Ethereum remains the cornerstone of decentralized innovation, powering the majority of total value locked (TVL) in the blockchain ecosystem and inspiring developers worldwide. With the continued evolution of Ethereum 2.0 and the rapid advancement of Layer 2 (L2) solutions, the network is poised to shape the future of decentralized finance (DeFi), digital ownership, and global trustless systems.
In this inaugural episode of the Developer Stories series, we explore Ethereum’s technological trajectory through the insights of Justin Drake, a core researcher at the Ethereum Foundation, and Owen Zhang, Head of Web3 Products at OKX. Their perspectives illuminate key developments in consensus mechanisms, scalability, security, user experience, and long-term sustainability—offering a comprehensive view of Ethereum’s path forward.
Ethereum and Layer 2 Growth After the Cancun Upgrade
The Cancun upgrade marked a pivotal moment in Ethereum’s journey toward scalable and cost-efficient operations. By introducing proto-danksharding, the network significantly improved data availability for L2 rollups, directly reducing gas fees and increasing transaction throughput.
👉 Discover how Ethereum’s latest upgrades are transforming Web3 scalability.
Justin Drake highlights measurable progress: "Post-upgrade, we’ve seen a steady rise in Blob usage—from about 1 Blob per block in March to over 2.3 today. We’re on track to reach the target of 3 Blobs per block within weeks, allowing Blob fees to stabilize at a fair market rate."
This shift has empowered L2 networks to thrive. As Owen Zhang notes, while overall transaction volume hasn’t exploded, activity metrics tell a compelling story:
- Base saw a 560% increase in daily active users (DAUs) and 540% growth in daily transactions.
- Optimism and Arbitrum experienced 70% and 200% increases in transaction volume, respectively.
The trend is clear: users and assets are migrating to L2s where lower fees and faster execution enhance usability—especially for small-value transactions.
Ethereum Foundation’s Shrinking Role: A Win for Decentralization
The Ethereum Foundation (EF) has deliberately reduced its footprint in ecosystem development—a move that strengthens long-term decentralization.
Justin Drake outlines EF’s current responsibilities:
- Hosting developer conferences like Devcon
- Maintaining Geth, one of five execution clients
- Distributing millions in grants annually
- Facilitating core coordination calls (e.g., All Core Devs, MEV-boost)
- Advancing foundational research and roadmap planning
Crucially, EF now holds just 0.23% of the total ETH supply, with ongoing grant programs steadily decreasing this further. "A gradual reduction in EF-held ETH is healthy," Drake explains. "The goal is to approach 0% over decades—this ensures no single entity can influence protocol direction."
Owen Zhang agrees: "EF should transition into an advisory role. Ethereum’s ecosystem is robust enough to evolve organically through community-driven governance. This openness reflects the true spirit of blockchain—transparent, inclusive, and decentralized."
Frequently Asked Questions
Q: Why is a smaller EF reserve beneficial?
A: It prevents centralization of power and aligns with Ethereum’s ethos of community ownership and distributed control.
Q: Does EF still drive innovation?
A: Yes—through funding research and coordinating core development—but implementation is increasingly decentralized across independent teams.
Q: How do grants affect ETH reserves?
A: Unconditional grants to developers, researchers, and builders gradually reduce EF’s holdings, promoting broader distribution.
The Future of Ethereum DeFi and Mass Adoption
DeFi remains Ethereum’s strongest use case, but high fees have pushed activity to L2s. Despite this, DEXs still dominate TVL, though it's down from previous highs.
Drake envisions a 10x expansion in DeFi over the next five years, driven by:
- $1 trillion in stablecoins, many decentralized
- DEX volume surpassing CEXs
- Lending platforms (e.g., Aave, Compound) growing tenfold
- Mature derivatives markets with perpetuals, options, and futures
- Prediction markets like Polymarket gaining mainstream traction
👉 See how DeFi innovations are unlocking new financial frontiers.
Beyond DeFi, Drake advocates for decentralized frontends using ENS and IPFS, reducing reliance on centralized services. He also proposes a global decentralized lottery—fair, cheap, and verifiable via on-chain randomness.
