In 2013, Vitalik Buterin proposed a new idea in the Bitcoin community: if the blockchain could not only be used for transaction records but could also run arbitrarily complex programs, then it could become a true "world computer." This vision gave birth to Ethereum, which officially launched in 2015. Unlike Bitcoin, which emphasizes "peer-to-peer electronic cash," Ethereum provides a completely new underlying infrastructure for the development of decentralized applications through smart contracts and a Turing-complete virtual machine (EVM).
Over the past decade, Ethereum has gradually carved out a unique development path, from the release of its genesis block, through security challenges and community splits, to multiple rounds of system upgrades and transformations of its consensus mechanism. Today, it is not only the most active smart contract platform but also the technical foundation for emerging industries such as decentralized finance (DeFi), non-fungible tokens (NFTs), decentralized autonomous organizations (DAOs), and on-chain games (GameFi).
From a technical perspective, it is the most representative sample in the public chain field, leading the transition from proof of work to proof of stake, and taking the lead in promoting cutting-edge technologies such as zero-knowledge proofs, Rollup, and account abstraction into practical applications. From an economic perspective, Ethereum's native asset ETH has gradually evolved from the initial "fuel token" to a core digital asset that serves as a settlement, staking, and value storage function. At the industrial level, the prosperity of the Ethereum ecosystem has laid the foundation for the blockchain industry, promoting decentralized experiments in various fields such as finance, art, and gaming.
This report aims to review the core technological upgrades of Ethereum at different stages, analyze the driving forces behind them, explore how these upgrades have shaped the ecosystem and industrial landscape, and predict the future technological direction of Ethereum.
The Birth of Ethereum (2013–2015)
In 2013, Bitcoin had gradually begun to attract global attention, but its functionality was still limited to value transfer. During his active time in the Bitcoin community, Vitalik Buterin keenly realized that although Bitcoin scripts had a certain degree of programmability, they lacked universality and could not support complex applications. In the white paper he published on November 27, 2013, he proposed that if a blockchain platform could run a Turing-complete virtual machine, developers would be able to deploy programs with any logic on the chain. This idea opened up the imaginative space for decentralized applications and directly laid the technical vision for Ethereum—a globally shared, immutable "world computer."
In 2014, the Ethereum team raised funds for the project through a token presale, allowing users to purchase ETH using Bitcoin. The presale not only provided the necessary capital for early development but also established a preliminary consensus and sense of participation within the community. Meanwhile, the Ethereum Foundation was established in Switzerland, providing institutional support for subsequent governance and technological research and development.
In July 2015, the Ethereum genesis block officially went live, marking the birth of Ethereum 1.0. Its core design has three aspects: first, the introduction of smart contracts and the EVM allows developers to write automated programs using languages like Solidity, enabling the deployment of decentralized applications; second, the establishment of the Gas mechanism, which requires the consumption of Gas for each execution of a smart contract or transaction. Gas is a unit that measures computational resources and storage consumption. The Gas mechanism ensures the rational allocation of network resources while providing a foundation for Ethereum's economic model; third, an open and flexible architecture that provides the soil for the emergence of standardized protocols (such as ERC-20 and ERC-721) in the future.
In the early days of its launch, the Ethereum ecosystem was still quite immature, with a limited number of applications and the network performance far from mature. Compared to Bitcoin's positioning as "digital gold", Ethereum is more like an experimental application platform.
Security Challenges and Governance Experiments (2016)
2016 is widely regarded as the first major test in the history of Ethereum. At that time, the Ethereum mainnet had been online for less than a year, and its ecosystem was still in the exploratory phase. However, it was this year that the DAO incident not only exposed the vulnerabilities in smart contract security but also forced the Ethereum community to make crucial choices under the impact of decentralized governance and differing values.
DAO (The Decentralized Autonomous Organization) was initiated by the Slock.it team and is a decentralized venture capital fund built on Ethereum, aimed at allowing token holders to collectively decide on investment directions through voting. DAO launched its crowdfunding in May 2016, attracting over 115 million ETH in just 28 days, which was approximately 150 million USD at the time, accounting for about 14% of the total circulating supply of Ethereum.
However, on June 17, 2016, an attacker exploited a reentrancy bug in the DAO contract code to repeatedly call the withdrawal function without triggering a balance update, thereby continuously stealing funds. In the end, the hacker transferred approximately 3.6 million ETH, equivalent to about 50 million dollars at that time. This incident shocked the entire cryptocurrency community and raised serious doubts about the security of Ethereum.
From the data, after the DAO hack incident, the price of Ethereum dropped from over $20 to less than $13 within a few days, with a market value evaporating nearly 40%. In contrast, Bitcoin remained relatively stable during the same period, reflecting the market's heightened sensitivity to Ethereum's own security risks. Meanwhile, DAO token holders and the broader Ethereum community engaged in intense discussions on how to respond.
The community ultimately formed three main positions:
Maintain the Status Quo: This means respecting the on-chain principle of "code is law," which holds that on-chain actions are irreversible.
Soft Fork Solution: Freezes the funds transferred by hackers but fails to address the long-term issue of potential vulnerabilities.
Hard Fork Plan: Transfer the stolen funds to a refund contract through a protocol upgrade, allowing investors to retrieve their ETH.
After weeks of intense debate and multiple rounds of voting, the community finally implemented the hard fork on July 20, 2016. On the forked chain, the stolen funds were transferred to a refund contract, allowing investors to redeem ETH proportionally. However, some members who adhered to the principle of "immutability" refused to accept this decision and continued to maintain the original chain, resulting in the formation of Ethereum Classic (ETC). Since then, the Ethereum community has split into two main chains: ETH and ETC, and this governance event has become one of the most representative fork cases in blockchain history.
