The DeFi Boom and the Evolution of Ethereum
Since the “DeFi Summer” of 2020, decentralized finance (DeFi) has experienced explosive growth, with liquidity mining and yield farming driving significant increases in lending volumes, the number of trading users, and total value locked (TVL).As the cornerstone of the DeFi ecosystem, Ethereum has been adapting to and leading this transformation through technical upgrades, aiming to address challenges such as network congestion and high transaction fees, thereby continuing to benefit from the DeFi boom.
Key Ethereum Technical Upgrades and Their Impact
Throughout Ethereum’s development, a series of major technical upgrades have had a profound impact on its DeFi ecosystem:
- EIP-1559 (London Upgrade, August 2021): Introduced a base fee burn mechanism designed to improve the predictability of transaction fees and permanently burn a portion of the ETH supply, though its primary purpose was not to directly reduce gas fees.
- The Merge (September 2022): Ethereum successfully transitioned from Proof-of-Work (PoW) to Proof-of-Stake (PoS), significantly reducing energy consumption and laying the foundation for future scalability.
- Shanghai Upgrade (April 2023): Allowed the withdrawal of staked ETH, enhancing the flexibility and liquidity of staking.
- Cancun-Dencun Upgrade (March 2024):Implemented Proto-Danksharding (EIP-4844), which introduced “blob transactions,” significantly reducing transaction costs for Layer-2 (L2) rollups—with mainstream rollup fees dropping by nearly 99%.However, this upgrade also led to a sharp decline in ETH burn rates, causing the ETH supply to trend upward, with an annual inflation rate of approximately 0.44%.
The Rise of Layer-2 Solutions and the Multi-Chain Landscape
High gas fees were once a major obstacle to the development of Ethereum DeFi, especially for small investors. The rise of Layer-2 solutions has effectively alleviated this problem.Layer-2 networks such as Arbitrum, Base, Optimism, zkSync, and StarkNet have attracted substantial liquidity by offering lower transaction costs and higher processing speeds, diverting activity from the Ethereum mainnet.As of September 17, 2026, the total TVL across Ethereum L1 and L2 networks had exceeded $58 billion. The DeFi market is moving toward a multi-chain landscape; Ethereum’s declining market share is not due to technical shortcomings but rather reflects the rapid development of other networks and Layer-2 solutions.
The Ethereum Foundation’s Active Participation and Future Outlook
The Ethereum Foundation is not only committed to technical upgrades but also actively participates in the DeFi ecosystem. In January 2025, the Foundation announced an investment of 50,000 ETH (approximately $165.3 million at the time) in the DeFi ecosystem, aiming to optimize capital allocation and drive ecosystem development.
Future upgrade plans include:
- The Pectra upgrade (expected in early 2025 or throughout the year): This is expected to improve the user experience, enhance account abstraction capabilities, and further expand blob throughput.
- EIP-8198 (Quick Slots, to be discussed in September 2026): Aims to gradually reduce block time from 12 seconds to 10 seconds to improve Ethereum’s speed and responsiveness.
- Quantum-Resistant Migration (Target: by December 2029): The Ethereum Foundation’s protocol team plans to implement a quantum-resistant L1 by December 2029, which will impact user accounts, the consensus layer, and the data availability layer.
Analysts are generally optimistic about Ethereum’s long-term development, believing it will remain a core force in the DeFi ecosystem, driven by an improving regulatory environment, technological upgrades, and emerging areas such as stablecoins, tokenization, and AI agents.Institutional interest in Ethereum is growing, with financial giants such as BlackRock launching tokenized funds on the Ethereum network; the launch of Ethereum spot ETFs is also seen as a key driver of institutional adoption.
Trading and Acquiring ETH
ETH can be traded on exchanges that support the token. According to current market data, users can trade ETH spot on major cryptocurrency exchanges such as CoinUp.io, BTCC, Binance, Tapbit, Pionex, WEEX, OKX, Biconomy.com,Gate, DigiFinex, Coinbase International Exchange, KCEX, Ourbit, Coinbase Exchange, OrangeX, and other major cryptocurrency exchanges.
The information on available platforms in this article is subject to change based on each exchange’s listing and delisting activities; please refer to the exchanges’ official announcements for the most up-to-date information.
