102 posts tagged with "Ethereum"

In 2022, Vitalik Buterin posed a simple question that would define the next four years of Ethereum scaling: how much Ethereum compatibility are you willing to sacrifice for faster zero-knowledge proofs? His answer came in the form of a five-type classification system for zkEVMs that has since become the industry standard for evaluating these critical scaling solutions.

Fast forward to 2026, and the answer isn't so simple anymore. Proving times have collapsed from 16 minutes to 16 seconds. Costs have dropped 45x. Multiple teams have demonstrated real-time proof generation faster than Ethereum's 12-second block times. Yet the fundamental trade-off Vitalik identified remains—and understanding it is essential for any developer or project choosing where to build.

The Vitalik Classification: Types 1 Through 4​

Vitalik's framework categorizes zkEVMs along a spectrum from perfect Ethereum equivalence to maximum proving efficiency. Higher type numbers mean faster proofs but less compatibility with existing Ethereum infrastructure.

Type 1: Fully Ethereum-Equivalent​

Type 1 zkEVMs don't change anything about Ethereum. They prove the exact same execution environment that Ethereum L1 uses—same opcodes, same data structures, same everything.

The upside: Perfect compatibility. Ethereum execution clients work as-is. Every tool, every contract, every piece of infrastructure transfers directly. This is ultimately what Ethereum needs to make L1 itself more scalable.

The downside: Ethereum wasn't designed for zero-knowledge proofs. The EVM's stack-based architecture is notoriously inefficient for ZK proof generation. Early Type 1 implementations required hours to generate a single proof.

Leading project: Taiko aims for Type 1 equivalence as a based rollup using Ethereum's validators for sequencing, enabling synchronous composability with other based rollups.

Type 2: Fully EVM-Equivalent​

Type 2 zkEVMs maintain full EVM compatibility but change internal representations—how state is stored, how data structures are organized—to improve proof generation.

The upside: Contracts written for Ethereum run without modification. The developer experience remains identical. Migration friction approaches zero.

The downside: Block explorers and debugging tools may need modifications. State proofs work differently than on Ethereum L1.

Leading projects: Scroll and Linea target Type 2 compatibility, achieving near-perfect EVM equivalence at the VM level without transpilers or custom compilers.

Type 2.5: EVM-Equivalent with Gas Cost Changes​

Type 2.5 is a pragmatic middle ground. The zkEVM remains EVM-compatible but increases gas costs for operations that are particularly expensive to prove in zero-knowledge.

The trade-off: Since Ethereum has a gas limit per block, increasing gas costs for specific opcodes means fewer of those opcodes can execute per block. Applications work, but certain computational patterns become prohibitively expensive.

Type 3: Almost EVM-Equivalent​

Type 3 zkEVMs sacrifice specific EVM features—often related to precompiles, memory handling, or how contract code is treated—to dramatically improve proof generation.

The upside: Faster proofs, lower costs, better performance.

The downside: Some Ethereum applications won't work without modification. Developers may need to rewrite contracts that rely on unsupported features.

Reality check: No team actually wants to stay at Type 3. It's understood as a transitional stage while teams work on adding the complex precompile support needed to reach Type 2.5 or Type 2. Both Scroll and Polygon zkEVM operated as Type 3 before advancing up the compatibility ladder.

Type 4: High-Level Language Compatible​

Type 4 systems abandon EVM compatibility entirely at the bytecode level. Instead, they compile Solidity or Vyper to a custom VM designed specifically for efficient ZK proofs.

The upside: Fastest proof generation. Lowest costs. Maximum performance.

The downside: Contracts may behave differently. Addresses might not match Ethereum deployments. Debugging tools need complete rewrites. Migration requires careful testing.

Leading projects: zkSync Era and StarkNet represent the Type 4 approach. zkSync transpiles Solidity to custom bytecode optimized for ZK. StarkNet uses Cairo, an entirely new language designed for provability.

Performance Benchmarks: Where We Stand in 2026​

The numbers have transformed dramatically since Vitalik's original post. What was theoretical in 2022 is production reality in 2026.

Proving Times​

Early zkEVMs required approximately 16 minutes to generate proofs. Current implementations complete the same process in roughly 16 seconds—a 60x improvement. Several teams have demonstrated proof generation in under 2 seconds, faster than Ethereum's 12-second block times.

