The Future of Ethereum

Ethereum powers thousands of applications generating billions in revenue, but it faces steep competition from other chains. Without critical upgrades, Ethereum faces three existential risks:

1. Competitive displacement by faster, newer networks

2. Economic sustainability issues from high transaction fees

3. Technical stagnation as user demands outpace capabilities

The Ethereum foundation’s response? A three-priority upgrade roadmap that could increase capacity by 1,000x while maintaining the security and decentralization that makes Ethereum unique.

1️⃣ Faster base network performance

• Base layer optimization ensures Ethereum can handle increased activity from both direct users and Layer 2 settlements

2️⃣ Enhanced "Layer 2" capacity (express lanes built on Ethereum)

• Layer 2 scaling moves transaction volume off the main chain while maintaining security guarantees

3️⃣ Better user experience across the ecosystem.

• UX improvements drive adoption that creates demand for both Layer 1 and Layer 2 capacity

The coordinated upgrade of a live network securing over $500B in value, while maintaining continuous operation, represents one of the most complex engineering challenges in modern software. Every change must preserve security, maintain decentralization, increase capacity, and improve usability—all while thousands of independent operators coordinate the transition.

The result: A roadmap where immediate improvements (gas limit increases, blob capacity doubling) create breathing room while more ambitious features (data availability sampling, parallel execution) deliver order-of-magnitude improvements.

This deliberate, systematic approach may seem slow compared to traditional software development, but it's the only way to evolve critical financial infrastructure responsibly. The depth of problem-solving within the Ethereum community should give institutions confidence that these challenges are being addressed with the rigor they deserve.

Disclaimer: The views and opinions expressed are solely those of the author and do not necessarily reflect those of the author's current employer. This material is for informational purposes only and is not intended to provide legal, tax, financial, or investment advice. Recipients should consult their own advisors before making these types of decisions. The author is not responsible for errors, inaccuracies, or omissions of information; nor for the accuracy or authenticity of the information upon which it relies.

Understanding Ethereum's Foundation

Ethereum operates through validators (computers that stake ETH to participate in network security). These validators vote on new transactions and maintain network consensus, essentially serving as Ethereum's distributed decision-making body.

With approximately 1 million validators currently operating, Ethereum has achieved impressive decentralization. But this success paradoxically limits performance: coordinating 1 million simultaneous votes every 12 seconds creates massive network congestion. While not all validators represent individual operators (large staking services run multiple validators on single machines), each must broadcast votes across the network.

This creates the core tension: more validators increase security through decentralization but decrease efficiency through communication overhead.

Three interconnected bottlenecks have emerged:

Base Layer Constraints: The L1 network itself processes transactions inefficiently, with gas scheduling optimized for old hardware and resource allocation that creates worst-case scenarios.

Layer 2 Data Limits: Rollup networks (Layer 2s) that process transactions off-chain are constrained by how much data they can post back to Ethereum for verification (the "blob" capacity).

User Experience Friction: Even when transactions process successfully, users face complex multi-step processes, expensive gas fees, and wallet management challenges that hinder mainstream and enterprise adoption.

The Three-Pillar Solution

Rather than pursuing isolated fixes, Ethereum developers recognized these constraints are interdependent. Solving one bottleneck without addressing others would simply shift the problem. This insight led to an integrated three-pillar strategy:

Pillar 1: Optimize Base Network Performance

The foundation chain must handle more activity efficiently

The foundation layer must handle more activity without requiring validator hardware upgrades. Instead, Ethereum focuses on software optimization to extract maximum performance from existing infrastructure.

Key improvements include:

• Increasing gas limits by 25% through call data optimization (allowing more transactions per block)

• Implementing parallel execution so multiple transactions process simultaneously

• Recalibrating resource pricing based on modern hardware capabilities

• Separating pricing for storage, compute, and memory operations

Pillar 2: Scale Layer 2 Capacity

Enable specialized networks built on top of Ethereum

Layer 2 networks (think of them as high-throughput networks secured by Ethereum) handle most transactions off-chain but must periodically submit proof of their activity back to Ethereum. These submissions, called "blobs" (data packages), currently limit how much Layer 2s can scale.

Scaling approach:

• Doubling blob capacity from 3 to 6 per block (immediate relief)

• Implementing Data Availability Sampling to enable 48 blobs per block (8x increase)

• Optimizing how Layer 2s compress and submit their data

Pillar 3: Eliminate User Experience Friction

Make blockchain interaction intuitive

Even when transactions process successfully, users face complex multi-step processes and expensive fees that prevent mainstream adoption.

User improvements:

• Transaction batching: Instead of approving each action separately, users can bundle multiple operations into one approval

• Sponsored transactions: Applications can pay gas fees on behalf of users

• Unified authentication: Single key management across all Ethereum applications

• Cross-chain interactions: Seamless asset movement between Layer 2 networks

The Implementation Roadmap

These improvements roll out through three major upgrades, named after cities following crypto conference locations:

Pectra (May 2025)

• Increases gas limit by 25%

• Doubles blob capacity to 6 per block

• Introduces EIP-7702 for transaction batching and sponsored fees

• Expected impact: 2-3x capacity increase

Fusaka (Late 2025/Early 2026)

• Implements Data Availability Sampling for 8x blob increase

• Optimizes validator communication protocols

• Enhances cross-Layer 2 communication

• Expected impact: 10x capacity increase for Layer 2s

Glamsterdam (2026-2027)

• Enables full parallel execution

• Implements advanced resource pricing

• Completes validator efficiency improvements

• Expected impact: Base layer performance increase of 5-10x

What This Means for Users and Developers

The combined effect of these upgrades positions Ethereum to handle more of the transaction volume of a global financial system by 2027.

Practical implications:

• For users: Gas fees could to a few cents for most transactions

• For developers: Applications can support millions of users without compromising on decentralization

• For institutions: Ethereum becomes viable infrastructure for traditional financial applications

The Long-Term Vision: Global Ethereum Infrastructure

These upgrades enable a future where Ethereum serves as global verification infrastructure:

• Asset verification: Bank balances and stock holdings verifiable on-chain

• Unified identity: Single authentication system across all digital services

• Application interoperability: Previously siloed applications working together

• Global consensus: Cryptographic verification replacing institutional trust

This vision represents moving to cryptographic verification through decentralized consensus. I (personally) hope we get there! More broadly, this entire upgrade process highlights the engineering and intellectual depth within the Ethereum community and showcases the serious problem-solving efforts of its engineers. This should give institutions some comfort that these real-world problems are being addressed in a systematic way.

Ethereum's scaling roadmap demonstrates that blockchain's limitations aren't permanent—they're engineering problems with engineering solutions. As these upgrades deploy over the next three years, we'll witness whether decentralized networks can truly scale to support global infrastructure.

Success means blockchain becomes the foundation for a new financial system. With Pectra approaching in spring 2025, we'll soon see if Ethereum can deliver on its ambitious promises.

Disclaimer: The views and opinions expressed are solely those of the author and do not necessarily reflect those of the author's current employer. This material is for informational purposes only and is not intended to provide legal, tax, financial, or investment advice. Recipients should consult their own advisors before making these types of decisions. The author is not responsible for errors, inaccuracies, or omissions of information; nor for the accuracy or authenticity of the information upon which it relies.