Ethereum continues to stand as one of the most influential public blockchain networks, serving as a foundational layer for decentralized applications, smart contracts, and the broader Web3 ecosystem. As Ethereum 2.0 progresses through its roadmap—driven by core developers and supported by ecosystem innovators like OKX Web3—the network is undergoing transformative changes in scalability, security, and user experience.
This inaugural episode of the Developer Story series features an insightful dialogue between Justin Drake, a key researcher at the Ethereum Foundation (EF), and Owen, OKX Web3’s product lead. Together, they explore Ethereum’s evolution post-Cancun upgrade, the impact of Proof of Stake (PoS), Layer 2 (L2) advancements, DeFi growth, and the long-term trajectory of Ethereum’s adoption and technological innovation.
Ethereum’s Post-Cancun Upgrade: Boosting Throughput and Reducing Costs
The Cancun upgrade marked a pivotal moment in Ethereum’s journey toward scalability. With the introduction of EIP-4844 (Proto-Danksharding), Ethereum significantly enhanced its data availability layer through blobs, reducing gas fees across Layer 2 networks.
👉 Discover how Ethereum's latest upgrades are reshaping the future of decentralized apps.
According to Justin Drake, the upgrade has already shown measurable results:
- L2 transaction volumes have surged.
- Blob usage per block has increased from ~1 to ~2.3, with expectations to reach the target of 3 blobs/block soon.
- As blob costs stabilize at fair market levels, demand from rollups and dApps continues to grow.
From an economic standpoint, increased data supply shifts the equilibrium, lowering transaction costs and stimulating user demand—a classic case of supply-driven price reduction leading to higher adoption.
Owen adds that while overall Ethereum transaction volume hasn’t exploded overnight, user activity on L2s has surged:
- Base saw a 560% increase in daily active users (DAUs) and 540% more daily transactions post-upgrade.
- Optimism and Arbitrum reported 70% and 200% increases in transaction volume, respectively.
- Total Value Locked (TVL) across L2s continues to climb, indicating capital migration from L1 to more efficient layers.
This shift reflects a broader trend: developers and users are increasingly favoring cost-effective, high-throughput environments—a vision that Ethereum 2.0 is actively enabling.
The Evolving Role of the Ethereum Foundation
While Ethereum thrives as a decentralized ecosystem, the Ethereum Foundation’s role has evolved from direct governance to facilitation and support.
Justin Drake outlines the EF’s current responsibilities:
- Hosting developer conferences (Devcon, Devconnect).
- Maintaining Geth, one of five execution clients.
- Distributing millions in grants to community projects—contributing to a gradual reduction in EF-held ETH.
- Organizing coordination calls (e.g., All Core Devs, MEV-boost discussions).
- Conducting foundational research and roadmap planning.
Notably, the EF now controls just 0.23% of circulating ETH, a figure expected to trend toward 0% over time—a move that strengthens decentralization.
Owen emphasizes that this shift aligns with blockchain’s core ethos: community-driven development. As the ecosystem matures, the EF’s advisory role fosters open, transparent discourse—ensuring Ethereum remains a truly decentralized platform.
Ethereum DeFi: Growth Trajectory and Barriers to Mass Adoption
Decentralized Finance (DeFi) remains a cornerstone of Ethereum’s utility. Justin Drake forecasts a 10x growth in DeFi over the next five years, driven by:
- Stablecoins: Aiming for $1 trillion in issuance, with room for decentralized alternatives.
- DEXs: Trading volumes rising relative to centralized exchanges (CEXs).
- Lending protocols like Aave and Compound scaling significantly.
- Prediction markets and derivatives expanding into perpetuals, options, and futures.
However, challenges persist. Owen points out that high gas fees on L1 remain a barrier, pushing most trading activity to L2s where hundreds of transactions can be executed at a fraction of the cost.
To bridge the gap for mainstream users, Ethereum is advancing Account Abstraction (EIP-4337)—a protocol-level improvement that simplifies wallet interactions. This innovation could enable:
- Social recovery
- Gas fee payments in any token
- Smart contract wallets with enhanced UX
👉 See how next-gen wallet technology is lowering barriers to Web3 entry.
The goal? A Web2-like user experience with Web3-level ownership, 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 made it more attractive to institutions and enterprises. With over 50,000 validator nodes and hundreds of billions in staked value, the network demonstrates robust decentralization and security.
Major companies like Microsoft, JPMorgan, and IBM are leveraging Ethereum for supply chain tracking, financial settlements, and identity management—validating its enterprise-grade potential.
For developers, Ethereum 2.0 offers:
- Faster finality
- Lower deployment costs
- Support for complex dApps via sharding and rollups
Yet, challenges remain:
- High entry cost for new users
- Steep learning curve around PoS, sharding, and rollups
- Fierce competition from platforms like Solana
- Evolving regulatory landscapes
Owen stresses that improving wallet onboarding and education will be key to onboarding the next wave of users.
