Ethereum at Ten: A New Decade of Breakthroughs and Challenges

Ethereum has celebrated its tenth anniversary. From being an "experimental project" at the launch of its genesis block in 2015 to now managing over $44 billion in Layer 2 locked value and becoming one of the key infrastructures for global cryptocurrency ETFs, Ethereum's first decade has written the most dramatic evolution in the history of blockchain. From the DAO incident to the Merge upgrade, from high Gas fees to the promotion of Rollup technology, every crisis has become an opportunity for technological leap.

However, at the beginning of the second decade, Ethereum faces a severe "rite of passage" test. The four core challenges - security vulnerabilities arising from the implementation of account abstraction, the "factional wars" in the Layer 2 ecosystem, the erosion of fairness by MEV, and the double-edged sword effect of global regulation - hang over it like the sword of Damocles. While institutional funds flood in through ETFs, ordinary users also look forward to a better interactive experience. Ethereum needs to find a new balance between technological ideals and real-world compromises.

Account Abstraction: The Game of Convenience and Security

In May 2025, a report about a user experiencing asset theft drew attention on social media. The user accidentally authorized a malicious contract while using a wallet's "one-click upgrade account abstraction" feature, resulting in the theft of 120,000 worth of ETH within 15 minutes. This is not an isolated case; according to statistics from a blockchain security company, more than 100,000 wallets were stolen due to the EIP-7702 authorization vulnerability within just two weeks of the Pectra upgrade, with total losses reaching 150 million dollars.

The Pectra upgrade has achieved a significant breakthrough in "account abstraction" through EIP-7702, allowing ordinary user wallets to temporarily have smart contract capabilities, supporting batch transactions, gas fee payment on behalf, and social recovery, among other "Web3 native experiences." This theoretically addresses Ethereum's "user experience chronic issues" over the past decade, simplifies DeFi operation processes, and even realizes the vision of "playing Web3 with zero ETH."

However, behind the convenience is a complete reconstruction of the trust model. Security experts point out that EIP-7702 breaks the underlying assumption that "EOA cannot execute contract code," exposing old contracts to the risk of reentrancy attacks. Even more seriously, hackers exploit users' novelty towards "account abstraction" by inducing them to authorize malicious contracts through phishing links. Data shows that novice users encountering account abstraction for the first time account for as much as 73% of the victims.

To address these challenges, the Ethereum community is advancing the "Smart Account Security Standards", which require wallets to display the open-source status of delegated contracts and to include a 72-hour cooling-off period. However, the real challenge lies in how to balance "flexibility" with "security". Institutional users need complex permission management systems, while ordinary users prefer operations that are simple and intuitive. As a well-known developer said at the Web3 Summit, account abstraction is not the end, but the beginning of the ongoing interplay between "user sovereignty" and "security safeguards".

Layer2 Ecosystem: The Fragmentation Crisis Behind Prosperity

The prosperity of the Layer2 ecosystem has brought significant performance improvements and cost reductions. For example, transferring USDC on a certain Layer2 network only costs $0.01, while the main network requires $5. However, users still face issues such as long cross-chain asset transfer times and complex operations. By 2025, the total locked value of Ethereum Layer2 is expected to exceed $52 billion, with daily transaction volumes reaching 40 million, but the user experience still needs improvement.

The current Layer 2 ecosystem presents a polarized situation. In the Optimistic Rollup camp, two major platforms have become the developers' first choice due to EVM compatibility, occupying 72% of the market share. The ZK-Rollup camp, on the other hand, leverages zero-knowledge proof technology to compress transaction confirmation times to 2 seconds, with transaction fees 60% lower than Optimistic Rollup.

However, there are many hidden problems behind the prosperity:

1. Liquidity Fragmentation: There are significant liquidity differences between different Layer2 platforms, leading to frequent deposits by users.
2. Technical Fragmentation: Optimistic Rollup and ZK-Rollup each have their own advantages and disadvantages, leaving developers facing a dilemma in technology choice.
3. Centralization risk: Some key components of certain Layer 2 platforms are still controlled by a single entity, leading to service interruption incidents.

To address these issues, the industry has proposed solutions such as "Super Chain" and "ZK Alliance", aimed at achieving interoperability between Layer 2s. However, technical compatibility and interest coordination remain significant challenges. As a blockchain analyst has stated, the ultimate form of Layer 2 is the key factor determining whether Ethereum can support 1 billion users.

