Column: Block Rabbit Observation Institute
Column Introduction: Focus on the future, jump into the rabbit hole of new technology with you
The core protocol of Ethereum is becoming increasingly powerful, but the ecosystem is facing unprecedented complexity
Over the past year, Ethereum has staged a textbook-level engineering miracle. From fundamentally solving the L2 cost issue with the Dencun upgrade to optimizing the core staking economy with the Pectra upgrade, this digital world's 'digital Leviathan' has precisely executed its public roadmap. However, a peculiar paradox lies before all observers: the certainty and success of the protocol layer do not seem to have brought tranquility to the ecological layer; instead, they have spawned unprecedented complexity and potential risks. The Ethereum engine room (main protocol) has never been so strong and clear, but its vast new territory (L2 and restaking ecology) is filled with the noise of opportunities and the fog of chaos. We must pose a new question: when the war of the underlying protocol is basically over, where exactly is Ethereum's next battlefield?
The duet of Dencun and Pectra
To understand the current situation of Ethereum, one must first acknowledge the tremendous success of its core engineering.
This victory consists of two key upgrades:
Firstly, it is the economic transformation triggered by the Dencun upgrade in early 2024. By introducing Proto-Danksharding (EIP-4844), the Ethereum mainnet has opened a dedicated, low-cost data channel (Blobs) for Layer 2 networks. This is not a minor fix, but a fundamental cost revolution. Over the past year and a half, we have witnessed a sharp decline in L2 transaction fees, which have maintained at extremely low levels for a long time. The market has cast the most honest vote with capital: in recent months, while the price of ETH has remained stable, its performance has lagged behind leading L2 ecosystem tokens. This clearly indicates that the expectation of value growth has successfully shifted from the execution capacity of the mainnet to the prosperity of L2 applications driven by cheap data. Ethereum has successfully transformed itself from a 'congested world computer' into the 'secure settlement and data anchor' of the entire ecosystem.
Secondly, it is the governance evolution brought by the Pectra upgrade completed this May.
If Dencun addresses the 'cost' issue, then Pectra directly faces the challenge of 'control'. In the face of the trend of power concentration among validators under the PoS mechanism, Pectra reduces the operational advantages of large staking pools by improving the effective balance limit of validators (EIP-7251) and optimizing the participation experience of decentralized staking. This is a precise, surgical intervention aimed at alleviating centralization pressure from the protocol level. Although a single upgrade cannot eradicate all problems, it sends a strong signal to the entire community: Ethereum's core developers have the capability and willingness to defend the network's decentralized characteristics.
The successful delivery of these two upgrades means that the major contradictions at the protocol level of Ethereum have been basically resolved. The engine room is operating well, providing an unprecedented foundation of certainty for the expansion of the superstructure.
The systemic risks of restaking and the fragmentation of L2
However, the success of the engine room has pushed complexity to a broader ecological level, giving rise to two major fogs:
Firstly, it is the maturity of the restaking track and its inherent systemic risks. Restaking protocols represented by EigenLayer have evolved from an emerging concept into a large and complex financial Lego over the past year. By sharing Ethereum's economic security, it provides a foundational launchpad for many emerging protocols (such as DA layers, oracles, bridges), which is undoubtedly a huge innovation. However, its essence is to add new leverage and risk layers that are not directly constrained by the main protocol based on Ethereum's credit foundation. The failure of a restaking service could lead to the forfeiture of ETH principal, triggering a series of chain liquidations. This 'potential systemic risk' has become a core issue that analysts cannot avoid when assessing Ethereum's long-term stability.
Secondly, the side effect brought by the prosperity of the L2 ecosystem: severe fragmentation. Dozens of Rollup networks operate independently, forming isolated liquidity islands and user experience discontinuities. Users' assets transfer between different L2s, not only is the process cumbersome, but it also faces security risks brought by different cross-chain bridges. This escalating 'L2 war' has sparked innovation while severely damaging the network's overall effect. A digital nation that should be unified has actually split into countless city-states that do not communicate with each other in language or transportation.
The commonality of these two major issues is that they cannot be solved simply by the next upgrade of the Ethereum main protocol. The battlefield has shifted.
Image Description: Layer 2 Total Locked Value (TVL) Market Share Pie Chart
Data Source: defillama
Active gardeners: How EcoDev bridges ecological rifts
Faced with an ecological chaos that the protocol layer cannot directly intervene in, the Ethereum Foundation's response strategy demonstrates a mature governance that transcends pure technical thinking. Its ecosystem development plan (EcoDev) plays the role of an 'active gardener', using 'soft power' to bridge ecological rifts.
By sorting out its recent funding strategy, we can find that EcoDev's investment is highly targeted. It does not simply reward the most successful projects, but instead heavily allocates resources to areas that can enhance the 'public goods' of the entire ecosystem:
Funding standardization tools: Support the development of common L2 cross-chain communication standards and developer toolkits to reduce the negative impacts of fragmentation.
Support academic research: Provide long-term funding for cutting-edge fields such as ZK technology and MEV mitigation solutions to ensure technological reserves.
Cultivating a global community: Invest resources in emerging markets such as Asia, Africa, and Latin America to ensure that Ethereum's culture and developer base remain global and diverse.
The core idea of this strategy is: since it is impossible to enforce unity through protocol rules, we should guide the ecosystem towards integration by cultivating public infrastructure and common standards. This is a softer and longer-term governance philosophy.
The evolution from protocol engineer to ecological gardener
The future path of Ethereum is already clear. It has successfully completed the modernization of its core protocol and established a robust and efficient foundation. Now, its focus is shifting from being a 'protocol engineer' to a more decentralized 'ecological gardener'.
This is a dual-track parallel long march: on the protocol layer, continuously carry out refined optimization and security reinforcement; on the ecological layer, respond to new challenges arising from success through strategic investment and cultivation. What we see is no longer a development team merely focused on technical implementation, but a mature organization that understands how to govern a large, complex, and vibrant digital economy.
This ability to navigate complexity, face new problems calmly, and respond with diversified means is what makes Ethereum the most trusted asset.
