needs ‘gas’ to power it — just like a car needs fuel to run. Gas is a unit that measures how much computing work is needed to process your request.

Now, the gas limit is the maximum amount of gas that can be used in a single block of transactions. Think of it like a bus that can carry only a certain number of passengers at once. The higher the gas limit, the more transactions the network can handle in each block.

So, when Ethereum increases the gas limit, it’s like upgrading the bus to carry more passengers. This helps the network process more transactions at the same time, making it faster and more efficient.

The first increase in over four years

Today’s adjustment boosts Ethereum’s transaction capacity without the need for a hard fork. The gas limit, which defines the total computational effort allowed per block, has now surpassed 31 million units. Validators’ consensus directly triggered the change, showcasing the flexibility of Ethereum’s proof-of-stake system.

Previously, the gas limit was last modified in 2021 when it doubled from 15 million to 30 million units under the proof-of-work model. Now, under proof-of-stake, this marks the first successful adjustment, reflecting the network’s evolving scalability strategy.

Gas measures the computational resources required to process transactions and execute smart contracts. The gas limit sets the upper boundary for the total gas that can be used in a single block, directly impacting network throughput.

Data from gaslimit.pics shows the average gas limit over the past 24 hours at 31.5 million units, with projections suggesting it could rise to a maximum of 36 million units soon. This increase complements recent scalability enhancements from the Dencun upgrade and proto-dank sharding, aimed at further optimizing Ethereum’s performance.

How will the increased gas limit impact Ethereum price?

The increase in Ethereum’s gas limit could have both direct and indirect effects on its price, though it’s not guaranteed to cause an immediate impact. Here’s why:

1. Better network efficiency (positive influence)

• Faster transactions: A higher gas limit allows more transactions per block, reducing congestion during busy times.
• Potentially lower fees: With more space for transactions, competition for block space may decrease, which could lower transaction fees.

This can attract more users and developers to the Ethereum network, increasing demand for ETH since it’s needed to pay for gas. Higher demand often supports price growth.

2. Scalability boost (long-term positive signal)

• The adjustment shows Ethereum is continuously improving, making it more scalable without major overhauls (like hard forks).
• This can boost investor confidence, potentially attracting more long-term holders and institutions.

3. Network risks (possible concerns)

• Validator strain: Higher gas limits mean validators have to process more data per block, which could strain less powerful nodes, raising concerns about decentralization.
• Security trade-offs: Processing more transactions might slightly increase the risk of network instability if not managed well.

If the network handles the change smoothly, it’s a positive sign. But any issues could affect investor sentiment.

Bottom line

While it’s a strong technical improvement, Ethereum’s price is influenced by many factors like market trends, macroeconomics, and investor sentiment. The gas limit increase is a positive development for Ethereum’s growth, but it might not cause an immediate price spike. It’s more of a long-term benefit that strengthens the network’s foundation.