MEV: The Fairness Dilemma in the Blockchain "Dark Forest"

In March 2025, a typical "sandwich attack" incident drew attention. A user, while exchanging 220,000 USDC, received only 5,272 USDT due to the intervention of MEV bots, resulting in a loss of up to 215,000 US dollars. On-chain data shows that the validator earned a "tip" of 200,000 US dollars for packaging this transaction, while the attacker only made a profit of 8,000 US dollars, with ordinary users becoming the biggest victims.

After Ethereum transitioned to PoS, MEV (Maximal Extractable Value) evolved from "miner privilege" into a specialized industry. In the first quarter of 2025, the total MEV extraction on Ethereum reached $520 million, with DEX arbitrage and liquidation accounting for 73%. In ordinary users' trading costs, 15%-20% is actually a "hidden tax" paid for MEV.

More concerning is the trend of MEV centralization: 65% of block building rights are controlled by leading builders. Validators, in pursuit of higher returns, tend to choose high MEV blocks, making it difficult for smaller builders to survive. Scholars warn that if block sorting rights are monopolized by a few institutions, Ethereum may become "Wall Street's high-frequency trading playground."

To address these challenges, the Ethereum community is advancing several solutions, including cryptographic memory pools, the MEV-Burn mechanism, and the proposer-builder separation (PBS) model. However, balancing "fairness" and "efficiency" among these solutions remains a significant challenge. As one core developer stated, "MEV is not a vulnerability, but an inevitable result of blockchain transparency. Our goal is not to eliminate MEV, but to distribute the gains more fairly across the entire network."

Regulation and Financialization: The Soul-Searching Questions After Institutional Entry

In July 2025, the Ethereum ETF approved by the United States attracted $2.2 billion in net inflows, with institutional holdings of ETH surging from 5% to 18%. Meanwhile, the EU required Layer 2 to publicly trade algorithms, while Hong Kong implemented KYC requirements for crypto service providers. Ethereum is facing the ultimate conflict between "compliance" and "decentralization."

The global regulation is showing a trend of diversification:

• USA: New legislation will trigger a compliance wave in DeFi, ETH is defined as a "commodity", allowing banks to custody.
• EU: New regulations require stablecoin issuers to hold 100% fiat reserves, and privacy coin transactions require additional approval.
• China: The mainland region still maintains a high-pressure situation, but the scale of cross-border settlement of digital yuan is expected to grow significantly. Hong Kong, as a "testing ground," opens up digital asset trading, and the stablecoin bill promotes market activity.

Regulatory differences have given rise to the phenomenon of "regulatory arbitrage," where a leading DeFi protocol deploys differentiated features in different regions. This "fragmented compliance" not only increases development costs but also undermines Ethereum's positioning as a "global unified infrastructure."

Institutional capital inflows have brought increased liquidity, but they have also significantly enhanced the correlation of Ethereum prices with traditional financial markets. In June 2025, when the Federal Reserve raised interest rates by 0.5%, ETH experienced a single-day decline of 8%, surpassing Bitcoin. This phenomenon would have been unimaginable five years ago. A more profound impact is the change in the "value capture mechanism," where ETH prices are increasingly influenced by ETF capital flows and macro interest rates, rather than solely relying on on-chain activities.

A renowned blockchain expert pointed out that the key to Ethereum's second decade lies in finding a balance between "compliance innovation" and "decentralized ethos." Hong Kong may become an ideal testing ground, capable of connecting with the mainland's digital yuan while also attracting global crypto enterprises.

Finding Balance in the "Impossible Triangle"

The first decade of Ethereum answered the question of "Can it survive?" through a series of significant upgrades. In the second decade, it needs to tackle the higher-level challenge of "How to become a true global infrastructure." The four major challenges of security games of account abstraction, ecological integration of Layer 2, fair distribution of MEV, and regulatory compliance adaptation essentially continue the "decentralization, security, scalability" trilemma. The difference this time is that the trust of 1 billion users is at stake.

As a core developer mentioned in the Ethereum 10th anniversary speech: "We don't need a perfect blockchain, we just need a 'constantly evolving blockchain'." Perhaps the ultimate value of Ethereum lies not in solving all problems, but in proving that decentralized networks can continue to advance amid the tug-of-war between technical ideals and real-world compromises.

The curtain of the second decade has been raised, and the answers will be written in every line of code, every upgrade, and every user's wallet.