1. Introduction
Ethereum, as a pioneer in the blockchain field, has experienced multiple upgrades and transformations since its launch in 2015, continuously leading the development of the industry. From the initial concept to becoming the largest smart contract platform in the world, Ethereum's development trajectory has witnessed the evolution of blockchain technology from its nascent stage to gradual maturity. With the ongoing evolution of the cryptocurrency market, Ethereum faces new opportunities and challenges in 2025, and its future development trends are a focus of attention. This article will comprehensively analyze Ethereum's development prospects in 2025, exploring its performance in technological upgrades, ecosystem development, market competition, and projecting its future development trends.
2. Progress of Ethereum's Technological Upgrades
2.1 Review of the Core Upgrade Roadmap
The upgrade roadmap of Ethereum has always been an important guide for its development, aimed at addressing key issues such as scalability, security, and decentralization. The transition from PoW to PoS, known as 'The Merge', is a significant milestone in Ethereum's development journey. This transition has reduced Ethereum's energy consumption by over 99%, with annual electricity usage dropping from about 121.36 billion kWh (close to Bitcoin levels) to nearly zero. At the same time, the participation threshold for nodes under the PoS mechanism has been lowered (only 32 ETH is required for staking), and the introduction of random number mechanisms and penalty mechanisms has improved network security and recovery capabilities. Furthermore, ETH issuance has decreased by 90%, marking Ethereum's entry into a deflationary era, with staking rewards becoming one of the core demands of users.
The 'The Surge' phase focuses on sharding and Rollup technologies, aiming to achieve L1+L2 TPS exceeding 100,000 through data sharding and Rollup solutions. Currently, the L2 ecosystem has witnessed an explosion, with the total locked value (TVL) of L2 reaching $43 billion by June 2024, and the daily active addresses around 2.1 million, comparable to TRON. Among these, projects like Arbitrum, Base, and zkSync Era have stood out, leading in TVL share, revenue, and technological innovation. The implementation of EIP-4844 (Proto-Danksharding) has reduced L2 data storage costs, with transaction fees decreasing by over 90%, further promoting the development of the L2 ecosystem.
2.2 Key Technical Controversies and Challenges
During the process of technological upgrades, Ethereum faces some controversies and challenges. For instance, the Prague upgrade in April 2025 allowed payments of Gas fees in USDC and DAI, which sparked debates about the long-term value of ETH. Supporters believe this will attract new users, especially those sensitive to cryptocurrency price fluctuations, thus expanding Ethereum's user base. However, critics worry this may weaken ETH demand because users no longer need to hold ETH to pay Gas fees.
Moreover, the relationship between L2 and the mainnet has also become a focal point. Although the transaction speed of L2 has significantly improved, increasing by 5 times compared to before the upgrade, this has also led to a decline in mainnet usage, potentially marginalizing the mainnet's role. How to balance the development of L2 and the mainnet and fully leverage the advantages of both is a problem that Ethereum developers need to resolve. At the same time, the community has raised questions about the efficiency of the Ethereum Foundation's annual expenditure of $140 million, calling for more transparent financial disclosures to ensure funds are used appropriately to promote the continuous development of Ethereum technology.
2.3 Technical Implementation Pressure and Solutions
Some analysts express concerns about the effectiveness of sharding, believing that the actual effects of Blob transactions (Danksharding) are limited and need further verification. The effects of upgrades like EIP-4844 directly influence market confidence; if these technologies fail to achieve the expected performance improvements, it may undermine user and developer confidence in Ethereum. In response to these pressures, Ethereum developers are actively exploring solutions.
In terms of sharding technology, efforts are being made to continuously optimize data storage and transmission mechanisms to improve Blob throughput, fully leveraging the advantages of sharding. At the same time, support and guidance for the L2 ecosystem are being strengthened to encourage developers to build more innovative applications on L2, enhancing its practicality and attractiveness. Furthermore, ongoing technical testing and optimization are ensuring the stability and reliability of upgrade solutions, minimizing risks during the implementation process.
3. L2 Ecosystem and Institutional Participation
3.1 The Rise of L2 Solutions
L2 solutions are playing an increasingly important role in the Ethereum ecosystem. Arbitrum, as a leader in the L2 space, has reached a TVL of $11 billion, achieving significant progress in both technological maturity and ecosystem development. Base, launched by Coinbase as an L2, has a TVL of $1.5 billion but ranks first in terms of revenue, demonstrating its unique business value. zkSync Era stands out with zero-knowledge proof technology, offering advantages in enhancing transaction privacy and security.
