2025 Ethereum Trend: The more successful the protocol, the higher the ecological risk?

Ethereum core protocol is becoming increasingly powerful, yet the ecosystem is facing unprecedented complexity

Ethereum is a textbook-level engineering marvel. The Dencun upgrade fundamentally addresses the L2 cost issue, while the Pectra upgrade aims to optimize the core staking economy. This "digital leviathan" of the digital world has executed its public roadmap with precision. However, a peculiar paradox stands before all observers: the certainty and success of the protocol layer seem to have not brought tranquility to the ecosystem layer, but rather spawned unprecedented complexity and potential risks. The engine room of Ethereum (the main protocol) has never been so powerful and clear, yet its vast new continent (L2 and Restaking ecosystem) is filled with the clamor of opportunity and the fog of chaos. We must pose a new question: when the war of the underlying protocols is essentially over, where exactly will Ethereum's next battlefield be?

The duet of Dencun and Pectra

To understand the current state of Ethereum, we must first acknowledge the tremendous success of its core engineering. This victory comprises two key upgrades:

Firstly, it is the economic transformation triggered by the Dencun upgrade at the beginning of 2024.

By introducing Proto-Danksharding (EIP-4844), the Ethereum mainnet has opened dedicated and inexpensive data channels (Blobs) for Layer 2 networks. This is not a minor tweak, but a fundamental cost revolution. Over the past year and a half, we have witnessed a sharp decline in L2 transaction fees, which have remained at extremely low levels for an extended period. The market has made the most honest vote with its funds: in recent months, although the price of ETH has remained stable, its performance has lagged far behind that of 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 inexpensive data. Ethereum has successfully transformed itself from a "congested world computer" to a "secure settlement and data anchor" for the entire ecosystem.

Secondly, it is the governance evolution brought by the Pectra upgrade completed in May this year.

If Dencun addresses the "cost" issue, then Pectra directly confronts the challenge of "control." In the face of the trend of power centralization among validators under the PoS mechanism, Pectra reduces the operational advantages of large staking pools by improving the effective balance limit for 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 core developers have the ability and willingness to defend the decentralized nature of the network.

The successful delivery of these two upgrades means that the main contradictions at the protocol level of Ethereum have been basically resolved. The engine room is operating well, providing an unprecedented certainty foundation 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 towards a broader ecological layer, giving rise to two great mists:

First, there is the maturity of the Restaking track and its inherent systemic risks. The re-staking 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 foundation for a large number of emerging protocols (such as DA layers, oracles, and bridges), which is undoubtedly a tremendous innovation. However, at its core, it adds new layers of leverage and risk that are not directly constrained by the main protocol on the basis of Ethereum's credit. A failure of a re-staking service could lead to the confiscation of ETH principal, triggering a series of chain liquidations. This "potential systemic risk" has become a core issue that analysts cannot avoid when assessing the long-term stability of Ethereum.

Secondly, there is a side effect brought about by the prosperity of the L2 ecosystem: severe fragmentation. Dozens of Rollup networks operate independently, forming isolated liquidity islands and gaps in user experience. The transfer of users' assets between different L2s is not only cumbersome but also faces security risks brought by different cross-chain bridges. This escalating "L2 war" has stimulated innovation while greatly harming the overall effect of the network. A digital nation that should have been unified has, in reality, split into countless city-states with different languages and disconnected transport.

The commonality between these two major issues is that they cannot be resolved merely through 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

Positive Gardener: How EcoDev Bridges Ecological Divides

In the face of the ecological chaos that cannot be directly intervened by the protocol layer, the Ethereum Foundation's response strategy demonstrates a mature governance that transcends pure technical thinking. Its ecosystem development plan (EcoDev) is playing the role of an "active gardener," using "soft power" to bridge the cracks in the ecosystem.

By reviewing its recent funding strategies, we can see that EcoDev's investments are highly targeted. It does not simply reward the most successful projects, but rather allocates substantial resources to areas that can enhance the "public goods" of the entire ecosystem:

• Funding Standardization Tools: Support the development of a universal L2 cross-chain communication standard and developer toolkit to reduce the negative impact of fragmentation.
• Support for Academic Research: Provide long-term funding for cutting-edge fields such as ZK technology and MEV mitigation solutions to ensure technological reserves.
• Nurturing a global community: Invest resources in emerging markets such as Asia, Africa, and Latin America to ensure that the culture and developer base of Ethereum remain global and diverse.

The core idea of this strategy is: since it is impossible to enforce unification through protocol rules, we should guide the ecosystem towards integration by cultivating public infrastructure and common standards. This is a softer and more long-term governance philosophy.

The evolution from protocol engineer to ecosystem gardener

The future path of Ethereum is already clear. It has successfully completed the modernization of its core protocol, establishing 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: at the protocol layer, ongoing refined optimization and security reinforcement; at the ecosystem layer, addressing new challenges arising from success through strategic investment and cultivation. What we see is no longer a development team that merely focuses 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 challenges calmly, and respond with diverse methods is precisely what makes Ethereum the most trusted asset.