Author: Zeqing Guo, Jeffrey Hu
Looking back at history, it is not difficult to find that many of the cutting-edge technology discussions in the Ethereum developer community have eventually evolved into current daily application products, from DEX, lending, to rollup, DA, all of which are like this. This certainly also contains investment opportunities.
So, at this point in time in early 2025, what valuable information can we capture from Ethereum's roadmap, the recent DevCon, and the upcoming Pectra upgrade at the beginning of next year? This article attempts to sort out and discuss it.
The Ethereum roadmap has always been an important reference for observing the future development direction, including various stages such as The Merge, The Surge, The Scourge, The Verge, The Purge, and The Splurge. Vitalik also published articles intensively in October to introduce the contents of each stage. Among them:
The Merge: The main completion is the execution layer and the consensus layer, thus completing the transition from PoW to PoS. But The Merge also includes some improvements in the consensus protocol, including single-slot finality and lowering the threshold for validators.
The Surge: The main discussion focuses on future scalability, improving from the bottom layer to better serve rollup. Among them, EIP-4844 has been launched, and the focus of the future includes PeerDAS to reduce node pressure and cross-rollup interaction.
The Scourge: Mainly reduces some problems related to MEV, including excessive concentration of builders and the capture of MEV value by large LST.
The Verge: Including the bottom layer from Merkle tree to Verkle tree and the Snarkification of EVM.
The Purge: Reduce the pressure on Ethereum node data storage and state maintenance by deleting or archiving historical data. At the same time, some technical debt will be cleared.
The Splurge: Some more cutting-edge improvements, including EVM bottom layer, account abstraction and other cryptographic applications (VDF, etc.).
We have extracted the key improvements of these stages in the table below, introduced their main effects, and sorted out the current progress.
In addition to the roadmap, another information channel worth exploring is the recent Ethereum DevCon conference. It discussed current problems and possible solutions.
The most eye-catching topic at DevCon may belong to Beam Chain. From the slightly playful but inaccurate "Ethereum 3.0", we can also see the community's desire for a new direction of development in the future. Beam Chain has proposed many underlying improvements, including Snarking the underlying layer, and improving block generation and staking. But the roadmap will take about 5 years to complete, so there is no need for too much extra attention for the time being.
https://www.youtube.com/watch?v=Gjuenkv1zrw
Rollup-related topics are still a hot topic during DevCon. Among them, the most discussed is the problem of liquidity fragmentation and difficulty in interaction between rollups, which affects the user experience. Many speeches and panels have involved this problem or related solutions. In addition, the current technical maturity of L2 was also discussed in the meeting, because currently only Optimism and Arbitrum have entered Stage 1 (fraud proof with permission), while most other L2 projects are still in Stage 0 (centralized upgrade, no fraud proof, etc.), and need to be synchronized with the upgrade of L1.
In addition, during DevCon, there were also more concentrated discussions on chain abstraction, pre-confirmation, cryptographic applications, and future upgrades. We will focus on the Pectra upgrade in the next section.
The recent focus is on the Ethereum Pectra upgrade, which is expected to be completed in Q1 2025, which will also include a number of related modifications from the bottom layer to the user end.
The most relevant to users is EIP-7702. Based on the design of EIP-3074, it further develops EIP-4337 and gives all EOA accounts the ability to "temporarily" convert to smart contract accounts, which can further improve the user experience (sign multiple transactions at a time, 0 gas, etc.), but it may also increase security risks such as signature phishing. At the same time, EIP-7702 is also effective for all EOAs, so wallets and other products should also be modified to cope with this upgrade. However, overall, the activation of EIP-7702 will still bring new opportunities to all AA projects. For more information, please refer to our previous report.
Pectra plans to adjust the target value of the number of blobs in each block from 3 to 6, and increase the maximum number of blobs from 6 to 9. Blobs provide cheaper storage space for rollups. Increasing the number of blobs will further reduce the cost of rollups and enhance Ethereum's DA competitiveness at the cost of increasing node operation costs. Therefore, it will further benefit rollup projects. At the same time, the adjustment of the target and maximum values also makes the gas drop faster when the blob is not used, and the gas rises more slowly when the blob is fully loaded and reaches the maximum limit.
Pectra plans to increase the current 32 ETH staking limit to 2048 ETH. Ethereum staking service providers and whales no longer need to divide their ETH into multiple nodes, but can merge them into one node to reduce the number of validators in staking.
All the above technical changes or research discussions may bring some new changes and opportunities. We summarize some of the more important opportunities as follows.
Whether it is from the roadmap or many sharings at DevCon, it can be seen that the liquidity interoperability and interactivity between Layer2 (rollups) are the focus of developers' attention.
At present, there are different solutions in the community to solve the liquidity and interoperability problems between rollups from various levels.
Based rollup: Since many L2s currently use their own relatively centralized sequencers to implement transaction sequencing and then publish them to L1, it is impossible to interact quickly and in a timely manner. One solution is to implement the sequencing function through L1 to ensure the atomicity of the interaction between L2s that use this sequencing function.
Shared sequencer: In addition to based-rollup, another implementation method is for L2 to share a set of sequencers to complete the interaction.
Cross-chain intents: In addition to solving the problem at the sequencer level, using intents to meet cross-rollup needs is another solution.
At present, all of the above solutions are being implemented and promoted. For example, Spire Labs's Based Stack for based rollup is expected to be launched in Q1 2025; Astria, Espresso and Polygon AggLayer related to Shared sequencer are being launched and iterated one after another; ERC-7683 is beginning to be used by Unichain, Arbitrum and others to solve cross-chain liquidity problems; and ERC-7802 launched by Optimism can implement SuperchainERC20 to support the unified standard of assets and liquidity transfer within the superchain ecosystem. These different solutions may compete for the winner in the market in 2025.
Because it involves all EOA account addresses, the activation of EIP-7702 will provide a new opportunity for the AA project. EIP-7702, combined with chain abstraction, intents and other functions, may also build more complex cross-chain or multi-chain interaction functions. However, since the market performance of ERC-4337 has been tepid before, the Pectra upgrade may also be the last opportunity for the AA track to verify PMF.
Therefore, after the Pectra upgrade in the first quarter of next year, teams that participated in EIP-7702 earlier and were prepared, such as Zerodev, may gain a new wave of growth, and the specific results will soon be seen.
Whether in the Ethereum roadmap or DevCon discussion, cryptography-related technologies and applications are still a big topic. In terms of technology, the zkEVM and zkVM frameworks are gradually maturing, and ZKP combined with MPC, FHE, etc. may have more application combination possibilities. In addition, some cutting-edge cryptographic technology discussions during DevCon, such as indistinguishable obfuscation (iO), which is known as the crown jewel of cryptography, may also receive more attention.
In terms of application, cryptographic technology will also have many opportunities on the consumer side. Verification applications including ZK Email (especially based on Aztec Noir) and zkTLS may be more adopted. In addition, with the recent OFAC sanctions on Tornado Cash being identified as overstepping its authority, some concerns about the compliance of privacy applications may be dispelled.
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