One, introduction: Ethereum's sluggish performance and future concerns
Ethereum's recent market performance has been unsatisfactory, raising concerns among many community members. Since the beginning of this year, Ethereum's price growth has significantly lagged behind Bitcoin and Solana. Especially after Ethereum decided to adopt a modular architecture strategy, the value growth of its network seems to have failed to meet expectations. In this context, many people cannot help but ask: Is Ethereum's strategic choice correct? Does the future direction need adjustment? This article will conduct an in-depth discussion around the current situation, the Beam Chain proposal, the modular strategy, and future challenges and opportunities.
Two, current situation analysis: Ethereum's performance in the market
2.1 Price performance comparison
When comparing Ethereum's market performance with Bitcoin and Solana, it is evident that Ethereum's performance in this cycle has lagged significantly. According to TradingView data, Ethereum's price has increased by 150% since the beginning of 2023, while Bitcoin has increased by 422% and Solana by 1629%. It is widely believed that Ethereum's choice of a modular architecture is a significant reason for its poor price performance.
Source: https://www.tradingview.com/x/zfBGgFQv/
2.2 Short-term impacts of the modular architecture
The modular strategy allows Ethereum to relinquish some infrastructure services, delegating functions such as execution, settlement, and data availability to Layer 2 (L2) or other independent projects, which means that Ethereum's core revenue source—network fees has decreased. The EIP-1559 mechanism introduced by Ethereum supports prices by shrinking supply through the destruction of some fees, but as Layer 2 rises, the effectiveness of this strategy gradually weakens. In other words, while the modular strategy has enhanced the flexibility and scalability of the Ethereum ecosystem, it has negatively affected the ETH price in the short term.
2.3 Overall value of the ecosystem
From the perspective of market value of the entire ecosystem, Ethereum and its modular infrastructure tokens created a value comparable to Solana in 2023, totaling about $50 billion. However, in 2024, this performance declined, partly due to shaken market confidence in the modular strategy, with investors gradually confused about the growth potential of decentralized infrastructure tokens.
Three, Beam Chain proposal: Opportunities and challenges in redesigning the consensus layer
3.1 Core content of the Beam Chain proposal
At the Devcon conference, Ethereum Foundation researcher Justin Drake proposed a consensus layer upgrade proposal called 'Beam Chain,' referred to as 'Ethereum 3.0.' Beam Chain aims to significantly improve Ethereum's performance and security through large-scale upgrades.
The goals of Beam Chain include:
Accelerate block production speed, reducing block time from the current 12 seconds to 4 seconds.
Achieve a lower validator staking threshold, reducing from 32 ETH to 1 ETH, attracting more new users to participate in staking.
Use SNARK technology to achieve 'chain SNARKification,' enhancing efficiency and security.
Justin Drake views this proposal as a sign of Ethereum entering the 'ZK era,' ensuring Ethereum remains secure in the face of quantum computing threats in the future through the use of post-quantum cryptography hash and signature schemes.
3.2 Batch upgrades and accelerated fossilization
The Beam Chain proposal plans to implement multiple significant changes at once. While this can accelerate Ethereum's transition to maintenance mode and reduce long-term uncertainty, it also increases systemic risk. Péter Szilágyi expressed concerns that large-scale bundled upgrades may lead to some potential issues being undiscovered, and the community and system need time to gradually adapt to these changes; iterative upgrades may be more prudent.
Four, reflections on Ethereum's modular strategy
4.1 Advantages of the modular strategy
Since Ethereum decided to adopt a modular architecture in 2020, its impacts have gradually emerged. The modular strategy aims to decompose different functions and delegate them to multiple projects, such as Layer 2 handling execution and projects like Celestia handling data availability. This architecture provides Ethereum with stronger adaptability and scalability. In this way, Ethereum can maintain the flexibility of its ecosystem and adapt to unpredictable technological changes in the future.
Flexibility: Modularity allows Ethereum to quickly adapt to new technologies, such as the integration of SNARK and zkEVM.
Scalability: By expanding the surface area through Layer 2, it lowers the development and user costs.
Reference source: https://ethereum.org/zh/layer-2/
4.2 Disadvantages of modularization
However, this strategy has also brought short-term economic and technical negative effects:
Fee reduction: The rise of Layer 2 has diverted fees originally belonging to the Ethereum mainnet, affecting the price of ETH.
User experience decline: The complexity of modularization may lead ordinary users to face operational complexities and liquidity constraints when using Layer 2.
Centralization risk: The centralization of some infrastructure token holdings may adversely affect the decentralization of the network.
