Title: "Perspective | Envisioning Ethereum in 2025"

Author: Polynya, Unitimes

Ethereum will serve as a global settlement layer, or from a more technical perspective, as a global security and data availability layer.

By then, Ethereum will have a thriving external execution layer ecosystem, such as Rollups and Volitions, which will be home to all users and DApps.

These execution layers are not just "scalability solutions", but also vibrant communities with their own culture, identity, governance, and economy. This is where all the innovation will happen, while Ethereum transforms into a somewhat rigid settlement layer. These different communities will interact and compete with each other, but they will also work together for the Ethereum ecosystem as a whole.

The image below, created by Reddit user u/emkoscp, provides a great visualization of this:

Illustration: u/emkoscp

As shown in the image, some execution layers will choose to become Ethereum-based Rollups, fully protected by the Ethereum L1 mainnet; others may opt to become Validiums with centralized data availability, some of which have semi-decentralized data availability, meaning they have their own data availability consensus mechanism; others will offer choices to users.

Some will choose to operate as independent sovereign sidechains, which have relatively centralized consensus mechanisms and do not need to submit any proofs to Ethereum L1. In this case, it could be an independent L1 public chain unrelated to Ethereum (like Bitcoin), or it could actually be a hostile Ethereum sidechain (like BSC), or a friendly Ethereum sidechain (like Polygon PoS). Although this is a technically inferior solution compared to Validiums or Volitions, its marketing, memes, and network effects will continue to exist.

Given this, some more pragmatic L1s in 2021 will turn into Volitions or Rollups, but as mentioned earlier, other L1s will stick to their monolithic blockchain model, despite the significant inefficiencies associated with it. A possible exception is zkL1s (L1s using zero-knowledge proofs), provided they are sufficiently decentralized.

What about users?

1. Regular users: They will use some form of centralized aggregator, which will settle on Rollups or directly on Ethereum. They can be seen as similar to CEXs (centralized exchanges), but they will expand their functionalities to integrate DeFi, NFTs, and social features.

2. Tech-savvy users: Technically skilled users who can self-custody will use smart contract social recovery wallets. These wallets will be very advanced, backed by various aggregation mechanisms that can aggregate smart contracts across multiple Rollups. Imagine a scenario where users deposit fiat into a smart wallet and wish to earn interest. All they need to do is deposit the funds. The smart wallet will a) convert fiat to stablecoins, b) automatically deposit the stablecoins into the best interest-yielding opportunities. Of course, there may be multiple interest aggregation pools similar to Yearn at that time. All of this will be abstracted away from the user, who will only see the interest they are earning! Similarly, most popular dApps will be integrated into smart wallets, so you won’t need to jump back and forth between the front end and Rollups.

3. Application-specific users: Some applications will be fully completed on the front end, while the backend will be invisible to users. In fact, we have already seen this with Sorare (an Ethereum-based NFT fantasy football game): the front end of the application is no different from centralized fantasy football games, while its backend uses StarkEx-based Validium for NFT settlement.

4. Enthusiast users: These users will likely trade directly using Rollups; cost-sensitive enthusiasts will use Volitions or Validiums solutions.

5. Financial institutions, governments, & whale NFT collectors: Ultimately, only a very limited number of participants will settle directly on Ethereum L1, some of which will aggregate user/citizen activities to submit to Ethereum L1 for settlement; others will seek to leverage Ethereum to eliminate their data liabilities. For example, Libra (now renamed Diem) would face this issue: if they deployed a Rollup chain on Ethereum instead of creating their own consensus mechanism, the project might have already succeeded (of course, Rollups did not exist at that time).

Another way to envision the user aspect is:

Who will use Ethereum? Financial institutions, governments, enterprises, and whale NFT collectors. Clearly, Rollups, Volitions, and Validiums will settle on Ethereum, while sidechains/other L1s will bridge to Ethereum.

Who will use Rollups? Those enthusiasts who prefer self-custody and direct interaction with Rollups chains.

Who will use Validiums or Volitions? The same as above, but more likely those who are cost-conscious and want to transact securely at a lower cost.

I expect that most people will use smart wallets and centralized aggregators; people will interact with discrete front ends far less than they do now.

Applications

I don't think we can imagine what types of applications will be built on top of Rollups. This is a completely open design space, and many applications that are simply impossible on traditional L1s blockchains will emerge. Non-consensus data availability will make significant progress, as will "logging in with Ethereum," both of which will be crucial. A brand new door of innovation will open, leading to the creation of innovative applications that will change how people and society operate.

The boundaries between social networks, gaming, identity, governance, and financial systems will become increasingly blurred. All of this will converge to form what many now refer to as the "metaverse," where most activities will settle on Ethereum—even if users may not realize it. They will be users of Ethereum, even if they never directly use Ethereum.

Ethereum: The Base Layer

At the base layer of Ethereum, there will be hundreds of data shards active. State expiry will be implemented, making the Ethereum execution layer more sustainable. Block builders/proposers will be separated, and the beacon chain will have single-slot finality. Additionally, there is one last major project within the Ethereum Foundation and the broader Ethereum research and client development community—implementing zk-SNARK/STARK for everything!

We may even see some non-EVM zkVMs (zero-knowledge virtual machines), possibly a zkVM shard specifically built for settling zero-knowledge proofs from Rollups or other advanced cryptography, running in parallel with the existing EVM. Ultimately, the Ethereum EVM execution layer and the beacon chain itself will implement zk-SNARK/STARK. This is a monumental engineering task that will take years to complete.

There is much more I envision, but I will stop here. What do you think Ethereum will look like in 2025?