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Ethereum Foundation: What Happened to Ethereum in 2024?

24-11-14 13:13

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Original Author: Josh Stark, Ethereum Foundation

Original Translation: Pzai, Foresight News

What Happened to Ethereum in 2024?

We can break it down into 3 main themes:

Applications: The product and service ecosystem built on Ethereum.

Infrastructure: The technology enabling all of this.

Community: You, me, and everyone using Ethereum or contributing to Ethereum.

Applications

Ethereum is changing the world because it solves problems for people. Developers worldwide use Ethereum to build what users want. But Ethereum is not just one thing—it is a platform that serves a wide range of use cases. One of these is stablecoins. Stablecoins give everyone the freedom to transact: send money home to family or save for the future. I believe they are still underrated—stablecoins fundamentally elevate human freedom globally.

Stablecoins exist on many chains, but the Ethereum ecosystem has a unique role as the home of most existing stablecoin circulation. The number of stablecoins in the Ethereum ecosystem can now compete with major payment processing networks including Mastercard and Visa.

Behind all these statistics are a variety of stories and use cases. For example, Bitso uses stablecoins on Ethereum to provide faster, cheaper remittances in Latin America; Pintu utilizes stablecoins to offer better savings products to Indonesian users.

Ethereum is also the birthplace of DeFi. These applications leverage Ethereum's unique properties to build financial products that are censorship-resistant and empower individuals to have better control over their funds. DeFi was invented on Ethereum, and the Ethereum ecosystem remains its home. Today, about 60% of the value in DeFi applications is stored on Ethereum or Ethereum L2.

Behind these enormous numbers are real-world benefits for ordinary people worldwide. In Mexico, EthicHub connects small business owners like coffee producers to lenders providing the capital they need for business development through DeFi.

There is also "more" DeFi on Ethereum that I couldn't cover in this talk. Thanks to all the teams, companies, DAOs, and independent developers building this ecosystem. Stablecoins and DeFi were the earliest use cases on Ethereum, and they continue to mature, grow, and scale. But Ethereum is also a blockchain ecosystem that spawns new things.

New things like social networks Farcaster, Lens, and Zora use Ethereum to give users control of their identity and even a share in the platform's growth. There are also new games that provide a new experience to players using Ethereum technology, such as EVE Frontier, a new MMO game where the physical properties of the game world are built in the form of smart contracts, allowing players to build autonomous systems on top of it.

Decentralized identity systems, such as ENS and AnonAadhaar, provide users with options that centralized or traditional IDs do not offer. Real-world infrastructure like Glow leverages the Ethereum ecosystem to incentivize hundreds of solar power plants.

The tremendous success of prediction markets, such as Polymarket, and the Polygon team are showcasing to the world the possibilities of building on-chain open systems. I am very excited about the quick completion of the Polygon PoS transition to Ethereum validation. One thing I love about the Ethereum ecosystem is that Ethereum is a place where creativity enters production. Prediction markets are an idea that has been formalized and debated in academic work for decades. It is on Ethereum where early experiments have brought breakthrough success.

Quadratic funding is another idea that has been formally shaped in academic work over the years. Then, multiple teams in the Ethereum ecosystem embraced these ideas and built products that serve users worldwide today.

Ethereum is a platform for developers. By 2024, Ethereum will be the "best" platform for developers in the crypto ecosystem. This is especially evident when you look at the chain ecosystem data of projects founders are building or "interested" in building:

One significant reason for this is Ethereum's incredibly deep and comprehensive developer tooling ecosystem that builds and maintains everything developers need to start, deliver, and build applications that can securely scale to millions of users worldwide.

When we look around in the Ethereum application layer, what do we see? Ethereum boasts the oldest and most mature use cases: currency, stablecoins, DeFi; Ethereum is also the birthplace of new things, and Ethereum has the best developer ecosystem. Surveying our ecosystem and seeing the confidence and excitement in each use case area, I can fairly say that Ethereum's goal is to maintain growth in every dimension.

Infrastructure

Behind every application is the technical layer, which includes the Ethereum L1 and L2 networks. In recent years, Ethereum's ecosystem has made significant investments in improving this infrastructure. Ethereum is the only blockchain with enough real demand pushing it to its limits and needing to achieve true scalability without compromise, which is a daunting but necessary path.