The impact on the data level is also quite significant. Within weeks after the implementation of the hard fork, the price of ETH gradually recovered and rose to the range of $8–10 by the end of 2016, while ETC gained a certain market value (around hundreds of millions of dollars) in a short period, forming an independent community. However, in the long term, ETH quickly took the lead in developer ecosystem, number of applications, and scale of funding, while ETC gradually became marginalized. According to Electric Capital's developer report, by 2017, the number of active developers for ETH had exceeded 250 people per month, while ETC was less than 30 people per month, and the gap rapidly widened.
The impact of the DAO incident lies not only in price fluctuations and community divides, but more profoundly, it directly shaped the development path of Ethereum thereafter. On one hand, the emphasis on the security of smart contracts significantly increased among developers and investors, leading to the rapid rise of the security auditing industry in the crypto space. On the other hand, the differences in governance concepts within the community sparked a long-term debate between the two different values of "code is law" and "community consensus first." The choice of ETH earned it more support from mainstream capital and users, but it also laid the groundwork for subsequent governance challenges.
The DAO incident in 2016 was a high-risk trial that tested the resilience of Ethereum. Although hackers stole millions of ETH, through governance forks and community consensus, Ethereum not only avoided the long-term spread of a trust crisis but also formed its own governance mechanism and security culture during the crisis. This laid an important institutional foundation for its subsequent scalability exploration and technological upgrades.
Key Stages of Technological Evolution
In the ten-year development of Ethereum, each major technological upgrade has not only marked a node in the industry's development but has also served as a deep experimental probe into the underlying architecture of blockchain. From early explorations of scalability to the PoS transformation, and then to Rollups and data availability optimization, each stage involved specific technical proposals and implementation paths. This chapter will focus on key stages, deeply analyzing their core mechanisms and industrial impacts.
4.1 Exploration of Scalability and Standardization (2017–2019)
The ICO boom of 2017 exposed a fundamental bottleneck in Ethereum's throughput: the TPS under a single chain architecture has long been maintained at about 15 transactions per second, and during network congestion, transaction confirmation delays can even reach several hours. To alleviate this issue, the community has launched various scalability explorations:
Plasma: Proposes using child chains for state computation, only submitting the final result to the main chain. This mechanism is similar to "side chains + fraud proofs" and significantly reduces the load on the main chain. However, Plasma faces issues with a complex exit mechanism and insufficient data availability, ultimately failing to become mainstream.
State Channel: A method for achieving high-frequency trading through off-chain multi-signature, only submitting to the main chain at settlement. This method is suitable for high-interaction scenarios such as payments, but is limited by fixed participants, making it difficult to scale into a general solution.
Sidechain: An independent chain interacts with Ethereum through cross-chain bridges, offering flexibility, but its security relies on its own consensus mechanism and cannot fully inherit Ethereum's security.
During the same period, the ERC-20 standard became a unified protocol for token issuance, allowing different tokens to interact with wallets and exchanges through a unified interface; subsequently, the ERC-721 standard fueled the explosive growth of NFTs. These standardized advancements laid the institutional foundation for the prosperity of the Ethereum ecosystem.
4.2 The Road to Upgrade: Ethereum 1.x → Ethereum 2.0 (2019–2021)
From 2019 to 2021, Ethereum entered a critical phase of upgrades and transitions. To improve performance and security, the network underwent several hard forks, including Byzantium, Constantinople, and Istanbul, each bringing enhancements in virtual machine efficiency, contract functionality, and Gas fee optimization. During this period, the community officially proposed the roadmap for Ethereum 2.0, aiming to achieve greater scalability and energy efficiency through Proof of Stake (PoS) and sharding technology.
PoS is a blockchain consensus mechanism where nodes stake their cryptocurrencies to compete for the right to generate new blocks. The more they stake, the higher the probability of being selected; honest nodes receive rewards, while malicious actions may result in the loss of staked coins. It is more energy-efficient than traditional proof of work and can maintain network security. Sharding technology is a method for blockchain scalability, breaking the entire network into multiple smaller shards, each independently processing a part of the transactions. This allows transactions to be processed in parallel, increasing speed, while each node does not need to store and process the entire network's data, reducing the burden on nodes.
During this period, the rise of decentralized finance (DeFi) provided a strong impetus for technological evolution. Projects like the DAI stablecoin launched by MakerDAO, the automated market-making model of Uniswap, and the lending protocol of Compound have gradually made Ethereum the infrastructure for decentralized finance. By the end of 2020, the total value locked (TVL) in DeFi on Ethereum surpassed $15 billion, and daily transaction fees at one point exceeded those of Bitcoin. The rapid growth in application demand highlighted the urgency of the ETH2.0 upgrade.
4.3 Fee Market Reform: London Upgrade and EIP-1559 (2021)
In 2021, the London hard fork introduced EIP-1559, which was a fundamental reform of the Ethereum economic model. The proposal suggested directly burning the Base Fee while introducing a tip mechanism to reward miners. The original intention of the reform was to alleviate the volatility of Gas fees, improve user experience, and add deflationary pressure to the network's economic model.
