Article reprinted from: HashKey Capital
Author: Zeqing Guo and 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, etc. This of course also contains investment opportunities.
So, at this point in time in early 2025, what valuable information can we capture from technical discussions such as Ethereum’s roadmap, the recent DevCon, and the upcoming Pectra upgrade early next year? This article attempts to sort out and explore.
Ethereum Roadmap
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 work completed was on the execution layer and consensus layer, thus completing the transition from PoW to PoS. However, 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 focused on future scalability, improving the underlying structure to better serve rollups. EIP-4844 has been launched, and future focus includes PeerDAS to reduce node pressure and cross-rollup interactions.
The Scourge: Mainly reduces some MEV-related issues, including excessive concentration of builders and MEV value being captured by large LSTs.
The Verge: This includes changing the underlying 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, etc. It will also clean up some technical debt.
The Splurge: Some more cutting-edge improvements, including EVM underlying layer, account abstraction, and other cryptographic applications (VDF, etc.).
We have summarized the key improvements in these stages in the table below, introduced their main effects, and summarized the current progress.
DevCon
In addition to the roadmap, another information channel worth exploring is the recent Ethereum DevCon conference, which discussed current issues and possible solutions.
The most eye-catching topic at DevCon may be Beam Chain. From the slightly joking but inaccurate "Ethereum 3.0", we can also see the community's desire for new development directions in the future. Beam Chain has proposed many underlying improvements, including Snarkification of the underlying layer, and improvements to block generation and staking. However, the roadmap will take about 5 years to complete, so it does not require 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. The most discussed issue is the liquidity fragmentation and difficulty in interaction between rollups, which affects the user experience. Many speeches and panels have touched on this issue or related solutions. In addition, the current technical maturity of L2 was also discussed at the conference, 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, future upgrades, etc. We will focus on the Pectra upgrade content in the next section.
Pectra Upgrade
What is worth paying attention to in the near future is the Ethereum Pectra upgrade, which is expected to be completed in Q1 2025, which will also include a number of related transformations from the bottom layer to the user end.
EIP-7702: AA
The most relevant to users is EIP-7702. Based on the design of EIP-3074, EIP-4337 is further developed, giving all EOA accounts the ability to "temporarily" convert to smart contract accounts, which can further improve the user experience (signing 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.
EIP-7691: Increase the number of blobs
Pectra plans to adjust the target 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 will also make the gas drop faster when the blob is not used, and the gas rise more slowly when the blob is fully loaded and reaches the maximum limit.
EIP-7251: Increase the staking 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, reducing the number of validators in staking.
Future opportunities
All of the above technological changes or research discussions may bring some new changes and opportunities. We summarize some of the more important opportunities as follows.
Interoperability between Rollups
Whether it is from the roadmap or many sharings at DevCon, we can see that the liquidity interoperability and interactivity between Layer2 (rollups) are the focus of developers' attention.
There are currently different solutions in the community to solve the liquidity and interoperability issues between rollups from various levels.
Based rollup: Currently, many L2s use their own relatively centralized sequencers to sequence transactions and then publish them to L1, so they cannot interact quickly and in a timely manner. One solution is to use L1 to implement the sequencing function to ensure the atomicity of interactions between L2s that use this sequencing function.
Shared sequencer: In addition to based-rollup, another implementation method is that L2 shares 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 requirements is another solution.
At present, all of the above solutions are being implemented and promoted. For example, Spire Labs' Based Stack for implementing 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.
Account Abstraction
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, the Pectra upgrade may also be the last opportunity for the AA track to verify PMF.
Therefore, after Pectra is upgraded in the first quarter of next year, teams that participated in EIP-7702 earlier and were well prepared, such as Zerodev, may see a new wave of growth, and the specific results will soon become apparent.
Cryptography Applications
Cryptography-related technologies and applications are still a big topic in both the Ethereum roadmap and DevCon discussions. In terms of technology, the zkEVM and zkVM frameworks are gradually maturing, and ZKP combined with MPC, FHE, etc. may have more application combinations. In addition, some cutting-edge cryptography 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 applications, cryptography 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 widely adopted. In addition, with the recent OFAC sanctions on Tornado Cash being determined to be excessive, some concerns about the compliance of privacy applications may be dispelled.
Special thanks to Zhixiong Pan and Yan for reviewing and providing suggestions on this article!
