Ethereum News Today: Ethereum Tackles L2 Dominance and Validator Incentives in 2025 Upgrade Push

Cointelegraph’s latest mini-documentary, “The Fight for Ethereum’s Soul,” delves into the evolving dynamics of the Ethereum blockchain ecosystem a decade after its launch. Filmed at EthCC in Cannes, the documentary features conversations with key figures including Ethereum Foundation co-executive director Tomasz Stańczak, Polygon co-founder Sandeep Nailwal, and Ethereum France president Jerome de Tychey, among others [1]. The documentary explores Ethereum’s ongoing struggle to maintain relevance as next-generation layer-1 blockchains like Solana and Aptos gain traction [1].

Ethereum has undergone major transformations, most notably the transition from proof-of-work to proof-of-stake in 2022. This shift changed the economic incentives within the network, moving away from energy-intensive mining to a staking model that rewards validators with ETH [1]. However, the rise of layer-2 solutions, particularly those utilizing zero-knowledge proofs, has led to a significant portion of transaction volume moving off Ethereum’s base layer [1].

According to Dune Analytics co-founder Fredrik Haga, the introduction of Blobs via EIP 4844 in March 2024 drastically reduced L2 transaction fees by 90%, but also reduced the economic incentives for Ethereum validators. “The L2 situation is interesting because now 85% of transactions are on L2, so there’s only 15% left on Ethereum L1, but 85% of the volume still lives on L1,” Haga explained [1]. This has sparked debates about how to sustain validator incentives while maintaining Ethereum’s role as a settlement layer.

In 2025, the Ethereum Foundation restructured its leadership, with Stańczak and Hsiao-Wei Wang assuming top roles under the guidance of Vitalik Buterin. The Pectra upgrade, launched in May 2025, marked a significant milestone by introducing 11 Ethereum Improvement Proposals (EIPs) aimed at improving scalability, user experience, and staking efficiency [1]. Pectra builds on the Dencun upgrade from 2024, which introduced proto-danksharding and laid the groundwork for more efficient data availability [1].

Despite these upgrades, challenges remain. Stańczak emphasized that unifying liquidity, improving interoperability, and enhancing user experience have been central to the Ethereum Foundation’s priorities over the past 18 months. “I think the big focus now is on the interop, on the tooling and the standards, and accelerating that idea that all the chains around Ethereum should feel very much like a single ecosystem,” he said [1].

De Tychey added that Ethereum must strike a balance between enhancing L1 scalability and ensuring the sustainability of L2 solutions. “We are doing two things right now. First, we are putting some emphasis on the L1, on scalability and on the sustainability of the L2,” he noted [1].

Polygon Labs CEO Marc Boiron warned against trying to compete directly with Solana and other high-performance chains. “I think it is dangerous, right? If they go down this road of trying to compete on execution too heavily, the likelihood is they will end up getting out-competed by those who are trying to do the exact same thing,” he said [1].

Looking ahead, the documentary highlights a growing optimism rooted in Ethereum’s utility and real-world applications. Over 90% of tokenized real-world assets are being built on Ethereum, with BlackRock tokenizing securities and Robinhood launching its own Ethereum-based layer 2 for RWA [1]. Stańczak expressed confidence that Ethereum will dominate the global markets through its decentralized infrastructure. “I would say absolutely no chance that DeFi will not dominate all the global markets. It will be there. It will happen on Ethereum,” he stated [1].

Nailwal summarized the core value proposition of Ethereum as a highly decentralized, sovereign-resistant, and permissionless settlement layer. “And if Ethereum plays well to its strengths and focuses on being the best settlement layer, we already have enough network effects and the momentum for the whole Web3 world to be created around Ethereum,” he said [1].

Source: [1] [The Fight for Ethereum’s Soul, a Cointelegraph documentary](https://cointelegraph.com/news/the-fight-for-ethereums-soul-cointelegraph-documentary?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound)