Ethereum's Next Decade: Technological Innovations and Unsolved Challenges
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Ethereum's Next Decade: Technological Innovations and Unsolved Challenges
At the beginning of its second decade, Ethereum's "coming-of-age" ceremony is no easy feat.
Navigating Web3 tides with focused insightsAuthor: Max.S
Ethereum turned ten yesterday. Back in 2015, it launched as an "experimental project," but today it manages over $44 billion in Layer2 locked value and serves as infrastructure for global crypto ETFs. Ethereum's first decade has written the most dramatic evolution in blockchain history—from the DAO fork to the Merge upgrade, from high Gas fees to Rollup adoption—each crisis becoming a stepping stone for technological leaps.
But entering its second decade, Ethereum's "coming-of-age" won't be easy. Security flaws emerged after account abstraction rolled out, the Layer2 ecosystem is facing "fragmentation wars," MEV erodes fairness, and global regulation acts as a "double-edged sword." These four core challenges hang like a Sword of Damocles. Institutional capital floods in via ETFs, while ordinary users demand better interaction experiences. Ethereum must find a new balance between technical ideals and real-world compromises.
Account Abstraction: The Life-or-Death Trade-off Between Convenience and Security
In May 2025, a user shared their experience on social media: within 15 minutes of clicking "authorize," their wallet balance was drained—even though the attacker never accessed their private key. While using a wallet's "one-click account abstraction upgrade" feature, they accidentally authorized a malicious contract, automatically transferring ETH worth 120,000 RMB. This is not an isolated case. Blockchain security firm SlowMist reported that just two weeks after the Pectra upgrade, over 100,000 wallets were drained due to EIP-7702 authorization vulnerabilities, totaling $150 million in losses.
The Dual Nature of EIP-7702
The Pectra upgrade, launched on May 7, 2025, achieved a major breakthrough in account abstraction through EIP-7702. It allows regular user wallets (EOAs) to temporarily gain smart contract capabilities, enabling batch transactions, Gas fee sponsorship, social recovery, and other "Web3-native experiences." In theory, this solves Ethereum's long-standing "user experience pain points." What used to require two authorizations and one transaction for a DeFi swap can now be done in a single step. Developers can also sponsor Gas fees, making "zero ETH needed to use Web3" a reality.
Behind this convenience, however, the trust model has been completely reshaped. CertiK’s security team pointed out that EIP-7702 breaks the fundamental assumption that "EOAs cannot execute contract code." Legacy contracts relying on tx.origin==msg.sender are now vulnerable to reentrancy attacks. Worse, hackers exploit users’ curiosity about account abstraction by luring them into authorizing malicious contracts via phishing links. For example, the top-ranked EIP-7702 delegation contract (0x930fcc37d6042c79211ee18a02857cb1fd7f0d0b) was found to automatically redirect funds. Newcomers experiencing account abstraction for the first time accounted for 73% of victims.
Future Directions
The Ethereum Foundation is advancing a "Smart Account Security Standard," requiring wallets to display whether delegation contracts are open-source and implementing a mandatory 72-hour cooling-off period. But the real challenge lies in balancing "flexibility" with "security." Institutional users need complex permission controls like multi-sig and time locks, while regular users want something as simple as Alipay. As Vitalik said at Hong Kong Web3 Festival, account abstraction isn't the end—it's an ongoing博弈 between "user sovereignty" and "security guardrails."
Layer2 Ecosystem: Fragmentation Beneath the Prosperity
Sending USDC on Arbitrum costs just $0.01 compared to $5 on the mainnet. Beijing developer Zhang Ming complained it took him 30 minutes to transfer assets when buying an NFT on zkSync. This reflects the current state of Layer2: by 2025, Ethereum’s Layer2 total value locked could surpass $52 billion, with daily transactions reaching 40 million. Yet users still have to jump between different Rollups—as if living across parallel universes.
Optimistic Dominance & ZK Comeback
The current Layer2 landscape is polarized. Optimistic Rollups like Arbitrum (TVL $17.8B) and Optimism (TVL $8.9B), thanks to EVM compatibility, have become developers' go-to choices, capturing 72% of the market share. On the ZK-Rollup side, zkSync (TVL $3.8B) and Starknet (TVL $2.2B) are rapidly catching up. Their zero-knowledge proof technology compresses transaction confirmation time to 2 seconds and reduces fees by 60% compared to Optimistic Rollups.
Yet beneath the prosperity lie hidden risks:
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Liquidity fragmentation: Uniswap’s liquidity on Arbitrum is eight times that on zkSync, forcing users to repeatedly deposit funds.
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Technical fragmentation: Optimistic Rollups rely on "fraud proofs," resulting in a 7-day withdrawal period, while ZK-Rollups still face high proof-generation costs that remain a barrier for average developers.
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Centralization risks: Arbitrum’s sequencer (transaction ordering service) is controlled by Offchain Labs, which once caused a 3-hour transaction outage due to server failure.
The Dream and Reality of the "Superchain"
Optimism’s proposed "Superchain" aims to connect all Optimistic Rollups through a shared security layer, but progress has been slow. By July 2025, only Base and Zora had achieved cross-chain interoperability. Meanwhile, zkSync and Starknet jointly launched the "ZK Alliance" to enable proof interoperability, yet compatibility across different ZK algorithms remains a challenge. Blockchain analyst Wang Feng noted that whether Layer2 ultimately becomes "a seamless network" or "a collection of fragmented silos" will determine if Ethereum can support one billion users.
