Ethereum's Second Decade: Opportunities and Challenges Coexist

Ethereum has celebrated its tenth anniversary. Looking back over the past decade, it has evolved from an experimental project into a blockchain platform managing over $44 billion in Layer 2 locked value, and has become an important infrastructure for global cryptocurrency ETFs. During these ten years, Ethereum has experienced many significant events, including the DAO fork and the Merge upgrade, with each crisis becoming an opportunity for technological advancement.

However, entering the second decade, Ethereum faces more complex challenges. The four core issues of account abstraction, Layer 2 ecosystem, MEV problems, and global regulation will test Ethereum's development capabilities. At the same time, institutional funds are pouring in through ETFs, and ordinary users are looking forward to a better interaction experience, all of which require Ethereum to find a new balance between technical ideals and real-world demands.

Account Abstraction: Balancing Convenience and Security

In May 2025, the Pectra upgrade introduced EIP-7702, achieving a significant breakthrough in account abstraction. This allows regular user wallets to temporarily have smart contract functionality, supporting new features such as batch transactions and gas fee delegation, greatly enhancing the user experience. However, this innovation also brought security risks. Some users lost assets due to inadvertently authorizing malicious contracts, and within just two weeks, over 100,000 wallets encountered EIP-7702 authorization vulnerability attacks, with total losses reaching $150 million.

This situation highlights the contradiction between convenience and security in account abstraction. To address this, the Ethereum community is promoting the "Smart Account Security Standards," which require wallets to display the open-source status of delegated contracts and introduce a cooling-off period mechanism. The future challenge lies in how to balance flexibility and security to meet the needs of different user groups.

Layer2 Ecosystem: Prosperity and Fragmentation Coexist

Layer 2 solutions greatly enhance the transaction efficiency and cost of Ethereum, with the total locked value surpassing 52 billion USD and daily transaction volume reaching 40 million by 2025. However, interoperability between different Layer 2s remains an issue, as users need to frequently switch between various Rollups.

Currently, the Layer 2 ecosystem presents a polarized pattern. The leading projects in the Optimistic Rollup camp occupy 72% of the market share, while the ZK-Rollup camp is quickly catching up, boasting faster transaction confirmation speeds and lower fees. However, behind this prosperity lie issues such as liquidity fragmentation, technological fragmentation, and centralization risks.

To address these issues, the industry has proposed solutions such as "superchain" and "ZK alliance", aiming to achieve interoperability between Layer 2s. However, technical compatibility and coordination difficulties remain major obstacles. The future direction of the Layer 2 ecosystem will directly affect whether Ethereum can support a larger user base.

MEV: The Dilemma of Fairness and Efficiency

The issue of Maximum Extractable Value (MEV) has become increasingly serious after Ethereum's transition to PoS. In the first quarter of 2025, the total MEV extraction amount for Ethereum reached $520 million, with DEX arbitrage and liquidations accounting for the majority. 15%-20% of ordinary users' transaction costs go towards paying this "hidden tax." Even more concerning is the trend of MEV centralization, which may lead to block sorting rights being monopolized by a few institutions.

To address this challenge, the Ethereum community is exploring various solutions, including encrypted memory pools, the MEV-Burn mechanism, and more. The proposer-builder separation (PBS) model is also seen as a potential solution. However, how to achieve a more equitable MEV distribution while ensuring network efficiency remains a long-term issue that needs exploration.

Regulation and Financialization: Opportunities and Challenges Coexist

With the large-scale entry of institutional funds, Ethereum is facing a contradiction between compliance and decentralization. In 2025, Ethereum ETFs saw significant capital inflows, and the proportion of institutional holdings of ETH increased significantly. At the same time, regulatory policies around the world are also continuously evolving.

The regulatory attitudes towards cryptocurrencies vary among the United States, the European Union, and the Asia-Pacific region, leading to the phenomenon of "regulatory arbitrage." Certain DeFi projects deploy different versions in different regions to comply with local regulatory requirements, which not only increases development costs but also undermines Ethereum's positioning as a global unified infrastructure.

The influx of institutional funds has brought higher liquidity, but it has also increased the correlation between Ethereum prices and traditional financial markets. This trend of financialization has changed the value capture mechanism of ETH, making it more susceptible to macroeconomic factors.

Future Outlook

Entering the second decade, Ethereum needs to find a new balance between decentralization, security, and scalability. The four major challenges of account abstraction, Layer 2 integration, fair MEV distribution, and regulatory adaptation are essentially a continuation of the "impossible triangle" of blockchain.

The future development of Ethereum will not only be a technical issue but also how to adapt to regulatory requirements while maintaining innovation, and how to ensure network security while enhancing user experience. This requires the joint effort and wisdom of the entire community.

With a new round of technological innovation and ecological development, Ethereum will continue to evolve and adapt to new challenges. Its value may not lie in completely solving all problems, but in proving that decentralized networks can find a balance between ideals and reality, and move forward continuously. The answers of the second decade will gradually be revealed through every line of code, every upgrade, and every user's actual usage.