Data shows that since the launch of EIP-1559, the total amount of ETH burned has exceeded 2 million within a year, equivalent to billions of dollars in assets being permanently removed. This has gradually given ETH deflationary characteristics, creating a different scarcity narrative compared to Bitcoin's "limited supply." At the same time, the income structure for miners has changed, relying more on block rewards and tips, while the volatility of user transaction fees has significantly decreased. EIP-1559 has not only optimized the transaction experience but also added new logic to ETH's function as a store of value.
4.4 Historic Turning Point: The Merge (2022)
In September 2022, Ethereum completed a significant upgrade known as "The Merge," officially transitioning from Proof of Work (PoW) to Proof of Stake (PoS). This switch is one of the most technically challenging projects in cryptocurrency history, involving years of development and multiple testnet rehearsals. After the Merge was completed, the block creation tasks previously performed by miners were replaced by validators, resulting in a reduction in energy consumption of over 99%, greatly improving Ethereum's image on environmental, social, and governance (ESG) issues.
Under the PoS mechanism, ETH holders can participate in network consensus through staking, and the number and distribution of validators determine the security of the network. As of the beginning of 2023, the amount of staked ETH has surpassed 16 million, accounting for over 13% of the total circulating supply. Meanwhile, staking derivatives (such as Lido's stETH) have rapidly developed, forming a new liquid staking market. The Merge is not only a technical turning point but also a significant reshaping of the Ethereum economy and ecosystem.
4.5 New Era of Scalability: Rollups and Data Availability (2023–2025)
After entering 2023, Ethereum has embarked on a new round of scalability exploration. Rollup solutions have gradually become the mainstream path for expansion, with Optimistic Rollup and Zero-Knowledge Rollup (ZK-Rollup) competing and coexisting in different scenarios. Rollup significantly improves transaction throughput by moving most of the computation off-chain and only submitting data to the mainnet. The TVL of Arbitrum and Optimism both surpassed $2 billion in 2023, while ZK solutions like ZKSync and StarkNet have shown potential in performance and security.
In 2024, Ethereum implemented EIP-4844 (Proto-Danksharding), significantly reducing the data costs for Rollups by introducing the "blob" data structure, laying the groundwork for future full sharding (Danksharding). This upgrade is considered a milestone in the scalability roadmap.
At the same time, the introduction of account abstraction (EIP-4337) has improved the wallet experience, allowing users to achieve Gas payment delegation, batch transactions, and more flexible permission controls, thereby lowering the entry barrier for new users. On the cutting edge of research, mechanisms such as MEV (Maximum Extractable Value), PBS (Proposer-Builder Separation), and Restaking have been proposed to optimize the block production process, suppress arbitrage behavior, and introduce more security and yield layer innovations to Ethereum.
Overall, the technological evolution from 2023 to 2025 marks Ethereum's gradual transition from a single-chain bottleneck to an architecture of "settlement layer + Rollup execution layer," driving it towards a higher performance, more user-friendly, and more sustainable infrastructure.
Driving Factors and Patterns of Technological Evolution
The ten-year technological evolution of Ethereum is not merely a simple iteration of functions, but rather the result of a combination of a series of internal and external driving forces. These driving forces can be summarized as four aspects: market demand push, technology bottleneck drive, community governance and standardization, and external environmental pressure.
First, market demand is the fundamental driving force behind technological upgrades. The prosperity of applications such as ICOs, DeFi, NFTs, stablecoins, and cross-chain assets continually increases on-chain transaction volumes and user demand. For example, the ICO boom in 2017 accelerated the rapid implementation of the ERC-20 standard, and the DeFi explosion from 2020 to 2021 led to Ethereum's daily transaction volume exceeding 1.5 million transactions at one point, with TVL quickly surpassing $150 billion. This demand forces the underlying protocols to continuously optimize in terms of throughput, transaction fees, and user experience, or else the ecosystem will struggle to sustain growth.
Secondly, technical bottlenecks drive innovation in solutions. The early trading throughput of Ethereum was only about 15 transactions per second, which could not support large-scale applications, leading to network congestion and high Gas fees becoming the norm. The CryptoKitties incident and the surge in transaction fees during the peak of DeFi directly gave rise to scalability solutions such as Plasma, state channels, and Rollups. Each technological iteration is almost formed under the drive of "pain points"; for example, EIP-1559 was proposed under the pressure of Gas fee fluctuations and user experience, and achieved a deflationary effect through the destruction of base transaction fees.
Thirdly, community governance and standardization are key factors for long-term development. Ethereum has established an open and transparent technical roadmap formulation process through the EIP (Ethereum Improvement Proposal) mechanism. From ERC-20 to ERC-721, and then to EIP-1559 and EIP-4337, each advancement in standardization has unified ecological rules and lowered development barriers, while also stimulating network effects and application diversity. The community's ability to form consensus has also become an important competitive advantage that distinguishes Ethereum from other public chains.
Fourth, external environmental pressures and changes in value perception also affect technological development. For example, the controversy over energy consumption has accelerated the implementation of the PoS proposal, and after the Merge, energy consumption has decreased by 99%, improving Ethereum's image in the ESG field. At the same time, changes in regulatory policies, investor preferences, and market bubble cycles can also indirectly drive adjustments in protocol design and economic models. The ETH deflation narrative, staking yield mechanism, and the promotion of Rollups can all be seen as responses to external environmental signals.
