Ethereum continues to stand as one of the most influential public blockchain networks, serving as a preferred platform for developers worldwide. With the ongoing evolution of Ethereum 2.0 and Layer 2 (L2) scaling solutions, the network is poised to shape the future of decentralized applications and blockchain innovation. In this inaugural episode of the Developer Story series, we bring together insights from Justin Drake, a core researcher at the Ethereum Foundation (EF), and Owen, Web3 Product Lead at OKX, to explore the technical advancements, ecosystem dynamics, and long-term vision of Ethereum.
Their dialogue offers a deep dive into Ethereum’s consensus evolution, scalability breakthroughs, DeFi growth potential, and the broader implications of its shift to Proof of Stake (PoS).
Ethereum and Layer 2 After the Cancun Upgrade
Justin Drake:
The Cancun upgrade marked a pivotal moment for Ethereum's scalability. With the introduction of proto-danksharding—specifically EIP-4844—blob transactions have significantly reduced data publishing costs for L2 rollups. As a result, Ethereum’s throughput has improved, and gas fees across major L2 networks have dropped substantially.
Looking at on-chain data from L2beat, we see consistent growth in transaction volume across leading rollups post-upgrade. This indicates growing adoption by both users and developers. Additionally, Dune Analytics shows that the average blob count per block has risen from ~1 to ~2.3, reflecting increased utilization of this new data layer.
👉 Discover how low-cost transactions are transforming Web3 user experiences.
We expect blob usage to stabilize around 3 blobs per block in the coming weeks, at which point pricing will reflect true market equilibrium. Economically speaking, this expansion in supply shifts the equilibrium point—lowering prices (P1 → P2) and stimulating demand (Q1 → Q2).
Owen (OKX Web3):
While overall transaction volume hasn’t exploded overnight, there’s been a clear migration of assets and activity to L2s. Total Value Locked (TVL) on L2s continues to climb, signaling strong user confidence.
For instance:
- Base saw a 560% increase in daily active users (DAUs) and 540% growth in daily transactions after the upgrade.
- Optimism and Arbitrum reported 70% and 200% increases in daily transaction volume, respectively.
This surge—especially among retail traders—demonstrates that reduced friction directly translates into higher engagement. Lower costs make micro-transactions viable, opening doors for new use cases beyond speculative trading.
The Evolving Role of the Ethereum Foundation
Justin Drake:
The Ethereum Foundation has intentionally stepped back from direct control over the ecosystem—a model some call “governance by non-action.” This decentralization is healthy.
Today, EF’s core responsibilities include:
- Hosting developer events like Devcon
- Maintaining Geth, one of five execution clients
- Distributing millions in grants annually to support community-driven innovation
- Facilitating coordination calls (e.g., All Core Devs, MEV-boost discussions)
- Conducting foundational research
- Contributing to roadmap development
Notably, EF now controls just 0.23% of total ETH supply, down from higher levels in earlier years. Over time, this number should trend toward zero—ensuring no single entity exerts undue influence.
Owen (OKX Web3):
This advisory role aligns perfectly with blockchain’s ethos: open participation and community governance. Ethereum thrives not because of centralized direction, but due to its vibrant, self-sustaining ecosystem. Developers and users alike can contribute without gatekeepers—making it truly a public good.
Ethereum DeFi: Growth Trajectory and Real-World Utility
Justin Drake:
DeFi remains one of Ethereum’s strongest value propositions. I anticipate a 10x growth in key sectors over the next five years:
- Stablecoins: Aiming for $1 trillion in circulation, with room for decentralized options like DAI and RPL.
- DEXs: Trading volumes are already rivaling centralized exchanges; this trend will accelerate.
- Lending protocols: Platforms like Aave and Compound will scale alongside broader adoption.
- Prediction markets: Projects like Polymarket are unlocking new forms of decentralized information pricing.
- Derivatives: Perpetual swaps, options, and futures will mature on-chain.
Beyond DeFi, I’m excited about decentralized frontends using ENS and IPFS—removing reliance on centralized hosting and enhancing censorship resistance.
Owen (OKX Web3):
While Ethereum still leads in DeFi TVL, high fees remain a barrier. The same trade executed once on L1 could be done hundreds of times on L2s. That efficiency drives user behavior.
However, recent upgrades like EIP-4337 (Account Abstraction) are game-changers. They simplify wallet onboarding—enabling social recovery, gasless transactions, and multi-signature security—making Web3 feel more like Web2.
