How will Ethereum prepare for breakthroughs in AI agents and major upgrades?

Author: Tom Mitchelhill Translator: Daisy, Mars Finance

Analysts and experts say AI agents, a series of important network upgrades, and an improved regulatory environment in the United States are all reasons for Ethereum fans to look forward to 2025.

Ethereum supporters say AI agents, major network upgrades, increased institutional interest, and comprehensive regulatory reforms brought about by the crypto-friendly administration of the new US President Donald Trump are all reasons to look forward to 2025.

Infinex founder Kain Warwick told Cointelegraph that although Ethereum performed slightly lackluster in 2024, the asset is like a "compressed spring" and is ready for a breakthrough in 2025.

According to TradingView data, ETH (Ether) has risen 53.5% so far this year, from $2,350 on January 1 to the current $3,478.

ETH has posted a year-to-date gain of 53.5%. Source: TradingView

Meanwhile, other major crypto assets, including Solana, Cardano and Ripple's XRP, have risen 92.7%, 57% and 276.5% respectively this year.

"The longer you suppress it, the stronger it will rebound. There are a lot of favorable factors and some constraints, but once it breaks through, people will say 'Oh my God'," Warwick said.

Source: Kain Warwick

He mentioned some Ethereum Improvement Proposals (EIPs) and the improved user experience brought about by these upgrades, and believed that these were key turning points in the price trend of Ethereum and ETH.

“In 2025, I think we’ll see improvements in account abstraction, a lot of progress in L2 interoperability, and a lot of improvement in the user experience between L2s.”

Ethereum to Get Pectra Upgrade in 2025

One ​​of the major upgrades that Warwick and other Ethereum supporters are eagerly awaiting is the Pectra upgrade — the next major milestone on the Ethereum roadmap, which is expected to be launched in early 2025.

Gaia Regis, co-founder and CEO of restaking platform Byzantine, said the Pectra upgrade will fundamentally change how Ethereum’s security layer works.

“Right now, Ethereum staking is mostly dependent on liquidity. Essentially, many ETH holders want to participate in staking. This is generally a good thing because more nodes mean more decentralization and higher security,” she said.

However, Regis said that Ethereum has now reached a massive scale — with more than 1 million Ethereum validators communicating with each other — which is starting to slow down the network.

“Pectra solves this problem by increasing the maximum valid balance of a validator from 32 ETH to 2,048 ETH, which significantly reduces the number of validators required and reduces the pressure on the network,” Regis said.

“Less pressure means a faster network and a better experience for Ethereum users.”

In September of this year, Ethereum core developers decided to split the Pectra upgrade into two major packages. The first Pectra package will introduce a total of eight EIPs, the most important of which is EIP-7702, which aims to improve the user experience of wallets and chain abstractions.

"This will make staking cheaper, leading to more people participating in staking, thereby reducing staking rewards over time. For this reason, we are extremely bullish on restaking. Many people will want to increase their staking rewards by securing other networks."

Trump's crypto-friendly SEC will be particularly beneficial to ETH

Saul Rejwan, managing partner of crypto venture capital firm Masterkey, told Cointelegraph that Ethereum and more "legal" projects in the crypto industry, especially decentralized finance (DeFi) and decentralized physical infrastructure (DePIN), will benefit the most under the Trump administration and a more crypto-friendly U.S. Securities and Exchange Commission (SEC).

On December 4, Trump nominated pro-cryptocurrency businessman and former SEC Commissioner Paul Atkins as the next SEC Chairman, while current Chairman Gary Gensler plans to resign on January 20.

"DeFi projects on Ethereum will flourish in a more favorable regulatory environment, and areas like restaking only need a little regulatory push to attract institutional investors," he said.

"We expect this new leadership to lower barriers to entry and make it easier for early crypto entrepreneurs and resilient companies to innovate and succeed."

Stablecoins, tokenization and AI agents

Bitwise Chief Investment Officer Matt Houghan said Ethereum has three major advantages as it enters 2025, and expects the asset to explode in the new year.

“Ethereum is at the center of three of the biggest trends in crypto: the rise of stablecoins, tokenization, and AI agents. It has dominant market share in all three,” Houghan said.

He added: “I think the excitement in all three of these areas will feed into Ethereum next year, making it the comeback king in 2025. You can already see this in its recent strong performance and ETF inflows.”

In the past two weeks, Ethereum ETFs have seen net inflows of $1.5 billion, making it one of the largest periods of inflows among eight spot funds, according to Farside Investors data.

Ethereum ETFs have witnessed over $1.5 billion in net inflows in the last two trading weeks. Source: Farside Investors

Like Rejwan, Houghan also believes that the new crypto-friendly SEC under Trump is particularly beneficial to Ethereum.

"I am looking forward to lifting the "Sword of Damocles" that has been hanging over the head of the US crypto industry for the past four years. Washington's new approach will unleash millions of crypto entrepreneurs, many of whom will build killer applications on Ethereum and its second-layer networks," said Houghan.

"We are entering the golden age of crypto, and Ethereum will be one of the main beneficiaries of this boom."

Overall, Houghan said, Bitwise expects ETH to break through its previous all-time high of $4,878 and reach what he described as a "conservative" forecast of a new high of $7,000.

More second-layer networks, heavy staking, and better DApps

Edu Timmers, an Ethereum supporter and chief marketing officer of crypto company Keyrock, believes that with the release of new second-layer networks such as Abstract and the Deutsche Bank project, this will enhance the widespread use of the Ethereum ecosystem.

Timmers also mentioned that the recent rise of Hyperliquid, an on-chain perpetual contract protocol built on Arbitrum, demonstrates Ethereum's growing on-chain dominance, and said he expects Ethereum and its decentralized application (DApps) ecosystem to begin competing with centralized market leaders like Binance in the new year.

"Projects like Hyperliquid will start competing with centralized players like Binance in 2025, rather than decentralized projects like Uniswap," Timmers said.

In addition, Timmers said that Ethereum restaking is another underrated area worth paying attention to in 2025, saying that this will make the network more robust and versatile. "As chains begin to move security to the Ethereum mainnet through solutions like EigenLayer, heavy staking may see a breakthrough."