Owen Zhang emphasizes usability: "High fees are Ethereum’s biggest DeFi hurdle. But advancements like EIP-4337 (Account Abstraction) will bridge Web2 and Web3 experiences." This upgrade allows wallets to support smart contract logic—enabling social recovery, gas payments in any token, and simplified login flows—making self-custody accessible to billions.
Ethereum 2.0: Global Adoption and Developer Appeal
Ethereum 2.0’s shift to Proof-of-Stake (PoS) has attracted global institutions and developers alike.
Key adoption indicators:
- Over 50,000 validator nodes worldwide
- Staked ETH valued in the hundreds of billions
- Enterprise adoption by firms like Microsoft, JPMorgan, and IBM for supply chain and financial applications
Developers benefit from faster deployments, lower costs, and enhanced tooling. However, challenges remain:
- High entry barriers for new users
- Steep learning curve around PoS, sharding, and rollups
- Competitive pressure from platforms like Solana
- Evolving regulatory landscapes
Still, Ethereum’s resilience, security, and vibrant ecosystem make it a top choice for long-term builders.
Frequently Asked Questions
Q: Is PoS less secure than PoW?
A: No—PoS introduces stronger economic disincentives for attacks and avoids geographic centralization seen in mining.
Q: Can small validators compete fairly?
A: Yes—future upgrades like Verkle trees and lower staking thresholds aim to level the playing field.
Q: How does sharding improve scalability?
A: Sharding splits the network into parallel chains (shards), increasing throughput while maintaining security via the beacon chain.
Key Technical Advances: Staking, Restaking & EIP-7702
Two major innovations define Ethereum 2.0’s technical edge:
- Staking & Restaking: PoS enables stakers to secure not just Ethereum but other protocols via restaking (e.g., EigenLayer). This turns ETH into a universal security layer.
- EIP-7702: Proposed by Vitalik Buterin, this upgrade allows externally owned accounts (EOAs) to temporarily become smart contract wallets—unlocking advanced features like batch transactions, social recovery, and flexible fee payment—all without changing wallet infrastructure.
These upgrades lower friction for Web2 users while expanding what’s possible for dApp developers.
Rollups: Strengths, Challenges, and the Path Forward
Rollups are central to Ethereum’s scaling strategy—but their rapid proliferation has led to fragmentation.
Advantages:
- High throughput and low gas costs
- Inherited security from Ethereum
- Full EVM compatibility
- Support for complex dApps
- Cheaper data post-Cancun
Challenges:
- Data availability requirements
- Withdrawal delays due to challenge periods
- Cross-rollup incompatibility
- Centralization risks from few sequencer operators
Owen notes: "The L2 landscape is overcrowded. We’ll see consolidation—only chains with strong liquidity and UX will survive." Solutions like chain abstraction aim to unify access across rollups through single-point entry wallets.
👉 Explore how chain abstraction is simplifying multi-Layer 2 navigation.
Security, Governance, Energy Efficiency & Privacy Outlook
Security:
While PoS reduces energy use by over 99%, concerns remain:
- Centralization risk from large staking pools (e.g., Lido)
- Potential collusion among validators
- Complexity introduced by sharding
Governance:
Post-PoS, governance is increasingly stake-weighted. Future upgrades will reflect staker interests more directly. As the ecosystem matures, formalized on-chain governance models may emerge.
Energy Efficiency:
Beyond PoS gains, transitioning from Merkle Patricia Trees to Verkle Trees will reduce node storage needs—further enhancing decentralization.
Privacy:
Zero-knowledge proofs (ZKPs) are key to future privacy. Research into quantum-resistant cryptography is also underway to future-proof Ethereum against emerging threats.
Long-Term Vision: Challenges Ahead and Ethereum’s Future
Over the next decade, Ethereum’s primary challenge will be seamless L1-L2 integration—eliminating friction in cross-chain interactions and reducing liquidity fragmentation.
In 30 years? "Ethereum should still matter," says Owen. "It’s built on one of the most decentralized, battle-tested foundations in crypto."
Keywords: Ethereum 2.0, Layer 2 scaling, Proof of Stake, DeFi growth, Rollup technology, Account Abstraction, Cancun upgrade, blockchain decentralization