Five, historical summary: From the 'Merge' to now
5.1 Review of the 2022 'Merge'
The 'Merge' in 2022 is one of the most important upgrades in Ethereum's history. It marks Ethereum's transition from Proof of Work (PoW) to Proof of Stake (PoS), significantly reducing the network's energy consumption and laying the foundation for future scalability improvements.
The merge not only improved the network's energy efficiency but also paved the way for future scalability solutions (such as sharding technology). With the introduction of the Beam Chain proposal, Ethereum is gradually moving towards achieving a more efficient and sustainable blockchain ecosystem, with the merge being a key step in this journey.
5.2 Development after the merge
Energy efficiency improvement: The introduction of PoS has reduced the network's energy consumption by 99.5%.
The rise of staking: Validators have replaced miners, making the network more decentralized and efficient.
Future scalability foundation: The merge has laid the technical groundwork for scalability solutions such as sharding and Beam Chain.
Six, future planning and challenges
6.1 Implementation roadmap
The implementation of Beam Chain is divided into several phases:
2025: Standardization phase
2026: Official development phase
2027 and beyond: A testing phase of at least two years to ensure the safety of new technologies before deployment on the mainnet.
6.2 Technical and governance challenges
This long timeline also reflects the complexity of technical implementation and the difficulty of governance coordination. In addition, how modularization and Beam Chain collaborate is also a major challenge for the future. Modularity expands Ethereum's 'surface area' through Layer 2, while Beam Chain aims to enhance the core performance of the consensus layer, and the combination of the two will determine the balance of Ethereum's future scalability and security.
6.3 Key issues to be addressed
Technical complexity: The integration difficulty of real-time SNARK and post-quantum cryptography technologies is extremely high.
Governance coordination: Requires broad community support and close collaboration of multiple development teams.
System security: New vulnerabilities must be avoided when introducing new technologies to ensure the long-term security of the network.
Seven, rebuttal and critical thinking
7.1 Advantages of phased upgrades
Regarding the Beam Chain proposal, Péter Szilágyi raised some critical viewpoints. He believes that Beam Chain attempts to completely revolutionize the consensus layer by introducing multiple changes at once, which may increase systemic risk, especially without sufficient time for testing and evaluation. In contrast, gradually implementing low-difficulty improvements and then considering full reconstruction when necessary may be more prudent and align better with the gradual evolution of Ethereum.
7.2 Centralization issues in the modular ecosystem
The complexity of modularization and the risks of centralization also need to be taken seriously. Although modularization enhances the flexibility of the Ethereum network, it also increases the complexity of user operations, especially when transferring between multiple Layer 2s, which may significantly degrade user experience. Additionally, the centralization of some Layer 2 development teams and infrastructure token holdings may adversely affect the decentralization of the network.
Eight, competitive comparison: Analysis of Solana and other L1 blockchains
8.1 Solana's 'single-layer' structure
Compared to Ethereum's modular strategy, Solana chose a 'single-layer' blockchain development path, achieving high throughput and low latency directly at Layer 1, attracting a large number of users and developers. This gives Solana a certain advantage in user experience, especially as users do not need to worry about cross-Layer complexities.
High throughput: Solana achieves significant performance advantages through parallel processing and efficient consensus mechanisms.
User-friendliness: Since cross-chain operations are not required, the user experience is relatively simple and intuitive.
8.2 Scalability and future challenges
However, this 'single-layer' structure also has inherent scalability bottlenecks. Once system demand exceeds its design capacity, Solana may need to rely on external scalability solutions, which contradicts its current design philosophy. In contrast, Ethereum's scalability achieved through modularization and Layer 2 solutions allows it to respond more flexibly to future technological challenges and market demands.
Scalability limitations: The scalability of the single-layer structure is limited, and breakthroughs of existing architectural constraints may be needed in the future.
Insufficient flexibility: Solana's flexibility in technological innovation is not as strong as Ethereum's, making it unable to quickly integrate new technologies through modularization like Ethereum.
Nine, conclusion: How will Ethereum's future evolve?
9.1 Combination of modularization and Beam Chain
The combination of Beam Chain and modular architecture represents an important attempt by Ethereum in terms of scalability and technological innovation. In the coming years, the success or failure of Beam Chain will determine whether Ethereum can continue to maintain its leading position as a smart contract platform. At the same time, while the modular strategy of Ethereum enhances network adaptability, it also needs to address issues of centralization and user experience.
9.2 Activity and innovation in the ecosystem
Overall, Ethereum's future depends on the vibrancy and innovative capacity of its ecosystem, as well as the community's support and consensus on the technological route. In the ever-changing technological and market environment, Ethereum can only truly achieve its vision of a 'world computer' by continuous innovation and iteration, maintaining its lead in the next wave of blockchain technology.