These L2 projects have not only achieved breakthroughs in performance but have also made progress in application innovation. For example, gaming chains (ApeChain, AnimeChain) and DeFi protocols (Rari Chain) have constructed L3 chains through Arbitrum Orbit, further expanding Ethereum's application scenarios. The prosperity of the L2 ecosystem has attracted more users and developers to Ethereum, becoming an important driving force for its development.
3.2 Deepening Institutional Participation
The participation of institutional investors in Ethereum is continually increasing. Liquid staking derivatives (LSD) projects such as Lido and Rocket Pool have lowered the staking threshold, attracting a large amount of institutional capital. These projects tokenize the staking rights of users, allowing them to circulate tokens in the market without losing staking rewards, thereby improving the liquidity of funds.
The restaking protocol EigenLayer has attracted over $50 billion TVL, building decentralized physical infrastructure (DePIN). Through the restaking mechanism, users can further use their staked ETH for other projects, increasing the efficiency and value of ETH. At the same time, Ethereum is collaborating with BIS to develop 'Regulatory Sandbox 2.0', actively exploring a path towards compliance, providing institutional investors with a safer and more compliant investment environment, and creating a new era of compliant DeFi.
4. Analysis of Ethereum's Development Prospects in 2025
4.1 Continuous Driving Force of Technological Upgrades
It is expected that by 2026, Ethereum will complete its sharding upgrade, with transaction speeds anticipated to increase to 100,000 TPS and Gas fees decreasing by over 90%. This will provide strong support for the implementation of institutional-grade payment scenarios, attracting more traditional financial institutions and enterprises to adopt Ethereum technology. The development of account abstraction and privacy technologies such as ERC-4337 and zero-knowledge proof (ZK) technologies will enhance user experience and security. ERC-4337 introduces dual-phase processing, supporting multi-signatures, social recovery, and other functions, lowering the barriers for users to use Ethereum. The application of zero-knowledge proof technology will protect user transaction privacy and promote the popularization of Web3 applications.
The L2 ecosystem is expected to remain prosperous, with innovations in DeFi 3.0, NFTs, and gaming attracting more users. L2 solutions like Base Chain will become growth engines, driving the continuous development of the Ethereum ecosystem. At the same time, cross-chain interoperability will be enhanced through ecosystems like Cosmos and Polkadot, promoting multi-chain collaborative development and enabling Ethereum to interact and cooperate better with other blockchains.
4.2 Market Dynamics and Competitive Landscape
In terms of market dynamics, the ETH/BTC exchange rate has rebounded from the bottom, the total locked value of DeFi has significantly warmed, and the market's strong expectations for Ethereum staking ETFs reflect a return of funds and an increase in market confidence. The prosperity of the stablecoin market brings new opportunities for Ethereum, and as a core hub for stablecoin activities, the Ethereum ecosystem attracts a large influx of new funds and users. However, Ethereum also faces fierce market competition. Other public chains such as TRON and Solana have certain advantages in transaction costs and performance, attracting some cost-sensitive users and developers. Ethereum needs to continuously enhance its performance and optimize user experience to maintain its leading position in market competition.
4.3 Long-term Predictions and Outlook
In the long term, Ethereum is expected to become the cornerstone of the global stablecoin network. In an optimistic scenario, the probability of the price breaking through $50,000 is 35%. If it can successfully accommodate the massive influx of users and funds brought by stablecoins, Ethereum will solidify its leadership position in a multi-chain world. In a neutral scenario, the price will fluctuate in the range of $8,000 to $20,000, with Ethereum serving scenarios like smart contract insurance and digital identity. Regardless of the scenario, Ethereum will continue to drive the development of blockchain technology and reshape the global financial landscape.
5. Conclusion
Ethereum is at a critical period of technological upgrades and ecosystem development in 2025. Through continuous technological innovations such as sharding, Rollup, and account abstraction, as well as the flourishing L2 ecosystem and deepening institutional participation, Ethereum is expected to address current challenges such as scalability and user experience, achieving an 'inversion' of the ecosystem and long-term sustainable growth. However, Ethereum also faces challenges such as implementation pressure and market competition, requiring the community, developers, and the foundation to work together to continuously optimize technological solutions and enhance market competitiveness. Overall, Ethereum's future development prospects are broad and will play an important role in the global digital financial landscape, leading blockchain technology into a new stage of development.
