Ethereum remains one of the largest and most developer-preferred public blockchain networks. As Ethereum 2.0 and Layer 2 (L2) solutions continue to evolve, they are shaping the future trajectory of blockchain technology. Justin Drake, a core researcher at the Ethereum Foundation (EF), has played a pivotal role in advancing Ethereum 2.0—driving technical innovation while offering profound insights for the broader Web3 ecosystem.
In this inaugural episode of Developer Dialogues, we explore Ethereum’s evolution through the perspectives of Justin Drake and Owen, OKX Web3’s Product Lead. Their insights span Ethereum 2.0’s technical upgrades, consensus mechanisms, scalability, DeFi potential, user experience, environmental impact, and long-term strategic vision—delivering a comprehensive look at where Ethereum stands and where it’s headed.
Ethereum and L2s Post-Cancun Upgrade: Higher Throughput, Lower Costs
Justin Drake:
The Cancun upgrade significantly improved Ethereum’s throughput and drastically reduced gas fees across L2 networks. Data clearly reflects this shift: both developer and project interest in Ethereum and its L2 ecosystem have surged.
L2beat’s metrics illustrate a steady rise in transaction volume over time—a testament to growing adoption. Additionally, Dune Analytics shows that the average number of blobs per block has increased from about 1 in March to approximately 2.3 today. This upward trend is largely driven by Ethereum’s support for L2 rollups.
👉 Discover how low-cost transactions are reshaping blockchain adoption.
We’re on track to hit the target of 3 blobs per block in the coming weeks, at which point blob fees will stabilize at a market-clearing level. Economically, this expansion in supply (shifting from S1 to S2) lowers equilibrium prices (from P1 to P2), which in turn stimulates demand (Q1 to Q2)—a classic supply-demand dynamic now playing out on-chain.
Owen, OKX Web3 Product Lead:
While overall transaction volume hasn’t exploded overnight, we’re seeing a clear migration of assets to L2s. Total Value Locked (TVL) on L2s continues to climb. Activity is surging—Base, for example, saw a 560% increase in daily active users (DAUs) and a 540% jump in daily transactions post-upgrade. Optimism and Arbitrum also reported 70% and 200% increases respectively.
This indicates that lower fees are attracting users—especially retail traders—who were previously priced out of the ecosystem.
Ethereum Foundation’s ETH Reduction: A Step Toward True Decentralization
Justin Drake:
Some view the Ethereum Foundation as "hands-off" in ecosystem development—a stance that has sparked debate. However, I believe EF’s diminishing influence is a positive development.
Today, EF’s core responsibilities include:
- Hosting Devcon or Devconnect annually—now just one of many major developer events.
- Maintaining Geth, one of five execution clients (EF does not maintain any consensus clients).
- Providing millions in annual grants to the community—contributing to a gradual reduction in EF’s ETH reserves.
- Facilitating coordination calls like All Core Devs (ACD), All Consensus Devs (ACDC), RollCall, MEV-boost discussions, and sequencing meetings.
- Conducting foundational research—though parts may eventually spin off independently.
- Helping shape the roadmap—Vitalik often publishes updated visuals, with dozens of parallel development tracks managed by independent teams.
EF currently controls just 0.23% of circulating ETH. The long-term goal? Approaching 0%. This reduction fosters greater decentralization—aligning with Ethereum’s ethos.
Owen:
The Foundation should transition into an advisory role. The ecosystem is mature enough to thrive without centralized oversight. Open, transparent discourse ensures Ethereum remains a truly community-governed project—consistent with blockchain’s core principles.
DeFi and the Road to Mass Adoption
Justin Drake:
While Ethereum excels technically, we must ensure innovation serves real user needs.
I expect DeFi to grow tenfold in the next five years:
- Stablecoins: Aiming for $1 trillion in issuance, with strong growth in decentralized options.
- DEXs: The DEX-to-CEX trading volume ratio will keep rising.
- Lending: Protocols like Aave and Compound could scale by 10x.
- Prediction Markets: Platforms like Polymarket are poised for similar growth.
- Derivatives: Liquid perpetuals, options, and futures will become standard on Ethereum.
Beyond DeFi, I anticipate wider adoption of ENS and IPFS for decentralized frontends.
Owen:
Ethereum still leads in DeFi TVL—but high gas fees remain a major barrier. On L2s, users can execute hundreds of transactions for the cost of one on L1. This efficiency naturally draws activity.
👉 See how next-gen wallets are lowering Web3 entry barriers.
That’s why initiatives like EIP-4337 (Account Abstraction) are critical—they simplify onboarding by enabling social recovery, gas payments in non-native tokens, and smart contract wallets. These features will make self-custody as seamless as Web2 experiences.