Overall, the technological evolution of Ethereum shows several obvious patterns:
"Demand-Bottleneck-Innovation" closed loop: The prosperity of applications drives network pressure, revealing technological bottlenecks, which in turn fosters underlying innovation and upgrades;
Standardization leads the way, and ecological prosperity follows: The success of early ERC standards laid the foundation for applications such as DeFi, NFTs, and stablecoins;
Phased progressive upgrades: from 1.x to 2.0, and then to Rollup + sharding architecture, with each upgrade balancing performance, security, and economic incentives;
Parallel evolution of economic models and technology: Reforms in the Gas fee mechanism, ETH burning, and PoS staking demonstrate the close binding of technological upgrades and value capture logic.
Industry Impact Analysis
Looking back at the ten-year development of Ethereum, we can see a trend in its technological evolution from a single-chain smart contract platform to a multi-layered, high-performance, economically optimized, and user-friendly ecosystem. From 2015 to 2025, Ethereum went through early ecological construction (ERC standardization, ICO boom), performance bottlenecks and scalability exploration (Plasma, state channels), economic model innovation (EIP-1559, deflationary mechanisms), historic protocol upgrades (The Merge), and the promotion of Rollup+sharding technology. Each stage is closely related to application demands, network pressure, and community governance.
From a data perspective, the number of active addresses on Ethereum has grown from hundreds of thousands in 2016 to over 200 million by 2025, with daily transaction volume exceeding 2 million during peak periods. The total value locked (TVL) in DeFi reached a historic high of over $105.6 billion in 2023. These metrics not only reflect the prosperity of the Ethereum ecosystem but also reveal the ongoing demands for scalability, transaction efficiency, and user experience posed by the iteration of underlying technology.
In the future, the development of Ethereum may present the following trends: First, the comprehensive implementation of multi-layered scaling architectures. Rollups, as a layer 2 scaling solution, have initially become mainstream, and the launch of Proto-Danksharding paves the way for complete sharding. It is expected that in the coming years, Ethereum will achieve efficient collaboration between the Rollup execution layer and the sharding data layer, increasing throughput from dozens of transactions per second to tens of thousands, significantly reducing user transaction costs.
Secondly, there is further optimization of user experience and account abstraction. Mechanisms such as EIP-4337 have lowered the entry barrier for new users, and in the future, we may see more flexible gas payment, batch transactions, and cross-application account management solutions, making Web3 applications closer to the usability of traditional internet.
The third is the evolution of economic models and incentive mechanisms. As the PoS staking system matures, the deflationary characteristics of ETH, liquid staking, and MEV governance will continue to affect network security and the income structure of participants. At the same time, innovations such as Restaking may create new layers of value capture, providing richer incentive mechanisms for validators and the protocol ecosystem.
Ultimately, sustainability and governance mechanisms will become core competitiveness. ESG issues, energy efficiency, the transparency of on-chain governance proposals, and the ability to reach community consensus will directly impact Ethereum's position in the future multi-chain competitive landscape. Through technological upgrades and economic model optimization, Ethereum is expected to maintain its leading position in the global public chain ecosystem while providing infrastructure support for Web3 finance, decentralized autonomous organizations (DAOs), and cross-chain interoperability.
Future Outlook
Despite the significant technological breakthroughs and ecological expansion achieved by Ethereum over the past decade, there are still multidimensional challenges and potential risks in its development process. These risks include not only technical bottlenecks but also uncertainties in economic models and pressures from external regulatory environments.
First, there is still uncertainty regarding scalability and performance. Although Rollup and sharding technologies theoretically bring high throughput capabilities to Ethereum, the actual implementation still faces risks from data availability, cross-Rollup interaction delays, and protocol complexity. For example, Optimistic Rollup relies on a fraud-proof mechanism, which results in withdrawal delays of up to a week, while ZK-Rollup still faces technical barriers in computation costs and generating zero-knowledge proofs. If Rollup networks grow too quickly or lack proper coordination in the future, it may lead to fluctuations in user experience and even trigger network congestion.
Secondly, economic incentives coexist with cybersecurity risks. While the PoS mechanism significantly reduces energy consumption, the incentive design for validators needs to balance security and yield. Currently, more than 16 million ETH is staked, accounting for over 13% of the circulating supply. If staking is overly concentrated in the hands of a few large staking service providers, it may pose centralization risks. Furthermore, the MEV (Maximum Extractable Value) issue has not yet been fully resolved, and arbitrage activities may distort transaction order, affecting fairness for ordinary users and network security.
Thirdly, the complexity of the protocol and the risks of upgrades cannot be ignored. The transition of the Ethereum tech stack from a single chain to a Rollup + sharding multi-layer architecture has made system design increasingly complex. Each protocol upgrade, such as the Merge, EIP-4844, or the future full sharding, may face risks of implementation errors, smart contract compatibility issues, and delays in node software upgrades. Historically, during hard forks or EIP implementations, there have been issues with node synchronization or vulnerabilities, reminding the community to maintain a high level of caution regarding large-scale upgrades.
In addition, external regulatory and legal risks are becoming increasingly prominent. With the rapid growth of DeFi, stablecoins, and the NFT market, regulatory agencies in various countries are paying increasing attention to crypto assets and on-chain financial activities. In the future, strict compliance requirements may affect the decentralized nature of the Ethereum ecosystem and increase compliance costs for developers and users. In particular, the regulatory uncertainty surrounding cross-chain transactions and staking derivatives could have a direct impact on liquidity and user participation.
Finally, ecological competition and cross-chain challenges are also potential risk factors. Emerging public chains like Solana, Polkadot, and Avalanche attract some users and developers with high performance and low fees. If the Ethereum Rollup ecosystem does not advance quickly enough, it may face the risk of market share being siphoned off. In addition, interoperability issues across chains still present technical challenges, and if secure and efficient cross-chain transactions cannot be achieved, it will limit Ethereum's competitiveness in multi-chain collaboration and the global Web3 ecosystem.
