Ethereum Trends in 2025: The More Successful the Protocol, the Higher the Ecosystem Risk? In-depth Analysis of the Post-Pectra Era

Ethereum Core Protocol Grows Stronger, While the Ecosystem Faces Unprecedented Complexity

Over the past year, Ethereum has staged a textbook-level engineering miracle. From the Dencun upgrade, which fundamentally solved the L2 cost issue, to the Pectra upgrade aimed at optimizing the core staking economy, this "digital Leviathan" of the digital world has precisely executed its public roadmap. However, a peculiar paradox now confronts all observers: the certainty and success at the protocol layer have not brought peace to the ecosystem layer; instead, they have spawned unprecedented complexity and potential risks. Ethereum's engine room (the main protocol) has never been so powerful and clear, but its vast new continent (L2 and Restaking ecosystem) is filled with the clamor of opportunity and the fog of chaos. We must now ask a new question: when the war at the base protocol layer is essentially over, where is Ethereum's next battlefield?

The Duet of Dencun and Pectra

To understand Ethereum's current state, one must first acknowledge the tremendous success of its core engineering. This victory consists of two key upgrades:

First, the economic transformation triggered by the Dencun upgrade at the beginning of 2024.

By introducing Proto-Danksharding (EIP-4844), Ethereum mainnet opened up dedicated, low-cost data channels (Blobs) for Layer 2 networks. This was not a minor tweak, but a fundamental cost revolution. Over the past year and a half, we have witnessed L2 transaction fees plummet and remain at extremely low levels. The market has voted with its capital: in recent months, while ETH’s price has remained stable, its performance has lagged far behind the leading L2 ecosystem tokens. This clearly indicates that expectations for value growth have successfully shifted from the mainnet’s execution capability to the L2 application boom fueled by cheap data. Ethereum has successfully transformed itself from a "congested world computer" into the "security settlement and data anchor" of the entire ecosystem.

Second, the governance evolution brought by the Pectra upgrade completed in May this year.

If Dencun solved the "cost" problem, then Pectra directly addressed the challenge of "control." Facing the trend of validator power concentration under the PoS mechanism, Pectra, through improvements such as raising the effective balance cap for validators (EIP-7251), reduced the operational advantages of large staking pools and optimized the participation experience for decentralized staking. This was a precise, surgical intervention aimed at alleviating centralization pressure from the protocol level. Although a single upgrade cannot eliminate all issues, it sent a strong signal to the entire community: Ethereum core developers have both the ability and the will to defend the network’s decentralized nature.

The successful delivery of these two upgrades means that Ethereum’s main contradictions at the protocol layer have basically been resolved. The engine room is running smoothly, providing an unprecedentedly certain foundation for the expansion of the upper layers.

Systemic Risks of Restaking and the Fragmentation of L2

However, the success of the engine room has pushed complexity to the broader ecosystem layer, giving rise to two major fogs:

First, the maturity of the Restaking track and its inherent systemic risks. Restaking protocols represented by EigenLayer have evolved over the past year from an emerging concept into a massive, complex financial Lego. By sharing Ethereum’s economic security, they provide a launchpad for a large number of new protocols (such as DA layers, oracles, bridges), which is undoubtedly a huge innovation. But in essence, they add new, leverage and risk layers—unconstrained by the main protocol—on top of Ethereum’s credit foundation. The failure of a restaking service could trigger slashing of ETH principal, leading to a series of cascading liquidations. This "potential systemic risk" has become a core issue that analysts cannot avoid when assessing Ethereum’s long-term stability.

Second, the side effect of L2 ecosystem prosperity: severe fragmentation. Dozens of rollup networks operate independently, forming isolated liquidity islands and user experience gaps. Transferring assets between different L2s is not only cumbersome, but also exposes users to security risks from various cross-chain bridges. This escalating "L2 war" has spurred innovation while greatly harming the network’s overall effect. What should be a unified digital nation has actually split into countless city-states with different languages and disconnected transportation.

The commonality of these two major issues is that neither can be solved simply by the next upgrade of the Ethereum main protocol. The battlefield has shifted.

Image description: Layer 2 Total Value Locked (TVL) market share pie chart
Data source: defillama

Active Gardeners: How EcoDev Bridges Ecosystem Cracks

Faced with ecosystem chaos that the protocol layer cannot directly intervene in, the Ethereum Foundation’s response strategy demonstrates a mature governance approach that goes beyond pure technical thinking. Its Ecosystem Development Program (EcoDev) is playing the role of an "active gardener," using "soft power" to bridge the cracks in the ecosystem.

Reviewing its recent funding strategies, we can see that EcoDev’s investments are highly targeted. Rather than simply rewarding the most successful projects, it heavily allocates resources to areas that can enhance the ecosystem’s "public goods":

• Funding standardization tools: Supporting the development of universal L2 cross-chain communication standards and developer toolkits to reduce the negative impact of fragmentation.

• Supporting academic research: Providing long-term funding for cutting-edge areas such as ZK technology and MEV mitigation solutions to ensure technical reserves.

• Cultivating global communities: Investing resources in emerging markets such as Asia, Africa, and Latin America to ensure Ethereum’s culture and developer base remain global and diverse.

The core idea of this strategy is: since it’s impossible to enforce unification through protocol rules, guide the ecosystem toward integration by nurturing 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 for 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 "ecosystem gardener."

This is a dual-track long march: at the protocol layer, continuing with fine-tuned optimization and security reinforcement; at the ecosystem layer, responding to new challenges born of success through strategic investment and cultivation. What we are seeing is no longer just a development team buried in technical implementation, but a mature organization that knows how to govern a vast, complex, and vibrant digital economy.

This ability to manage complexity, calmly face new problems, and respond with diverse approaches is precisely Ethereum’s most trustworthy asset.