MEV: Fairness Trapped in Blockchain's "Dark Forest"
On March 24, 2025, Uniswap user Michael attempted to swap $220,000 worth of USDC but fell victim to a classic "sandwich attack." An MEV bot bought USDT first, pushing up the price. After Michael’s trade went through, the bot immediately sold, leaving Michael with only 5,272 USDT—a loss of $215,000. On-chain data showed validator bobTheBuilder received a $200,000 "tip" for including the transaction, while the attacker profited just $8,000. Ordinary users bore the brunt of the loss.
MEV Industrialization and Network Fairness
After Ethereum’s shift to PoS, MEV (Maximal Extractable Value)—once a "miner privilege"—has evolved into a professionalized industry. Arbitrage scripts are written by searchers, block builders package transactions, and validators select optimal blocks. In Q1 2025, total MEV extracted on Ethereum reached $520 million, with DEX arbitrage and liquidations accounting for 73%. An estimated 15%-20% of ordinary users’ transaction costs constitute this "invisible tax."
More concerning is "MEV centralization": 65% of block-building power is controlled by top players like Flashbots. Validators, seeking higher returns, often choose high-MEV blocks, squeezing out smaller builders. MIT professor Muriel Médard warned that if transaction ordering power is monopolized by a few institutions, Ethereum might turn into "Wall Street’s high-frequency trading playground."
Breaking the Gridlock: From Technical Defenses to Mechanism Design
The Ethereum community is advancing multiple solutions:
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Encrypted mempools: Hide transactions from public view so MEV bots can’t monitor them in advance.
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MEV-Burn: Destroy part of MEV revenue to reduce validators’ rent-seeking incentives.
Under the proposer-builder separation (PBS) model, only validators propose blocks while builders compete for ordering rights, reducing single-point control risks. Yet a balance between "fairness" and "efficiency" must still be struck. As Ethereum core developer Dankrad Feist stated, "MEV isn't a bug—it's an inevitable result of blockchain transparency. Our goal isn't to eliminate MEV, but to distribute its benefits more fairly across the entire network."
Regulation and Financialization: The Soul-Searching After Institutional Adoption
In July 2025, U.S. SEC-approved Ethereum ETFs saw $2.2 billion in net inflows, and institutional ownership of ETH surged from 5% to 18%. Meanwhile, the EU’s "Smart Contract Transparency Act" requires Rollups to disclose their trading algorithms, and Hong Kong mandates KYC for all crypto service providers. Ethereum now faces the ultimate conflict between "compliance" and "decentralization."
The Global Regulatory Crossroads
United States: The CLARITY Act is ushering in a wave of DeFi compliance, defining ETH as a "commodity" and allowing banks to custody it, while requiring DeFi platforms to register as "exchanges." European Union: MiCA regulations mandate 100% fiat reserves for stablecoin issuers and require additional approvals for privacy coin transactions. China: Mainland China maintains a strict regulatory stance, but cross-border digital yuan settlements are projected to exceed 3.5 trillion RMB by 2025. Hong Kong, serving as a "testbed," has opened up free circulation and trading of digital assets, and its stablecoin legislation has invigorated the local market.
Regulatory divergence has also fueled "regulatory arbitrage": for instance, a leading DeFi protocol deploys KYC modules in the EU but keeps anonymous pools in Singapore, with compliant trading pairs accessible only to U.S. users. This "fragmented compliance" not only increases development costs but undermines Ethereum’s vision of being a "unified global infrastructure."
The Double-Edged Sword of Financialization
Institutional capital brings liquidity, but Ethereum’s price correlation with U.S. equities has risen from 0.3 to 0.6. When the Fed raised rates by 0.5% in June 2025, ETH dropped 8% in a day—compared to Bitcoin’s 5%—something unimaginable five years ago. A deeper shift is underway: the "value capture mechanism" has changed. Previously driven by on-chain Gas fees and ecosystem growth, ETH’s price is now dominated by ETF flows and macro interest rates.
Xiao Feng, chairman of Wanxiang Blockchain, noted that in its second decade, Ethereum must chart a course between "innovating within compliance frameworks" and "staying true to decentralization." Hong Kong may be the ideal testing ground—it can connect with China’s digital yuan while attracting global crypto firms.
Seeking Balance Within the "Impossible Triangle"
In Ethereum’s first decade, upgrades like "The Merge," "Shapella," and "Dencun" answered the question of "can it survive?" In the second decade, it must answer "how can it become a true global infrastructure?" The security trade-offs of account abstraction, Layer2 ecosystem integration, fair MEV distribution, and regulatory compliance are fundamentally extensions of the "decentralization, security, scalability" impossible triangle. This time, however, the trust of one billion users is at stake.
At Ethereum’s tenth anniversary speech, Vitalik said, "We don’t need a perfect blockchain—we just need a constantly evolving one." Perhaps Ethereum’s ultimate value isn’t in solving every problem, but in proving that decentralized networks can keep moving forward despite the tug-of-war between technical ideals and real-world compromises.
The curtain has risen on the second decade. The answers will be written in every line of code, every upgrade, and every user’s wallet!
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