Just a few days ago, the Marginal Revolution podcast sparked a compelling discussion about Vitalik Buterin’s contributions to monetary economics and blockchain technology, particularly his role in creating Ethereum.
The conversation centered around the idea of nominating Buterin for a Nobel Prize due to his profound influence on modern economic systems through blockchain, which has transformed how people understand decentralized finance (DeFi) and digital assets.
While Buterin might not be the next Nobel Peace Prize winner, he and Ethereum have undeniably impacted various areas of finance. From redefining concepts of ownership and value through non-fungible tokens (NFTs) to enabling financial instruments in DeFi, Buterin’s work has catalyzed a shift in how people perceive and interact with money.
Ethereum’s progress to date and upgrades ahead
As DeFi expands, evolves, and attracts institutional interest, many blockchain networks are competing with Ethereum, offering unique features, low costs, and scalability. And one specific way to measure the viability of blockchain networks is through Total Value Locked (TVL), which Ethereum is currently dominating.
Ethereum’s TVL accounts for over half of DeFi’s total market value. By leveraging its unique approach to smart contracts, developers have created various decentralized apps (dApps), ranging from financial services to gaming.
The Ethereum Foundation in collaboration with its rich developer community and other stakeholders implements timely upgrades geared toward improving its scalability, security, and overall functionality. The transition from a proof-of-work consensus mechanism to the more eco-friendly proof-of-stake in 2022, known as “the Merge,” symbolizes its dedication to improving the network’s overall efficiency and long-term viability as the premier blockchain.
Additional Ethereum upgrades include the Dencun upgrade, which introduced the concept of dank sharding. This new concept benefits Layer2 solutions, providing more scalable data storage, reducing network congestion, and improving performance. As a result, gas fees on Layer-2s have been reduced, making transactions more affordable and efficient.
As a network, Ethereum continually releases Ethereum Improvement Proposals (EIPs) with its latest upgrade, the Prague/Electra (Pectra) upgrade set to introduce changes in 2025. With Pectra, Ethereum will cater to a broader range of use cases and user needs, enabling regular Ethereum accounts to be more programmable.
This past week, Ben Adams proposed the EIP-7781, an initiative to shorten slot times on Ethereum from 12 seconds to 8 seconds. Such proposals reflect Ethereum’s goal of refining its infrastructure to meet the demands of its communities, with developers leading the charge.
While Ethereum’s commitment to enhancing the user and developer experience has solidified its dominance in the DeFi arena, this position doesn’t come without pressure from other blockchains vying for a piece of the market.
How do blockchain networks respond to Ethereum’s success?
James Wo, Founder and CEO of DFG, a global Web3 and blockchain investment firm, shares his perspective on the pressures Ethereum faces from other networks and Layer-2s:
“Other blockchains have challenged Ethereum in the form of enhanced performance, lower gas fees, and the distribution of incentives for their users.”
While these factors create a more favorable environment for certain narratives, Ethereum remains committed to being a fully scaled and maximally resilient platform through its roadmap.
Wo adds:
“From reducing fees and improving decentralization in Layer-2s to future-proofing its network, Ethereum continues to focus on developing a scalable and secure infrastructure that prioritizes decentralization.”
As the competition intensifies, Ethereum’s ability to adapt and innovate is crucial for maintaining its position atop the pecking order of blockchains. As we gear up for 2025, the platform’s approaching upgrades will significantly address user demands while scaling effectively.
As other networks aim to close the gap on Ethereum, Wo believes this pressure will enable Ethereum to “continue to innovate and improve its underlying infrastructure so that user experience of building and using dAPPs in its ecosystem is a smooth process.”
The focus on sustainable practices and developer engagement will be key in attracting new projects while retaining old ones, ensuring Ethereum remains the most developer-friendly network and at the forefront of all DeFi and blockchain developments.