Ethereum remains one of the world’s largest and most developer-preferred public blockchain networks. As Ethereum 2.0 and Layer 2 (L2) solutions continue to evolve, the network is poised to maintain its leadership in shaping the future of blockchain technology. Justin Drake, a key researcher at the Ethereum Foundation (EF), has played a pivotal role in advancing Ethereum 2.0, driving both technical innovation and broader industry transformation.
This inaugural episode of Developer Stories brings together insights from Justin Drake and Owen, Head of OKX Web3 Products, to explore Ethereum’s technical evolution, ecosystem dynamics, and long-term vision. Covering topics such as consensus mechanisms, scalability, DeFi, user experience, security, and sustainability, this dialogue offers a deep dive into the core developments defining Ethereum’s roadmap.
Post-Cancun Upgrade: Ethereum and L2 Transformation
Justin Drake: The Cancun-Deneb upgrade marked a turning point for Ethereum’s scalability. With the introduction of proto-danksharding and EIP-4844, blob transactions significantly reduced L2 gas fees while increasing throughput. Data shows a clear uptick in developer and project engagement post-upgrade.
L2beat’s analytics illustrate sustained growth in L2 transaction volume over time—a direct result of improved cost efficiency.
Dune’s data on “average blobs per block” reveals usage rising from ~1 blob/block in March to ~2.3 today. This steady climb reflects growing demand from L2s leveraging Ethereum as a data availability layer. Within weeks, we expect blob usage to stabilize at 3 blobs/block, with pricing reaching market equilibrium.
From an economic standpoint, increased supply (S1 → S2) lowers equilibrium price (P1 → P2), stimulating demand (Q1 → Q2). Cheaper transactions mean more users and developers can participate affordably.
👉 Discover how low-cost blockchain interactions are reshaping DeFi and Web3 adoption.
Owen: While overall transaction volume hasn’t exploded overnight, asset migration to L2s is accelerating. Total Value Locked (TVL) across L2 networks continues to rise. 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% gains respectively.
This surge indicates that lower fees are attracting retail traders and micro-transactors—key demographics for mass adoption.
Ethereum Foundation ETH Reserves: A Path Toward Decentralization
Justin Drake: Some view the EF as “hands-off,” but I see this as healthy. The foundation’s influence is intentionally shrinking—a sign of ecosystem maturity.
EF’s current roles include:
- Hosting Devcon or Devconnect annually—now just one of many community-led events.
- Maintaining Geth, one of five execution clients (but no consensus clients).
- Distributing tens of millions in unrestricted grants yearly, gradually depleting its ETH reserves.
- Facilitating coordination calls like All Core Devs (ACD), ACDC, RollCall, Sequencing meetings, and MEV-boost discussions.
- Conducting foundational research—though parts may spin off independently.
- Supporting roadmap alignment; Vitalik often publishes updated visual roadmaps guiding parallel development efforts.
Critically, EF now controls just 0.23% of total ETH supply. The long-term goal? Approach 0% holdings, ensuring no single entity influences protocol direction. This fosters true decentralization.
Owen: The EF should transition into an advisory role. The ecosystem has reached a stage where innovation thrives organically. Open, transparent discourse—free from centralized control—aligns with blockchain’s core ethos: community-driven governance.
DeFi Growth and Future Application Scenarios
Justin Drake: Ethereum’s culture remains deeply technical, focused on solving hard problems. But technology must serve real-world use cases.
I anticipate 10x growth in DeFi over the next five years, driven by:
- Stablecoins: Aiming for $1 trillion in issuance, with strong representation from decentralized options.
- DEXs: Their share of total trading volume vs. CEXs will keep rising.
- Lending protocols: Aave and Compound could scale tenfold.
- Prediction markets: Platforms like Polymarket gaining mainstream traction.
- Derivatives: Liquid perpetuals, options, and futures becoming standard on Ethereum.
Beyond finance, decentralized frontends using ENS and IPFS will become more common—enhancing censorship resistance and user sovereignty.
Owen: Despite Ethereum leading in DEX TVL, high gas fees remain a bottleneck. A single L1 transaction costs as much as hundreds on L2s, pushing activity toward efficient alternatives.
To bridge Web2-style usability with Web3 ownership, initiatives like EIP-4337 (Account Abstraction) are critical. They lower entry barriers by enabling social recovery, multi-signature logic, and gas payment in any token—paving the way for seamless self-custody experiences.
👉 Explore how account abstraction is simplifying Web3 onboarding for millions.
Global Adoption of Ethereum 2.0: Developer & User Appeal
Owen: Ethereum 2.0 is now globally adopted. Its PoS network secures over $100 billion in staked ETH, with more than 50,000 independent validators participating worldwide.
Institutions like Microsoft, JPMorgan, and IBM are integrating Ethereum into supply chains and financial systems. Lower fees and faster finality make it attractive for enterprises and developers alike.