Overall, the challenges and risks of Ethereum are concentrated in five dimensions: technical implementation, economic incentives, protocol complexity, regulatory uncertainty, and ecological competition. In future development, the community, developers, and investors need to maintain a balance between continuous innovation and stable operations, promoting performance and scalability upgrades while also preventing security, compliance, and centralization risks to ensure the long-term sustainable development of the Ethereum ecosystem.
References:
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DEATHLESS
· 08-29 14:53
so many words got me lost
Reply0
DEATHLESS
· 08-28 17:25
I don't think so but we'll see
Reply0
ZENGE
· 08-28 04:08
JUST IN: 🇰🇷 Bitplanet launches Korea's first global institutional #Bitcoin treasury company.
Gate Research Institute: A decade of ETH, the technological evolution from a world computer to a global settlement layer.
Introduction
In 2013, Vitalik Buterin proposed a new idea in the Bitcoin community: if the blockchain could not only be used for transaction records but could also run arbitrarily complex programs, then it could become a true "world computer." This vision gave birth to Ethereum, which officially launched in 2015. Unlike Bitcoin, which emphasizes "peer-to-peer electronic cash," Ethereum provides a completely new underlying infrastructure for the development of decentralized applications through smart contracts and a Turing-complete virtual machine (EVM).
Over the past decade, Ethereum has gradually carved out a unique development path, from the release of its genesis block, through security challenges and community splits, to multiple rounds of system upgrades and transformations of its consensus mechanism. Today, it is not only the most active smart contract platform but also the technical foundation for emerging industries such as decentralized finance (DeFi), non-fungible tokens (NFTs), decentralized autonomous organizations (DAOs), and on-chain games (GameFi).
From a technical perspective, it is the most representative sample in the public chain field, leading the transition from proof of work to proof of stake, and taking the lead in promoting cutting-edge technologies such as zero-knowledge proofs, Rollup, and account abstraction into practical applications. From an economic perspective, Ethereum's native asset ETH has gradually evolved from the initial "fuel token" to a core digital asset that serves as a settlement, staking, and value storage function. At the industrial level, the prosperity of the Ethereum ecosystem has laid the foundation for the blockchain industry, promoting decentralized experiments in various fields such as finance, art, and gaming.
This report aims to review the core technological upgrades of Ethereum at different stages, analyze the driving forces behind them, explore how these upgrades have shaped the ecosystem and industrial landscape, and predict the future technological direction of Ethereum.
The Birth of Ethereum (2013–2015)
In 2013, Bitcoin had gradually begun to attract global attention, but its functionality was still limited to value transfer. During his active time in the Bitcoin community, Vitalik Buterin keenly realized that although Bitcoin scripts had a certain degree of programmability, they lacked universality and could not support complex applications. In the white paper he published on November 27, 2013, he proposed that if a blockchain platform could run a Turing-complete virtual machine, developers would be able to deploy programs with any logic on the chain. This idea opened up the imaginative space for decentralized applications and directly laid the technical vision for Ethereum—a globally shared, immutable "world computer."
In 2014, the Ethereum team raised funds for the project through a token presale, allowing users to purchase ETH using Bitcoin. The presale not only provided the necessary capital for early development but also established a preliminary consensus and sense of participation within the community. Meanwhile, the Ethereum Foundation was established in Switzerland, providing institutional support for subsequent governance and technological research and development.
In July 2015, the Ethereum genesis block officially went live, marking the birth of Ethereum 1.0. Its core design has three aspects: first, the introduction of smart contracts and the EVM allows developers to write automated programs using languages like Solidity, enabling the deployment of decentralized applications; second, the establishment of the Gas mechanism, which requires the consumption of Gas for each execution of a smart contract or transaction. Gas is a unit that measures computational resources and storage consumption. The Gas mechanism ensures the rational allocation of network resources while providing a foundation for Ethereum's economic model; third, an open and flexible architecture that provides the soil for the emergence of standardized protocols (such as ERC-20 and ERC-721) in the future.
In the early days of its launch, the Ethereum ecosystem was still quite immature, with a limited number of applications and the network performance far from mature. Compared to Bitcoin's positioning as "digital gold", Ethereum is more like an experimental application platform.
Security Challenges and Governance Experiments (2016)
2016 is widely regarded as the first major test in the history of Ethereum. At that time, the Ethereum mainnet had been online for less than a year, and its ecosystem was still in the exploratory phase. However, it was this year that the DAO incident not only exposed the vulnerabilities in smart contract security but also forced the Ethereum community to make crucial choices under the impact of decentralized governance and differing values.
DAO (The Decentralized Autonomous Organization) was initiated by the Slock.it team and is a decentralized venture capital fund built on Ethereum, aimed at allowing token holders to collectively decide on investment directions through voting. DAO launched its crowdfunding in May 2016, attracting over 115 million ETH in just 28 days, which was approximately 150 million USD at the time, accounting for about 14% of the total circulating supply of Ethereum.
However, on June 17, 2016, an attacker exploited a reentrancy bug in the DAO contract code to repeatedly call the withdrawal function without triggering a balance update, thereby continuously stealing funds. In the end, the hacker transferred approximately 3.6 million ETH, equivalent to about 50 million dollars at that time. This incident shocked the entire cryptocurrency community and raised serious doubts about the security of Ethereum.
