The Evolution of the Ethereum Ecosystem: Moving Towards Unification and Simplification

In the world of cryptocurrency, there has always been much debate about the future of Ethereum. Some believe that other public chains may surpass Ethereum, while others question the high transaction fees of Ethereum or that its ecosystem is declining. However, the facts may be quite different from these views.

Looking back to 2017, early cryptocurrency users experienced a simple and direct trading method. Today, Ethereum is recreating and enhancing this user experience by adopting a modular strategy to reshape its underlying architecture. The mainnet focuses on security and settlement, while Layer 2 solutions are dedicated to improving performance and user experience.

This evolution is bringing a series of exciting changes: the popularity of smart contract wallets, extremely low transaction fees, and a smooth application experience similar to Web2. These advancements are building a seamless, flexible, secure, and unified Ethereum ecosystem.

Ethereum Mainnet: The Cornerstone of Trust

Although high-frequency trading is migrating to Layer 2, the Ethereum mainnet remains the core hub for capital, protocols, and developers.

1. Economic Dominance: Data shows that the total locked value of Ethereum is approximately $62 billion, far exceeding other blockchains. Its stablecoin market cap exceeds $126 billion, making it the largest stablecoin network in the world. In addition, the Ethereum ecosystem dominates the monthly trading volume in decentralized exchanges (DEX).

2. Strategic Shift: Ethereum is transitioning to become the "world ledger", focusing on being a neutral and secure settlement layer for global finance and digital assets. Its "trillion-dollar security" plan aims to create a reliable platform capable of accommodating substantial assets.

3. Institutional Participation: Traditional financial institutions are building future financial services on Ethereum. From large banks to asset management companies, more and more institutions are exploring the potential of Ether. The gradual improvement of the regulatory framework has also paved the way for the large-scale entry of compliant funds.

Layer2: The Engine of Growth

The scaling solution of Ethereum has transitioned from theory to reality, creating a new division of labor pattern:

1. Surge in Trading Volume, Plummeting Costs: The total daily trading volume of mainstream Layer 2 solutions has surpassed that of the mainnet, primarily due to significantly reduced trading costs. This has opened the door to more diverse trading and application scenarios.

2. Technical Upgrade Supports Layer2: The upcoming Dencun upgrade will introduce a dedicated data processing mechanism for Layer2, further reducing costs and increasing efficiency.

Account Abstraction: A Revolution in User Experience

Account abstraction technology aims to address the complexity issues of cryptocurrency usage, paving the way for mass adoption:

1. Simplified Gas Fees: Users may no longer need to handle Gas fees directly; applications can pay on their behalf or allow payments in stablecoins.

2. Account Recovery Simplified: Through social recovery or new technologies, users can more easily retrieve their accounts without worrying about losing their mnemonic phrases.

3. Seamless User Experience: Technologies such as biometric authentication and session keys will make blockchain interactions simpler and more intuitive.

Interoperability: Connecting the On-Chain Islands

After solving the issues of cost and usability, the final challenge facing the Ethereum ecosystem is fragmentation. Emerging interoperability technologies are addressing this problem:

• Intents: Allows users to express only their end goals, while the system automatically completes complex cross-chain operations.
• Shared Sequencer: Ensures atomicity of cross-chain transactions, enhancing security.
• Cross-chain session key: Achieve automated task execution across multiple chains.

Looking to the Future

A unified Ethereum ecosystem is taking shape. The mainnet provides security, Layer 2 offers performance, account abstraction simplifies the user experience, and interoperability technologies seamlessly connect these elements.

In this new paradigm, Web3 wallets will play a more important role, not just as simple asset management tools, but as smart gateways to access a unified ecosystem, assistants for managing programmable accounts, and guides for obtaining the best experience in a multi-chain world.

We are standing at the starting point of a brand new, unified, open, and user-friendly value internet, and the potential of this ecosystem is unprecedented.