Global Adoption of Ethereum 2.0: Strengths and Challenges
Owen:
Ethereum 2.0 is now widely adopted across industries. With over $100 billion staked and more than 50,000 independent validators, its PoS network is robust. Institutions like Microsoft, JPMorgan, and IBM are leveraging Ethereum for supply chain tracking and financial applications.
Developers benefit from faster speeds and lower costs—enabling more complex dApps without performance bottlenecks.
Yet challenges remain:
- High entry barriers: Wallets must become frictionless gateways.
- Steep learning curve: Concepts like PoS, sharding, and rollups require education.
- Infrastructure maturity: Tools and dev environments are still evolving.
- Competition: Platforms like Solana offer faster speeds or lower costs.
- Regulatory uncertainty: Global crypto policies vary widely.
Key Technical Advances: Staking, Restaking & EIP-7702
Owen:
Staking under PoS slashed energy use by over 99%. It also enabled restaking—where staked ETH secures other protocols—making Ethereum a foundational security layer.
EIP-7702 proposes enhancing EOAs (externally owned accounts) with smart contract capabilities. This allows wallets to temporarily execute smart contract logic—unlocking features like social recovery and multi-chain logins—paving the way for mass Web2-to-Web3 migration.
PoS and Decentralization: Balancing Security and Fairness
PoW was theoretically permissionless but led to mining centralization—top pools once controlled over 75% of hashrate. Geopolitical risks (e.g., China’s 2021 mining ban) and hardware monopolies (e.g., NVIDIA limiting GPU mining) exposed vulnerabilities.
PoS improves this balance:
- Effective incentives: Slashing mechanisms deter malicious behavior.
- Attack resistance: Threats like short-range reorgs have been mitigated.
- Fair access: Proposals like Verkle Trees + EIP-4444 reduce hardware needs, enabling lightweight clients and fairer participation.
L2 Landscape & Rollup Potential
Owen:
The L2 space is crowded—leading to fragmented liquidity and disjointed UX. Headline chains will likely consolidate activity, while others fade.
Rollups offer clear advantages:
- Scalability and lower gas
- Security via Ethereum’s data availability
- EVM compatibility
- Innovation-friendly environments
But challenges exist:
- Data availability verification
- Withdrawal delays
- Cross-rollup incompatibility
- Centralization risks from few sequencers
Chain abstraction may solve these—letting users interact seamlessly across chains.
👉 Explore how unified Web3 experiences are emerging.
Security, Governance, Energy Efficiency & Privacy
Owen:
Ethereum 2.0 faces key challenges:
- PoS security: Risk of whale manipulation
- Validator centralization: Liquid staking dominance (e.g., Lido)
- Sharding complexity: New attack vectors
- Economic incentives: Ensuring attack costs exceed rewards
- Smart contract risks: EVM upgrades breaking compatibility
Governance is evolving toward greater decentralization—with stakers gaining influence. Future models must balance formal structures with community input.
Energy efficiency has improved dramatically—but storage optimization (e.g., Verkle Trees) remains ongoing.
Privacy will rely on zero-knowledge proofs and quantum-resistant cryptography as quantum computing advances.
Long-Term Outlook: Challenges Ahead
Owen:
In the next decade, reducing friction between L1 and L2—and unifying liquidity—is critical. Projects like Polygon’s AggLayer aim to make multi-chain interaction seamless.
Thirty years from now? Ethereum will likely remain foundational—recognized for its decentralization, longevity, and resilience.
Frequently Asked Questions
Q: What is the main benefit of Ethereum’s Cancun upgrade?
A: It drastically reduced L2 transaction costs via blob-carrying transactions, boosting scalability and user adoption.
Q: Why is the Ethereum Foundation reducing its ETH holdings?
A: To promote decentralization—ensuring no single entity exerts undue influence over the network.
Q: How does PoS improve energy efficiency?
A: It eliminates energy-intensive mining, cutting power consumption by over 99% compared to PoW.
Q: What is restaking?
A: It allows staked ETH to secure additional protocols (e.g., EigenLayer), extending Ethereum’s trust layer.
Q: Will Ethereum remain relevant in 30 years?
A: Given its robust decentralization, active development, and ecosystem strength, it’s well-positioned to endure long-term.
Q: How does account abstraction help new users?
A: It enables smart wallet features like social recovery and gasless transactions—making Web3 as easy as Web2.
Core Keywords: Ethereum 2.0, Layer 2 scaling, Proof of Stake (PoS), Decentralized Finance (DeFi), Account Abstraction, Rollups, Blockchain Security, Web3 Adoption