Key Technological Advancements: Staking, Restaking & EIP-7702
Ethereum 2.0’s PoS transition didn’t just improve energy efficiency—it unlocked new economic models.
Staking & Restaking
Staking has reduced Ethereum’s energy consumption by over 99% compared to PoW. Beyond sustainability, it enables restaking, where staked ETH secures other protocols—turning Ethereum into a foundational security layer for the broader ecosystem.
EIP-7702: Smarter Wallets
Proposed by Vitalik Buterin, EIP-7702 allows externally owned wallets (EOAs) to temporarily become smart contract wallets. This enables:
- One-click social logins
- Gasless transactions
- Customizable recovery mechanisms
These upgrades are critical for enabling mass Web3 adoption.
Is PoS Truly Decentralized?
A common critique of PoS is centralization risk. But Owen argues that PoW was never as decentralized as it seemed:
- Mining pools concentrated hash power (top 5 controlled >75% pre-Merge).
- Geographical concentration in low-energy-cost regions.
- Hardware dependency (e.g., NVIDIA’s influence on GPU mining).
In contrast, PoS allows more equitable participation. While large staking providers like Lido pose centralization risks, Ethereum’s roadmap includes mitigations:
- Verkle Trees + EIP-4444: Reduce node storage needs, enabling lightweight clients.
- Lowering minimum staking requirements to expand validator diversity.
These steps ensure long-term fairness and decentralization.
The State of Ethereum L2s: Fragmentation vs. Innovation
The L2 landscape is crowded—Base, Arbitrum, Optimism, zkSync, and others compete for users. This fragmentation leads to:
- Split liquidity
- Inconsistent UI/UX
- Cross-chain friction
But innovation is emerging:
- Chain abstraction aims to unify access via single-entry wallets.
Rollups offer compelling advantages:
- High throughput
- Low fees
- Ethereum-level security
- EVM compatibility
Despite challenges like data availability delays and partial incompatibility between rollups, they remain central to Ethereum’s scalability strategy.
Security, Governance, Energy & Privacy in Ethereum 2.0
Security Challenges
- PoS introduces new attack vectors (e.g., long-range attacks).
- Sharding complexity increases risk surface.
- Centralized staking services threaten decentralization.
Governance Evolution
Post-PoS, governance is increasingly stake-weighted. Future upgrades may reflect staker interests more directly. However, social consensus remains vital—ensuring no single group dominates decision-making.
Energy Efficiency
PoS slashed energy use by 99%, but further gains are possible via Verkle Trees, which optimize state storage.
Privacy Roadmap
Zero-knowledge proofs (ZKPs) will drive privacy enhancements. With quantum computing on the horizon, Ethereum is already exploring quantum-resistant cryptography to safeguard long-term security.
The Next Decade: Seamless L1-L2 Integration
Owen believes the biggest challenge over the next 10 years is reducing friction between L1 and L2. The goal? A unified experience where users interact with Ethereum as if it were a single chain—regardless of underlying layers.
Projects like Polygon’s AggLayer are pioneering this vision. Success means solving:
- Liquidity fragmentation
- Cross-chain latency
- UX inconsistency
Looking 30 years ahead? Ethereum will likely remain a cornerstone of decentralized computing—thanks to its resilience, community, and relentless innovation.
Frequently Asked Questions (FAQ)
Q: What is the main benefit of Ethereum’s Cancun upgrade?
A: The Cancun upgrade introduced blob transactions (via EIP-4844), drastically reducing gas fees on Layer 2 networks and improving data availability for rollups.
Q: How has Ethereum 2.0 improved energy efficiency?
A: By transitioning from Proof of Work (PoW) to Proof of Stake (PoS), Ethereum reduced its energy consumption by over 99%, making it environmentally sustainable.
Q: Why are Layer 2 solutions important for Ethereum?
A: L2s handle most transactions off-chain while inheriting Ethereum’s security, enabling high throughput and low fees—critical for mass adoption.
Q: What is restaking in Ethereum?
A: Restaking allows staked ETH to provide security for additional protocols (e.g., EigenLayer), extending Ethereum’s trust layer beyond its native chain.
Q: Can small validators compete in Ethereum’s PoS system?
A: Yes. Future upgrades aim to lower hardware requirements and reduce minimum stakes, ensuring fair participation for smaller validators.
Q: What role does OKX Web3 play in Ethereum’s ecosystem?
A: OKX Web3 focuses on improving user experience through wallet innovations, cross-chain tools, and support for emerging standards like account abstraction.
👉 Explore how OKX Web3 is building the future of decentralized access today.