Ethereum at 9: Industry leaders reflect on the ecosystem

Nine years ago on July 30, the Ethereum network launched, sparking a revolution in the decentralized space. 

In 2015 Vitalik Buterin and a team of visionary developers introduced the concept of smart contracts via Ethereum, which forever changed the blockchain landscape by enabling decentralized applications (dApps) to be built on its platform.

Unlike Bitcoin (BTC), which primarily served as a digital currency until the advent of Bitcoin Ordinals, Ethereum was designed as a versatile, programmable blockchain. This allows developers to create and deploy a wide array of DApps that extend far beyond financial transactions.

Over the past nine years, Ethereum has grown from this ambitious project idea to a cornerstone of the crypto ecosystem, influencing countless innovations in finance, supply chain management, gaming, and beyond. It has fostered a vibrant community of developers, entrepreneurs, and enthusiasts who continue to push the boundaries of what is possible with blockchain technology.

To commemorate this milestone, we spoke with several key executives involved in the Ethereum ecosystem to share nine key insights on Ethereum’s past achievements, current challenges, and future potential.

1. Scalability challenges in emerging markets

Ethereum, being the largest blockchain with a total value locked (TVL) of nearly $60 billion, has been the ultimate example of needing to evolve in order to scale and host the amount of activity that it currently does. 

Despite the network’s many attempts to lower fees over the years, Dominic Schwenter, the chief operating officer of the layer-2 platform Lisk, highlights the pressing issue of such fees being a problem for the future of Ethereum’s scalability in emerging markets (EMs).

“What we want to avoid is a situation in which EMs wouldn’t be able to benefit from the fantastic ecosystem the Ethereum network provides.”

He said with improvements in L2 solutions, Ethereum could become a “cornerstone of the global digital economy,” significantly benefiting these regions. Both Ethereum and L2 addresses have surged by 127% in the last year, signaling that there is an increased amount of activity. 

This could, if given the right attention, domino into the needed improvements hinted to by Schewenter.

2. Tokenization of Real World Assets (RWA)

Schwenter also emphasized the benefits of tokenizing Real World Assets for EMs.

"RWA allows for increased access to capital in regions where access to traditional financial services is usually limited.”

By lowering transaction costs and enhancing liquidity, tokenization of RWAs promotes financial inclusion.

This would allow EMs to take a giant step towards an optimal hybrid financial system, connecting them to the rest of the world in the best possible way, while transforming industries and empowering individuals worldwide.

3. Stablecoins for financial inclusion

Amanda Cassatt, the founder and CEO of Serotonin and former marketing head at Consensys, reflected on the role of stablecoins in achieving what she called Ethereum's original goal of “banking the unbanked."

She has witnessed the impact of stablecoins in emerging markets like the Philippines, where they play major roles in facilitating everyday transactions.

“In early Ethereum days I would’ve been surprised to hear about the degree of stablecoin adoption. Lots of us assumed that one day crypto would be used regularly for payments, but at the time, the idea was a floating token like BTC or ETH.”

"Stablecoins make a ton of sense,” she said and predicted that they will become “even more important.”

4. Institutional crypto adoption

Cassatt pointed out Ethereum’s role in helping encourage the evolution of institutional crypto adoption, noting the shift from private blockchains to public blockchains.

“The whole idea of ‘blockchain without crypto’ which was a trendy way to predict institutional adoption is gone now. To the degree institutions are adopting blockchain, it’s because they’re adopting crypto.”

“It’s a great idea,” she said and encouraged that “more should consider it for balance sheets.” This could even look like investing in assets like ETFs, which just saw a historic entrance of the ETH ETF to the market on July 23.

5. Ethereum as a settlement layer

Matt Katz, the co-founder and CEO of Caldera, observed that Ethereum has evolved from an application development platform to a robust settlement and data availability layer for numerous rollups. 

“These scaling advancements will open doors to mass-market applications in areas such as decentralized physical infrastructure networks (DePIN), gaming, and social platforms.”

Katz attributes this evolution to be largely facilitated by optimistic and ZK-proofs, which allow applications to securely “rent" Ethereum’s security affordably.

6. Distribution and infrastructure investment

Cassatt also shed light on the investment trends within the Ethereum ecosystem, pointing back to when Ethereum first gained success, venture capitalists (VCs) invested heavily in layer-1 and layer-2 solutions rather than applications built on Ethereum.

"The risk/reward profile of infrastructure investment lures VCs and attracts builders who want VC backing.”

Cassatt said the next era needs to focus on proving that applications can be successful and return capital. She highlights the importance of distribution, citing the Telegram and TON ecosystem as a promising area.

"Telegram is poised to become the non-government-controlled version of WeChat, with fully integrated self-sovereign wallets and the ability to bring significant activity on-chain," she explains. As regulation becomes clearer, Cassatt said she expects more companies with actual distribution to enter the crypto space, driving industry growth.

7. Simplifying user experience with account abstraction

Charles Wayn, the co-founder of Galxe, said he is particularly excited about the development of account abstraction, which simplifies the user experience and allows more flexible transaction models.

"This means easier wallet management, enhanced security, and the ability to execute more complex transactions seamlessly," he explains. He sees this innovation as one that will make Ethereum more accessible and user-friendly for a broader audience.

 8.Commitment to open source and decentralization

Karl Floersch, the co-founder of Optimism and CEO of OP Labs, stressed the importance of driving forward open source standards and public goods for the ecosystem.

"A lot of the crypto narrative internally revolves around vigorous competition between large players, but there is so little discourse on how effectively we are building open source software to drive us towards a more and more open internet.”

He pointed to a quote from Vitalik Buterin in which he said, “We are not here to just create isolated tools and games, but rather build holistically toward a more free and open society and economy, where the different parts — technological, social and economic — fit into each other.”

Floersch believes there is too much “zero sum” competition in the current market, and emphasized the need for economic alignment, through programs like retroactive public goods funding, to keep the vision of a decentralized internet alive.

9. Ethereum at a Crossroads

The Optimism co-founder said he’d love to see Ethereum reach the vision of the world computer in both technical capabilities and social and economic capabilities.

However, he said in order to reach that two things need to happen, the first being an open source tech stack that is decentralized without sacrificing UX, along with sufficient funding for open protocols that benefit the ecosystem at large.

“If we get these two things right, then it won’t be about where Ethereum will be in 10 years, but instead what a vibrant ecosystem the internet will become.”

Wes Levitt, the head of strategy at Theta Labs, also sees Ethereum at a pivotal moment. While it has been a pioneer in expanding crypto's scope beyond Bitcoin, it faces competition from other Layer 1 blockchains like Solana.

"The next year or so will tell us how the story ends," Levitt states. He believes that Ethereum's ability to maintain its market cap dominance, especially with the launch of new ETFs, will be crucial in solidifying its position in the crypto ecosystem.