From the data, after the DAO hack incident, the price of Ethereum dropped from over $20 to less than $13 within a few days, with a market value evaporating nearly 40%. In contrast, Bitcoin remained relatively stable during the same period, reflecting the market's heightened sensitivity to Ethereum's own security risks. Meanwhile, DAO token holders and the broader Ethereum community engaged in intense discussions on how to respond.
The community ultimately formed three main positions:
After weeks of intense debate and multiple rounds of voting, the community finally implemented the hard fork on July 20, 2016. On the forked chain, the stolen funds were transferred to a refund contract, allowing investors to redeem ETH proportionally. However, some members who adhered to the principle of "immutability" refused to accept this decision and continued to maintain the original chain, resulting in the formation of Ethereum Classic (ETC). Since then, the Ethereum community has split into two main chains: ETH and ETC, and this governance event has become one of the most representative fork cases in blockchain history.
The impact on the data level is also quite significant. Within weeks after the implementation of the hard fork, the price of ETH gradually recovered and rose to the range of $8–10 by the end of 2016, while ETC gained a certain market value (around hundreds of millions of dollars) in a short period, forming an independent community. However, in the long term, ETH quickly took the lead in developer ecosystem, number of applications, and scale of funding, while ETC gradually became marginalized. According to Electric Capital's developer report, by 2017, the number of active developers for ETH had exceeded 250 people per month, while ETC was less than 30 people per month, and the gap rapidly widened.
The impact of the DAO incident lies not only in price fluctuations and community divides, but more profoundly, it directly shaped the development path of Ethereum thereafter. On one hand, the emphasis on the security of smart contracts significantly increased among developers and investors, leading to the rapid rise of the security auditing industry in the crypto space. On the other hand, the differences in governance concepts within the community sparked a long-term debate between the two different values of "code is law" and "community consensus first." The choice of ETH earned it more support from mainstream capital and users, but it also laid the groundwork for subsequent governance challenges.
The DAO incident in 2016 was a high-risk trial that tested the resilience of Ethereum. Although hackers stole millions of ETH, through governance forks and community consensus, Ethereum not only avoided the long-term spread of a trust crisis but also formed its own governance mechanism and security culture during the crisis. This laid an important institutional foundation for its subsequent scalability exploration and technological upgrades.
Key Stages of Technological Evolution
In the ten-year development of Ethereum, each major technological upgrade has not only marked a node in the industry's development but has also served as a deep experimental probe into the underlying architecture of blockchain. From early explorations of scalability to the PoS transformation, and then to Rollups and data availability optimization, each stage involved specific technical proposals and implementation paths. This chapter will focus on key stages, deeply analyzing their core mechanisms and industrial impacts.
4.1 Exploration of Scalability and Standardization (2017–2019)
The ICO boom of 2017 exposed a fundamental bottleneck in Ethereum's throughput: the TPS under a single chain architecture has long been maintained at about 15 transactions per second, and during network congestion, transaction confirmation delays can even reach several hours. To alleviate this issue, the community has launched various scalability explorations:
During the same period, the ERC-20 standard became a unified protocol for token issuance, allowing different tokens to interact with wallets and exchanges through a unified interface; subsequently, the ERC-721 standard fueled the explosive growth of NFTs. These standardized advancements laid the institutional foundation for the prosperity of the Ethereum ecosystem.
4.2 The Road to Upgrade: Ethereum 1.x → Ethereum 2.0 (2019–2021)
From 2019 to 2021, Ethereum entered a critical phase of upgrades and transitions. To improve performance and security, the network underwent several hard forks, including Byzantium, Constantinople, and Istanbul, each bringing enhancements in virtual machine efficiency, contract functionality, and Gas fee optimization. During this period, the community officially proposed the roadmap for Ethereum 2.0, aiming to achieve greater scalability and energy efficiency through Proof of Stake (PoS) and sharding technology.
PoS is a blockchain consensus mechanism where nodes stake their cryptocurrencies to compete for the right to generate new blocks. The more they stake, the higher the probability of being selected; honest nodes receive rewards, while malicious actions may result in the loss of staked coins. It is more energy-efficient than traditional proof of work and can maintain network security. Sharding technology is a method for blockchain scalability, breaking the entire network into multiple smaller shards, each independently processing a part of the transactions. This allows transactions to be processed in parallel, increasing speed, while each node does not need to store and process the entire network's data, reducing the burden on nodes.
During this period, the rise of decentralized finance (DeFi) provided a strong impetus for technological evolution. Projects like the DAI stablecoin launched by MakerDAO, the automated market-making model of Uniswap, and the lending protocol of Compound have gradually made Ethereum the infrastructure for decentralized finance. By the end of 2020, the total value locked (TVL) in DeFi on Ethereum surpassed $15 billion, and daily transaction fees at one point exceeded those of Bitcoin. The rapid growth in application demand highlighted the urgency of the ETH2.0 upgrade.
4.3 Fee Market Reform: London Upgrade and EIP-1559 (2021)
In 2021, the London hard fork introduced EIP-1559, which was a fundamental reform of the Ethereum economic model. The proposal suggested directly burning the Base Fee while introducing a tip mechanism to reward miners. The original intention of the reform was to alleviate the volatility of Gas fees, improve user experience, and add deflationary pressure to the network's economic model.
