Ten years, Ethereum's "Soul Battle"

Has Ethereum been "sidelined" a decade after its launch? The community is engaged in a fierce debate over its "core value" and "expansion path" — should it continue to enhance the capabilities of the mainnet itself, and if so, how, in order to both preserve Ethereum's value and not lose the soul of decentralization?

Author: Li Xiaoyin

Source: Wall Street News

A decade after its birth and having established its dominant position in the market, Ethereum is facing a profound debate about its core identity.

The crux of this "battle for the soul" is: Should Ethereum's future be to become a high-performance execution layer that directly competes with emerging rivals, or should it consolidate its unique position as the world's most secure and decentralized settlement layer, serving the thriving Layer 2 ecosystem built on top of it?

Layer 2 refers to off-chain networks, systems, or technologies based on an underlying blockchain (often called Layer 1), aiming to scale the underlying blockchain network. Relevant data shows that Layer 2 transactions now account for 85% of the total, but large sums of funds still remain primarily on the Ethereum mainnet.

Faced with this contradiction, at the recent EthCC conference in Cannes, several founders, CEOs, and key builders in the Ethereum ecosystem shared their views with crypto industry media Cointelegraph, including Tomasz Stańczak, Co-Executive Director of the Ethereum Foundation (EF), Sandeep Nailwal, Co-Founder of Polygon, and Jerome de Tychey, President of Ethereum France.

Tomasz Stańczak stated that unifying the ecosystem, enhancing interoperability, and improving user experience have been the top priorities over the past 18 months; Marc Boiron, CEO of Polygon Labs, warned that trying to compete with next-generation blockchains like Solana in terms of execution speed is "dangerous."

Fredrik Haga, Co-Founder of Dune Analytics, pointed out that since the introduction of Blobs in March 2024, the fees for Layer 2 settlements to the mainnet have dropped to near zero, which is a technical breakthrough but an economic setback for Layer 1 validators.

Despite intense internal debates, market signals show strong confidence. BlackRock, the world's largest asset manager, is tokenizing assets on Ethereum, and over 90% of real-world asset (RWA) tokenization projects have chosen to build on Ethereum.

This suggests that the market may have already answered the question of Ethereum's "soul" with its actions: an irreplaceable global settlement layer.

The Cost of Scalability

From 2015 to the present, Ethereum's evolution has been full of trade-offs.

With "The Merge" — transitioning from Proof of Work (PoW) to Proof of Stake (PoS) — Ethereum successfully transformed its consensus algorithm, fundamentally changing the way the protocol operates.

However, with the surge in users and applications, the performance bottlenecks of its underlying chain have become increasingly prominent. To address this, the community adopted a Layer 2-centric scaling roadmap, shifting transaction execution to independent Layer 2 networks.

This strategy, through cryptographic innovations such as zero-knowledge proofs (ZK-proofs), achieved optimizations in scale, speed, and cost. In particular, the "Blobs" feature introduced in the 2024 Dencun upgrade caused Layer 2 transaction fees to plummet by 90%.

This technical victory, however, put pressure on the incentive income of Layer 1 validators.

Data shows that although 85% of transactions now occur on Layer 2, 85% of the total funds still remain on Layer 1.

The Foundation's Balancing Act

Faced with the complex dynamics of the ecosystem, the Ethereum Foundation (EF) is trying to play the role of a balancer.

After adjusting its organizational structure in 2025, the new team led by Co-Executive Directors Tomasz Stańczak and Hsiao-Wei Wang is fully promoting a unified ecosystem vision.

The Pectra upgrade, launched in May this year, is the latest manifestation of this effort.

The Pectra upgrade includes 11 Ethereum Improvement Proposals (EIPs), aiming to further enhance scalability, user experience, and staking efficiency.

Stańczak said that over the past 18 months, the Foundation's top priorities have been to address the unification of liquidity, interoperability, and improvements to user experience:

"The focus now is on interoperability, tools, and standards, so that all chains around Ethereum feel like a single ecosystem where users can naturally move assets between them."

Jerome de Tychey, President of Ethereum France, added that the future success of the protocol depends on finding a balance between prioritizing the development of Layer 1 mechanisms and maintaining a symbiotic relationship with Layer 2.

He believes that the community's simultaneous focus on the sustainability of Layer 1 and the security and user experience of Layer 2 is a positive sign that Ethereum is becoming more user-friendly.

Compete or Focus?

This debate about Ethereum's future ultimately boils down to a strategic choice: Should it directly compete with high-performance blockchains like Solana, SUI, and Aptos at the execution layer, or focus on its core strengths?

Marc Boiron, CEO of Polygon Labs, issued a clear warning. He believes that if Ethereum overinvests in competing at the execution layer, it may well be "outpaced" by rivals that have focused on this from the start.

"Trying to overcompete on execution is dangerous," he said.

Sandeep Nailwal, Co-Founder of Polygon, was more direct, arguing that Ethereum's core value proposition has always been a "highly decentralized, censorship-resistant, permissionless settlement layer."

He concluded:

"Ethereum has been dragged into an execution race, which is not its strength. If Ethereum can play to its advantages and focus on being the best settlement layer, we already have enough network effects and momentum to build the entire Web3 world around it."

What's Next for the Next Decade?

Despite ongoing criticism over the past year, discussions at the EthCC conference generally conveyed optimism about Ethereum's future.

This optimism is not based on fanaticism but on real utility and on-chain metrics.

The strongest evidence comes from institutional adoption — over 90% of real-world asset (RWA) tokenization chooses to happen on Ethereum.

Asset management giant BlackRock has tokenized its securities products on Ethereum, and Robinhood announced during the conference the launch of its Ethereum-based Layer 2 network, targeting RWA and securities tokenization.

These actions clearly indicate that large traditional financial institutions value Ethereum's security and decentralization as a settlement layer more than pure transaction speed.

"DeFi (decentralized finance) will dominate global markets, and it will all happen on Ethereum," asserted the Ethereum Foundation's Stańczak.

Jerome de Tychey was more pointed:

"Everything else is a ghost train heading in the wrong direction."

This seems to imply that, regardless of internal debates, Ethereum's position as a trust anchor has already reached a consensus in the market.

Disclaimer: The views in this article are solely those of the author and do not constitute investment advice for this platform. This platform makes no guarantees regarding the accuracy, completeness, originality, or timeliness of the information in the article, nor does it bear any responsibility for any losses arising from the use or reliance on the information in the article.