However, challenges persist:
- High entry cost: Wallets remain complex gateways.
- Steep learning curve: Concepts like PoS, sharding, and rollups require significant education.
- Infrastructure immaturity: Tools are evolving but not yet plug-and-play.
- Competition: Platforms like Solana offer speed and low cost.
- Regulatory uncertainty: Policies vary globally, affecting adoption pace.
Despite these hurdles, confidence in Ethereum’s long-term viability remains strong.
Key Technical Advances: Staking, Restaking & EIP-7702
Owen: Two major innovations define Ethereum 2.0’s progress:
- Staking & Restaking: PoS slashed energy use by over 99%. Beyond efficiency, staking enables restaking—extending Ethereum’s security to other protocols via shared validation layers.
- EIP-7702: Proposed by Vitalik Buterin, this upgrade allows EOA wallets to temporarily act as smart contracts. It unlocks advanced features—social recovery, batched transactions, gas abstraction—without requiring new wallet setups.
These upgrades lay the foundation for mass-market Web3 applications.
PoS and the Decentralization Debate
PoW promised permissionless participation but led to mining centralization—top pools once controlled >75% of hashpower. Geopolitical risks (e.g., China’s 2021 mining ban) exposed vulnerabilities.
PoS mitigates these issues:
- No specialized hardware required.
- Validators distributed globally.
- Economic penalties deter malicious behavior.
While concerns about “ETH whales” influencing consensus exist, mechanisms like slashing ensure accountability. Future upgrades—Verkle trees, EIP-4444—will further reduce hardware requirements, enabling lightweight clients and fairer access for small validators.
L2 Landscape & Rollup Potential
Owen: Today’s L2 space is overcrowded—undermining the original goal of scaling Ethereum. Fragmented liquidity and inconsistent UIs create friction.
Market consolidation is inevitable; only top-tier rollups will survive. Chain abstraction—a unified interface across chains—is emerging as a solution.
Rollups offer compelling advantages:
- Scalability via off-chain computation
- Security inherited from Ethereum
- Full EVM compatibility
- Support for complex dApps
- Cheaper data posting post-Cancun
Yet challenges remain: data availability risks, withdrawal delays, interoperability gaps, and potential centralization of sequencers.
Still, rollups are essential to Ethereum’s scaling roadmap.
👉 See how next-gen rollups are redefining scalability and user experience.
Security, Governance, Energy Efficiency & Privacy
Security Challenges:
- PoS risks: Large stakeholders could collude.
- Lido dominance: Centralized staking services threaten decentralization.
- Sharding complexity: New attack vectors emerge with multi-chain architecture.
- Economic incentives: Attack profitability must remain below cost.
- Smart contract risks: EVM changes may break existing code.
Governance Outlook:
PoS empowers token holders in decision-making. As Layer 2s grow, governance must adapt to multi-layer coordination—balancing decentralization with efficiency.
Energy Efficiency:
PoS reduced energy use by >99%. Future optimizations include migrating from Merkle Patricia Trees to Verkle Trees for lighter state storage.
Privacy Roadmap:
Zero-knowledge proofs (ZKPs) will enhance transaction privacy. With quantum computing on the horizon, research into quantum-resistant cryptography is already underway within the Ethereum community.
Long-Term Vision: Challenges Ahead
Over the next decade, the primary challenge is reducing friction between L1 and L2—enabling seamless cross-layer interaction and combating liquidity fragmentation. Projects like Polygon’s AggLayer aim to unify the stack into a single logical chain.
Looking 30 years ahead? Ethereum is likely to endure as one of the most decentralized, battle-tested networks in existence—a foundational layer for the digital economy.
Frequently Asked Questions
Q: What is the main benefit of Ethereum 2.0?
A: Ethereum 2.0 improves scalability, security, and sustainability through PoS consensus and sharding—making it faster, greener, and more efficient.
Q: How do rollups reduce gas fees?
A: Rollups process transactions off-chain and post compressed data to Ethereum L1, drastically lowering data costs while inheriting L1 security.
Q: Is Ethereum truly decentralized after moving to PoS?
A: Yes—though staking services like Lido raise concerns, ongoing upgrades promote validator diversity and lower entry barriers for individual participants.
Q: What is account abstraction?
A: Account abstraction (e.g., EIP-4337) turns wallets into smart contracts, enabling features like social recovery and gasless transactions for better UX.
Q: Why does blob usage matter?
A: Blobs carry temporary data for rollups; higher usage indicates growing L2 activity and demand for affordable data availability on Ethereum.
Q: Can Ethereum handle mass adoption?
A: With continued L2 innovation, protocol upgrades, and UX improvements like chain abstraction, Ethereum is on track to support billions of users securely.
Keywords: Ethereum 2.0, Layer 2 scaling, PoS consensus, rollups, account abstraction, DeFi growth, Cancun upgrade, restaking