Data shows that since the launch of EIP-1559, the total amount of ETH burned has exceeded 2 million within a year, equivalent to billions of dollars in assets being permanently removed. This has gradually given ETH deflationary characteristics, creating a different scarcity narrative compared to Bitcoin's "limited supply." At the same time, the income structure for miners has changed, relying more on block rewards and tips, while the volatility of user transaction fees has significantly decreased. EIP-1559 has not only optimized the transaction experience but also added new logic to ETH's function as a store of value.
4.4 Historic Turning Point: The Merge (2022)
In September 2022, Ethereum completed a significant upgrade known as "The Merge," officially transitioning from Proof of Work (PoW) to Proof of Stake (PoS). This switch is one of the most technically challenging projects in cryptocurrency history, involving years of development and multiple testnet rehearsals. After the Merge was completed, the block creation tasks previously performed by miners were replaced by validators, resulting in a reduction in energy consumption of over 99%, greatly improving Ethereum's image on environmental, social, and governance (ESG) issues.
Under the PoS mechanism, ETH holders can participate in network consensus through staking, and the number and distribution of validators determine the security of the network. As of the beginning of 2023, the amount of staked ETH has surpassed 16 million, accounting for over 13% of the total circulating supply. Meanwhile, staking derivatives (such as Lido's stETH) have rapidly developed, forming a new liquid staking market. The Merge is not only a technical turning point but also a significant reshaping of the Ethereum economy and ecosystem.
4.5 New Era of Scalability: Rollups and Data Availability (2023–2025)
After entering 2023, Ethereum has embarked on a new round of scalability exploration. Rollup solutions have gradually become the mainstream path for expansion, with Optimistic Rollup and Zero-Knowledge Rollup (ZK-Rollup) competing and coexisting in different scenarios. Rollup significantly improves transaction throughput by moving most of the computation off-chain and only submitting data to the mainnet. The TVL of Arbitrum and Optimism both surpassed $2 billion in 2023, while ZK solutions like ZKSync and StarkNet have shown potential in performance and security.
In 2024, Ethereum implemented EIP-4844 (Proto-Danksharding), significantly reducing the data costs for Rollups by introducing the "blob" data structure, laying the groundwork for future full sharding (Danksharding). This upgrade is considered a milestone in the scalability roadmap.
At the same time, the introduction of account abstraction (EIP-4337) has improved the wallet experience, allowing users to achieve Gas payment delegation, batch transactions, and more flexible permission controls, thereby lowering the entry barrier for new users. On the cutting edge of research, mechanisms such as MEV (Maximum Extractable Value), PBS (Proposer-Builder Separation), and Restaking have been proposed to optimize the block production process, suppress arbitrage behavior, and introduce more security and yield layer innovations to Ethereum.
Overall, the technological evolution from 2023 to 2025 marks Ethereum's gradual transition from a single-chain bottleneck to an architecture of "settlement layer + Rollup execution layer," driving it towards a higher performance, more user-friendly, and more sustainable infrastructure.
Driving Factors and Patterns of Technological Evolution
The ten-year technological evolution of Ethereum is not merely a simple iteration of functions, but rather the result of a combination of a series of internal and external driving forces. These driving forces can be summarized as four aspects: market demand push, technology bottleneck drive, community governance and standardization, and external environmental pressure.
First, market demand is the fundamental driving force behind technological upgrades. The prosperity of applications such as ICOs, DeFi, NFTs, stablecoins, and cross-chain assets continually increases on-chain transaction volumes and user demand. For example, the ICO boom in 2017 accelerated the rapid implementation of the ERC-20 standard, and the DeFi explosion from 2020 to 2021 led to Ethereum's daily transaction volume exceeding 1.5 million transactions at one point, with TVL quickly surpassing $150 billion. This demand forces the underlying protocols to continuously optimize in terms of throughput, transaction fees, and user experience, or else the ecosystem will struggle to sustain growth.
Secondly, technical bottlenecks drive innovation in solutions. The early trading throughput of Ethereum was only about 15 transactions per second, which could not support large-scale applications, leading to network congestion and high Gas fees becoming the norm. The CryptoKitties incident and the surge in transaction fees during the peak of DeFi directly gave rise to scalability solutions such as Plasma, state channels, and Rollups. Each technological iteration is almost formed under the drive of "pain points"; for example, EIP-1559 was proposed under the pressure of Gas fee fluctuations and user experience, and achieved a deflationary effect through the destruction of base transaction fees.
Thirdly, community governance and standardization are key factors for long-term development. Ethereum has established an open and transparent technical roadmap formulation process through the EIP (Ethereum Improvement Proposal) mechanism. From ERC-20 to ERC-721, and then to EIP-1559 and EIP-4337, each advancement in standardization has unified ecological rules and lowered development barriers, while also stimulating network effects and application diversity. The community's ability to form consensus has also become an important competitive advantage that distinguishes Ethereum from other public chains.
Fourth, external environmental pressures and changes in value perception also affect technological development. For example, the controversy over energy consumption has accelerated the implementation of the PoS proposal, and after the Merge, energy consumption has decreased by 99%, improving Ethereum's image in the ESG field. At the same time, changes in regulatory policies, investor preferences, and market bubble cycles can also indirectly drive adjustments in protocol design and economic models. The ETH deflation narrative, staking yield mechanism, and the promotion of Rollups can all be seen as responses to external environmental signals.
