Yesterday marked Ethereum's tenth anniversary. When the genesis block went live in 2015, it was just an "experimental project". Now it manages over 44 billion US dollars in Layer 2 locked value and serves as one of the infrastructures supporting global cryptocurrency ETFs. The first decade of Ethereum wrote one of the most dramatic evolutionary histories in blockchain, from DAO forks to the merge upgrade, from high gas fees to rollup promotion, with each crisis becoming a stepping stone for technological leaps.
However, at the beginning of the second decade, Ethereum's "coming of age" is not easy. After account abstraction was implemented, security vulnerabilities emerged, and the Layer 2 ecosystem is experiencing a "fragmentation war." MEV erodes fairness, and global regulation is a "double-edged sword." These four core challenges are like the sword of Damocles hanging over its head. Institutional funds are flowing in through ETFs, while ordinary users are looking for better interaction experiences. Ethereum must find a new balance between technological ideals and real-world compromises.
Account abstraction: The "life-and-death game" between convenience and security
In May 2025, a user shared his experience on social media: after clicking authorization, his wallet balance was drained within 15 minutes, without the attacker even obtaining his private key. While using a certain wallet's "one-click upgrade account abstraction" feature, he accidentally authorized a malicious contract, causing 120,000 dollars worth of ETH to be automatically transferred. This situation is not an isolated case; blockchain security company SlowMist reported that over 100,000 wallets were hacked due to EIP-7702 authorization vulnerabilities in just two weeks after the Pectra upgrade, resulting in total losses of 150 million dollars.
The duality of EIP-7702
The Pectra upgrade launched on May 7, 2025, achieved a significant breakthrough in "account abstraction" through EIP-7702, allowing ordinary user wallets (EOA) to temporarily possess smart contract functionality to support batch transactions, gas fee payments, social recovery, and other "Web3 native experiences." Theoretically, Ethereum's decade-long "user experience ailment" has been resolved. Previously, completing a DeFi exchange required 2 authorizations and 1 transaction, but this can now be consolidated into a single-step operation. Moreover, developers can also cover gas fees for users, making it possible to engage in Web3 with "zero ETH."
Behind convenience, the trust model has been completely reconstructed. The CertiK security team points out that EIP-7702 has broken the underlying assumption that "EOA cannot execute contract code," putting old contracts relying on tx.origin==msg.sender at risk of re-entrancy attacks. More seriously, hackers exploit users' curiosity about "account abstraction" by using phishing links to lure users into authorizing malicious contracts, such as the top-ranked EIP-7702 delegated contract (0x930fcc37d6042c79211ee18a02857cb1fd7f0d0b), which was found to automatically redirect funds. New users encountering account abstraction for the first time constitute 73% of the victims.
Future breakthrough directions
The Ethereum Foundation is advancing the "Smart Account Security Standard," requiring wallets to display the open-source status of delegated contracts and include a 72-hour cooling-off period. However, the real challenge is balancing "flexibility" and "security"; institutional users require complex permission management such as multi-signatures and time locks, while ordinary users hope for simplicity akin to Alipay. Vitalik stated at the Hong Kong Web3 Carnival that account abstraction is not the endpoint but a continuous game between "user sovereignty" and "security barriers."
Layer 2 ecosystem: The "fragmentation crisis" behind prosperity
Transferring USDC on Arbitrum costs only 0.01 dollars, while it costs 5 dollars on the mainnet. Developer Zhang Ming in Beijing complained that transferring assets across chains while buying NFTs on zkSync took 30 minutes. This reflects the current state of Layer 2: by 2025, the total locked value of Ethereum Layer 2 is expected to exceed 52 billion dollars, with daily transaction volumes reaching 40 million, yet users still have to switch between different Rollups as if they were in multiple parallel universes.
Optimistic hegemony & ZK counterattack
Currently, the Layer 2 ecosystem is polarized. Arbitrum (with a TVL of 17.8 billion dollars) and Optimism (with a TVL of 8.9 billion dollars) have become the developers' first choice due to EVM compatibility, occupying 72% of the market share, while zkSync (TVL 3.8 billion dollars) and Starknet (TVL 2.2 billion dollars) are quickly catching up, with zero-knowledge proof technology compressing transaction confirmation times to 2 seconds and fees being 60% lower than Optimistic Rollup.
However, hidden concerns lurk beneath prosperity:
Liquidity fragmentation: Uniswap's liquidity on Arbitrum is 8 times that of zkSync, and users can only recharge repeatedly while trading.
Technological fragmentation: Optimistic Rollup relies on "fraud proofs," which requires a 7-day withdrawal period, while the proof generation cost of ZK-Rollup remains a hurdle for ordinary developers.
Centralization risks: Arbitrum's sequencer (transaction sorter) is controlled by Offchain Labs, which once interrupted transactions for 3 hours due to server failure.
"Superchain" dreams and real-world resistance
Optimism's proposed "Superchain" plan aims to connect all Optimistic Rollups through a shared security layer, but progress has been slow. By July 2025, only Base and Zora have achieved cross-chain interoperability, while zkSync and Starknet have jointly launched the "ZK Alliance" to achieve proof recognition. However, compatibility between different ZK algorithms remains a challenge. Blockchain analyst Wang Feng noted that whether Layer 2 ultimately resembles "a seamless web" or "multiple fragmented territories" will determine whether Ethereum can support one billion users.