👉 See how account abstraction is lowering barriers to Web3 adoption.
In the near future, self-custody will become seamless for mainstream users—without sacrificing security.
Global Adoption of Ethereum 2.0: Developer and User Appeal
Ethereum 2.0 has achieved widespread global adoption. With over 50,000 validator nodes and staked assets worth hundreds of billions of dollars, its PoS network is robust and secure.
Enterprises like Microsoft, JPMorgan, and IBM are integrating Ethereum into supply chain tracking and financial infrastructure—validating its enterprise-grade potential.
For developers, Ethereum offers:
- Faster iteration cycles
- Mature tooling (e.g., Hardhat, Foundry)
- Access to a vast user base via L2s
Yet challenges persist:
- High entry cost: Wallets must evolve into intuitive “Web3 gateways.”
- Learning curve: Concepts like PoS, sharding, and rollups require education.
- Infrastructure maturity: Tools are improving but still fragmented.
- Regulatory uncertainty: Compliance landscapes vary globally.
- Competition: Chains like Solana offer speed and low cost—pushing Ethereum to innovate continuously.
Key Technological Advancements in Ethereum 2.0
Two breakthroughs stand out:
Staking & Restaking
PoS enables staking as a source of network security—and now, restaking extends that security to other protocols via EigenLayer. This transforms ETH into a shared trust layer across Web3.
EIP-7702: Smarter Wallets
Building on EIP-4337, EIP-7702 allows EOAs (externally owned accounts) to temporarily act as smart contract wallets. This unlocks features like:
- Social recovery
- Cross-chain interactions from a single interface
- Gas payment in any token
These upgrades lay the foundation for mass-market Web3 applications.
Proof of Stake and Decentralization: A Balanced View
Owen (OKX Web3):
Critics argue PoS favors wealthy stakeholders—but reality paints a different picture.
In PoW:
- Mining pools concentrated hash power (top 5 controlled >75%)
- Geographically centralized in low-energy-cost regions
- Dependent on specialized hardware (e.g., GPUs), vulnerable to manufacturer interference
PoS mitigates these risks:
- Lower barrier to becoming a validator (~32 ETH)
- No need for expensive hardware
- Greater geographic distribution
Moreover, proposed upgrades like Verkle Trees + EIP-4444 will reduce node storage requirements—making solo staking more accessible and further democratizing validation.
The State of Ethereum L2s and Rollups Potential
L2 ecosystems are thriving—but also fragmented. Dozens of rollups compete for liquidity and users, creating UX friction.
Despite this, rollups offer compelling advantages:
- Scalability: High throughput at low cost
- Security: Inherits Ethereum’s security via data availability
- Compatibility: Full EVM support enables easy migration
- Future-readiness: Complements sharding in Ethereum’s long-term roadmap
Challenges remain:
- Withdrawal delays
- Cross-rollup incompatibility
- Centralization risks (e.g., few sequencer operators)
Solutions like chain abstraction aim to unify access—allowing users to interact seamlessly across L2s through atomic cross-chain swaps.
FAQs
Q: What is the main benefit of Ethereum 2.0?
A: Ethereum 2.0 improves scalability, security, and sustainability through Proof of Stake and sharding—reducing energy use by over 99% compared to PoW.
Q: How do rollups reduce gas fees?
A: Rollups process transactions off-chain and batch data on Ethereum, drastically lowering per-transaction costs while maintaining security.
Q: Is Ethereum still decentralized after moving to PoS?
A: Yes—PoS enhances decentralization by lowering hardware barriers and enabling broader validator participation globally.
Q: What is account abstraction?
A: It allows wallets to behave like smart contracts, enabling features like social recovery, multi-sig security, and gasless transactions.
Q: Will all L2s survive long-term?
A: Likely not—network effects will favor top performers, leading to consolidation. Interoperability solutions will help unify fragmented ecosystems.
Q: How does restaking work?
A: Restaking lets validators reuse their staked ETH to secure additional protocols (e.g., EigenLayer), amplifying capital efficiency across Web3.
👉 Explore how Ethereum innovations are powering the next generation of decentralized apps.
Ethereum’s journey toward becoming the “world computer” is far from complete—but with sustained technical progress, growing adoption, and community-driven governance, its foundation for long-term relevance is stronger than ever.