Overall, the technological evolution of Ethereum shows several obvious patterns:
Industry Impact Analysis
Looking back at the ten-year development of Ethereum, we can see a trend in its technological evolution from a single-chain smart contract platform to a multi-layered, high-performance, economically optimized, and user-friendly ecosystem. From 2015 to 2025, Ethereum went through early ecological construction (ERC standardization, ICO boom), performance bottlenecks and scalability exploration (Plasma, state channels), economic model innovation (EIP-1559, deflationary mechanisms), historic protocol upgrades (The Merge), and the promotion of Rollup+sharding technology. Each stage is closely related to application demands, network pressure, and community governance.
From a data perspective, the number of active addresses on Ethereum has grown from hundreds of thousands in 2016 to over 200 million by 2025, with daily transaction volume exceeding 2 million during peak periods. The total value locked (TVL) in DeFi reached a historic high of over $105.6 billion in 2023. These metrics not only reflect the prosperity of the Ethereum ecosystem but also reveal the ongoing demands for scalability, transaction efficiency, and user experience posed by the iteration of underlying technology.
In the future, the development of Ethereum may present the following trends: First, the comprehensive implementation of multi-layered scaling architectures. Rollups, as a layer 2 scaling solution, have initially become mainstream, and the launch of Proto-Danksharding paves the way for complete sharding. It is expected that in the coming years, Ethereum will achieve efficient collaboration between the Rollup execution layer and the sharding data layer, increasing throughput from dozens of transactions per second to tens of thousands, significantly reducing user transaction costs.
Secondly, there is further optimization of user experience and account abstraction. Mechanisms such as EIP-4337 have lowered the entry barrier for new users, and in the future, we may see more flexible gas payment, batch transactions, and cross-application account management solutions, making Web3 applications closer to the usability of traditional internet.
The third is the evolution of economic models and incentive mechanisms. As the PoS staking system matures, the deflationary characteristics of ETH, liquid staking, and MEV governance will continue to affect network security and the income structure of participants. At the same time, innovations such as Restaking may create new layers of value capture, providing richer incentive mechanisms for validators and the protocol ecosystem.
Ultimately, sustainability and governance mechanisms will become core competitiveness. ESG issues, energy efficiency, the transparency of on-chain governance proposals, and the ability to reach community consensus will directly impact Ethereum's position in the future multi-chain competitive landscape. Through technological upgrades and economic model optimization, Ethereum is expected to maintain its leading position in the global public chain ecosystem while providing infrastructure support for Web3 finance, decentralized autonomous organizations (DAOs), and cross-chain interoperability.
Future Outlook
Despite the significant technological breakthroughs and ecological expansion achieved by Ethereum over the past decade, there are still multidimensional challenges and potential risks in its development process. These risks include not only technical bottlenecks but also uncertainties in economic models and pressures from external regulatory environments.
First, there is still uncertainty regarding scalability and performance. Although Rollup and sharding technologies theoretically bring high throughput capabilities to Ethereum, the actual implementation still faces risks from data availability, cross-Rollup interaction delays, and protocol complexity. For example, Optimistic Rollup relies on a fraud-proof mechanism, which results in withdrawal delays of up to a week, while ZK-Rollup still faces technical barriers in computation costs and generating zero-knowledge proofs. If Rollup networks grow too quickly or lack proper coordination in the future, it may lead to fluctuations in user experience and even trigger network congestion.
Secondly, economic incentives coexist with cybersecurity risks. While the PoS mechanism significantly reduces energy consumption, the incentive design for validators needs to balance security and yield. Currently, more than 16 million ETH is staked, accounting for over 13% of the circulating supply. If staking is overly concentrated in the hands of a few large staking service providers, it may pose centralization risks. Furthermore, the MEV (Maximum Extractable Value) issue has not yet been fully resolved, and arbitrage activities may distort transaction order, affecting fairness for ordinary users and network security.
Thirdly, the complexity of the protocol and the risks of upgrades cannot be ignored. The transition of the Ethereum tech stack from a single chain to a Rollup + sharding multi-layer architecture has made system design increasingly complex. Each protocol upgrade, such as the Merge, EIP-4844, or the future full sharding, may face risks of implementation errors, smart contract compatibility issues, and delays in node software upgrades. Historically, during hard forks or EIP implementations, there have been issues with node synchronization or vulnerabilities, reminding the community to maintain a high level of caution regarding large-scale upgrades.
In addition, external regulatory and legal risks are becoming increasingly prominent. With the rapid growth of DeFi, stablecoins, and the NFT market, regulatory agencies in various countries are paying increasing attention to crypto assets and on-chain financial activities. In the future, strict compliance requirements may affect the decentralized nature of the Ethereum ecosystem and increase compliance costs for developers and users. In particular, the regulatory uncertainty surrounding cross-chain transactions and staking derivatives could have a direct impact on liquidity and user participation.
Finally, ecological competition and cross-chain challenges are also potential risk factors. Emerging public chains like Solana, Polkadot, and Avalanche attract some users and developers with high performance and low fees. If the Ethereum Rollup ecosystem does not advance quickly enough, it may face the risk of market share being siphoned off. In addition, interoperability issues across chains still present technical challenges, and if secure and efficient cross-chain transactions cannot be achieved, it will limit Ethereum's competitiveness in multi-chain collaboration and the global Web3 ecosystem.
Overall, the challenges and risks of Ethereum are concentrated in five dimensions: technical implementation, economic incentives, protocol complexity, regulatory uncertainty, and ecological competition. In future development, the community, developers, and investors need to maintain a balance between continuous innovation and stable operations, promoting performance and scalability upgrades while also preventing security, compliance, and centralization risks to ensure the long-term sustainable development of the Ethereum ecosystem.
References:
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