Most of the investment is related to L2 or Rollups. I won't go into details here, but I want to provide a very simple mental model that anyone can understand. The idea behind L2 is simple: the core is Ethereum L1 -- a native smart contract platform and the world's most secure blockchain. But the "surface area" available on L1 for developers and users is limited, meaning it can be relatively expensive. The outer layer is Ethereum L2, which are networks built on top of L1 and extend its surface area. L2 offers developers and users more space to work with, reducing costs, but as they can be attached to Ethereum in a specific way, they are very secure.

Now, we can't rest on our laurels -- there is still a lot of work to do to complete the ecosystem's L2 roadmap. But at present, we have some very compelling evidence that this strategy is working.

The first evidence is: people are using them! This year, real TPS on Ethereum L2 has seen explosive growth, as has TVL in L2. Meanwhile, following a key network upgrade earlier this year, fees remain low (EIP 4844). On Ethereum L2, you can send $1, $100, or even $1 million to anyone on earth for less than 1 cent.

The second evidence is: developers are starting to take advantage of the fact that different L2s can be customized for different purposes. This means Ethereum can absorb innovation from any other ecosystem and provide specific environments for different use cases. The third evidence is: institutions and enterprises are rolling out L2s, bringing their communities into the Ethereum ecosystem. Ethereum is helping centralized institutions become more decentralized and bringing millions of people on-chain.

Finally, over the past few years, we have even seen some former L1s decide to transition to L2s within the Ethereum ecosystem to leverage Ethereum's security and community advantage. We are thrilled to have you here — welcome to the Infinite Garden!

But as I mentioned, we are not done yet. We have two major tasks for the ecosystem: shedding the training wheels (achieving final form) and building interoperability.

Currently, most L2s are not yet in their "final form," and they stand to benefit from as much security and decentralization as possible. In fact, the image I presented earlier is more like this:

We often refer to these as "phases," and you can learn more about them on L2Beat, where each L2 is progressing towards Phase 2. There is much to be proud of here; so far, two full EVM L2s — Arbitrum and Optimism — have reached Phase 1, and surely more will follow soon. Finally, thank you to L2 Beat for tracking, assessing, and reporting on the progress of each L2 entering Phase 2. You are helping the Ethereum ecosystem better understand itself and holding the community accountable to our ambitious goals.

The second task is interoperability and user experience. Using L2s is currently not as seamless as envisioned. Moving from one L2 to another, then sending to someone elsewhere in the ecosystem — the experience is far from what it should be. Instead, it needs to look more like a simple, interoperable network that feels like an ecosystem, because it *is* an ecosystem.

Fortunately, there are hundreds in the ecosystem working towards this. Soon, we will have addresses usable anywhere, the ability to seamlessly send from one L2 to any other L2, and we will be able to easily use light client verification for L2.

Community

To understand Ethereum's state today, we have to talk about ourselves! The Ethereum community has grown so large and diverse that it's hard to wrap our heads around it. We can be users of Ethereum applications, ETH holders, app developers, protocol researchers, client developers, L2 developers and commentators, stakers and restakers, degens and regens, cypherpunks, activists, and radicals, artists, musicians, and writers, educators, translators, and students, complete newbies and old hands, and so much more.

One incredible feature of the Ethereum community is its true internationalization. There are multiple user and enthusiast communities in every region of the world, as well as developers contributing to applications, L2, and research. Nothing beats that. But our community has another not-so-obvious quality. I don't have fancy charts to prove this, but maybe you've noticed. Over the past few years, our community has not only grown larger but also deeper; it has matured.

By 2024, many of us understand that this is not a sprint but a marathon. We are putting down roots, preparing for long-term development. We are building enduring organizations and companies, we are nurturing the next generation, we have gained confidence in planning for success.

So—what happened in the Ethereum story by 2024? I see the beginning of a virtuous cycle. We are growing, and this growth tests us and pushes Ethereum's infrastructure to the limit, and then we build this way. Better infrastructure can do bigger things, opening up a new phase of growth. The interplay between adoption, growth, infrastructure, and growth again has attracted a community where there are people who need what Ethereum can offer, those who want to sow their seeds, and those who want to build an entire community for the next generation.

We cannot be complacent. There are many challenges to address. But remember: Ethereum is the first to encounter challenges because it has come the farthest.