MEV: The fairness dilemma of the blockchain's "dark forest"
On March 24, 2025, Uniswap user Michael attempted to exchange 220,000 US dollars of USDC but fell victim to a typical "sandwich attack." The MEV bot first bought USDT, raising the price, and after Michael's transaction, the bot immediately sold off, resulting in Michael actually receiving only 5,272 USDT, losing 215,000 dollars. On-chain data indicates that validator bobTheBuilder packaged this transaction for a 200,000-dollar "tip," while the attacker only profited 8,000 dollars, leaving ordinary users as the biggest victims.
The industrialization of MEV and network fairness
After Ethereum transitioned to PoS, MEV (Maximum Extractable Value) shifted from "miner privilege" to a specialized industry. Arbitrage scripts are written by seekers, and builders are responsible for packaging transactions, with optimal blocks chosen by validators. In the first quarter of 2025, Ethereum's total MEV extraction reached 520 million dollars, of which DEX arbitrage and liquidation accounted for 73%, with 15%-20% of ordinary users' transaction costs being paid as "hidden taxes".
More severe is the "MEV centralization": 65% of block construction power is controlled by the leading builder Flashbots, and validators often choose high MEV blocks for higher returns, making it difficult for smaller builders to survive. MIT professor Muriel Médard warns that if block sorting rights are monopolized by a few institutions, Ethereum might become a "high-frequency trading playground for Wall Street."
The path to breaking the deadlock: From technical defense to mechanism design
The Ethereum community is advancing multiple solutions:
Cryptographic memory pools: Hiding transactions outside of the public memory pool to prevent MEV bots from monitoring them in advance.
MEV-Burn: Destroying part of MEV earnings to reduce the rent-seeking motivation of validators.
Under the Proposer-Builder Separation (PBS) model, only validators propose blocks while builders compete for sorting rights, which can reduce the risk of single-point control. However, it is still necessary to balance "fairness" and "efficiency" within these solutions. Ethereum core developer Dankrad Feist once said, "MEV is not a vulnerability, but an inevitable result of blockchain transparency — our goal is not to eliminate MEV, but to distribute the profits more fairly across the entire network."
Regulation and financialization: The "soul-searching question" after institutional entry
In July 2025, the Ethereum ETF approved by the US SEC saw a net inflow of 2.2 billion dollars, and the proportion of institutional holdings of ETH surged from 5% to 18%. Meanwhile, the EU (Smart Contract Transparency Act) requires Rollup to publicly trade algorithms, and Hong Kong mandates all crypto service providers to implement KYC, putting Ethereum in a situation of ultimate conflict between "compliance" and "decentralization."
The "three-way fork" of global regulation
USA: The (CLARITY Act) will usher in a wave of DeFi compliance, defining ETH as a "commodity" to allow bank custody, while DeFi platforms must also register as "exchanges."
EU: The MiCA regulation requires stablecoin issuers to hold 100% fiat reserves, and transactions of privacy coins require additional approval.
China: Currently, the mainland still maintains a high-pressure stance, but cross-border settlements of the digital yuan are expected to exceed 3.5 trillion yuan by 2025. Hong Kong, as a "testing ground," has opened up the free circulation and trading of digital assets, and the stablecoin bill has made Hong Kong's market vibrant.
Moreover, regulatory discrepancies have led to a series of "regulatory arbitrage": for instance, a leading DeFi protocol deploys a KYC module in the EU but retains an anonymous pool in Singapore. Compliant trading pairs are the only ones accessible to US users. This "fragmented compliance" not only increases costs for developers but also undermines Ethereum's vision of a "globally unified infrastructure."
The double-edged sword of financialization
The influx of institutional funds has increased liquidity, but the correlation of Ethereum's price with US stocks has risen from 0.3 to 0.6. In June 2025, when the Federal Reserve raised interest rates by 0.5%, ETH experienced a single-day drop of 8%, while Bitcoin only fell 5%. This was unimaginable five years ago and has deeper implications; the "value capture mechanism" has changed. Previously, ETH prices were driven by on-chain gas fees and ecological growth, but now ETF fund flows and macro interest rates have become dominant factors.
Xiao Feng, chairman of Wanxiang Blockchain, pointed out that Ethereum's second decade must find direction between "innovation within a compliance framework" and "adhering to the original intention of decentralization". Hong Kong may be the best testing ground, as it can connect with mainland China's digital yuan and attract global cryptocurrency enterprises.
Finding balance in the "impossible triangle"
In Ethereum's first decade, upgrades such as "The Merge," "Shapella," and "Dencun" answered the question of "can it survive?" In the second decade, it must answer "how to become a true global infrastructure." The security game of account abstraction, the ecological integration of Layer 2, fair distribution of MEV, and compliance adaptation to regulation are all continuations of the "decentralization, security, scalability" impossible triangle, but this time, the trust of one billion users is at stake.
In his tenth anniversary speech, Vitalik stated, "We do not need a perfect blockchain, we only need a 'continuously evolving blockchain.'" Perhaps Ethereum's ultimate value is not to solve all problems but to prove that decentralized networks can still move forward amidst the tug-of-war between technological ideals and real-world compromises.
The curtain on the second decade has opened, and the answers will be written in every line of code, every upgrade, and every user's wallet!