The Ethereum Foundation has set an ambitious target: proving 99% of mainnet blocks in under 10 seconds using less than $100,000 in hardware and 10kW of power consumption. Multiple teams have already demonstrated capability close to this target.

Transaction Costs​

The Dencun upgrade in March 2024 (EIP-4844 introducing "blobs") reduced L2 fees by 75-90%, making all rollups dramatically more cost-effective. Current benchmarks show:

Platform	Transaction Cost	Notes
Polygon zkEVM	$0.00275	Per transaction for full batches
zkSync Era	$0.00378	Median transaction cost
Linea	$0.05-0.15	Average transaction

Throughput​

Real-world performance varies significantly based on transaction complexity:

Platform	TPS (Complex DeFi)	Notes
Polygon zkEVM	5.4 tx/s	AMM swap benchmark
zkSync Era	71 TPS	Complex DeFi swaps
Theoretical (Linea)	100,000 TPS	With advanced sharding

These numbers will continue improving as hardware acceleration, parallelization, and algorithmic optimizations mature.

Market Adoption: TVL and Developer Traction​

The zkEVM landscape has consolidated around several clear leaders, each representing different points on the type spectrum:

Current TVL Rankings (2025)​

• Scroll: $748 million TVL, largest pure zkEVM
• StarkNet: $826 million TVS
• zkSync Era: $569 million TVL, 270+ deployed dApps
• Linea: ~$963 million TVS, 400%+ growth in daily active addresses

The overall Layer 2 ecosystem has reached $70 billion in TVL, with ZK rollups capturing increasing market share as proving costs continue declining.

Developer Adoption Signals​

• Over 65% of new smart contracts in 2025 deployed on Layer 2 networks
• zkSync Era attracted approximately $1.9 billion in tokenized real-world assets, capturing ~25% of on-chain RWA market share
• Layer 2 networks handled an estimated 1.9 million daily transactions in 2025

The Compatibility-Performance Trade-off in Practice​

Understanding the theoretical types is useful, but the practical implications for developers are what matter.

Type 1-2: Zero Migration Friction​

For Scroll and Linea (Type 2), migration means literally zero code changes for most applications. Deploy the same Solidity bytecode, use the same tools (MetaMask, Hardhat, Remix), expect the same behavior.

Best for: Existing Ethereum applications prioritizing seamless migration; projects where proven, audited code must remain unchanged; teams without resources for extensive testing and modification.

Type 3: Careful Testing Required​

For Polygon zkEVM and similar Type 3 implementations, most applications work but edge cases exist. Certain precompiles may behave differently or be unsupported.

Best for: Teams with resources for thorough testnet validation; projects not relying on exotic EVM features; applications prioritizing cost efficiency over perfect compatibility.

Type 4: Different Mental Model​

For zkSync Era and StarkNet, the development experience differs meaningfully from Ethereum:

zkSync Era supports Solidity but transpiles it to custom bytecode. Contracts compile and run, but behavior may differ in subtle ways. Addresses aren't guaranteed to match Ethereum deployments.

StarkNet uses Cairo, requiring developers to learn an entirely new language—though one specifically designed for provable computation.

Best for: Greenfield projects not constrained by existing code; applications prioritizing maximum performance; teams willing to invest in specialized tooling and testing.

Security: The Non-Negotiable Constraint​

The Ethereum Foundation introduced clear cryptographic security requirements for zkEVM developers in 2025:

• 100-bit provable security by May 2026
• 128-bit security by end of 2026

These requirements reflect the reality that faster proofs mean nothing if the underlying cryptography isn't bulletproof. Teams are expected to meet these thresholds regardless of their type classification.

The security focus has slowed some performance improvements—the Ethereum Foundation explicitly chose security over speed through 2026—but ensures the foundation for mainstream adoption remains solid.

Choosing Your zkEVM: A Decision Framework​

Choose Type 1-2 (Taiko, Scroll, Linea) if:​

• You're migrating existing battle-tested contracts
• Audit costs are a concern (no reaudit needed)
• Your team is Ethereum-native without ZK expertise
• Composability with Ethereum L1 matters
• You need synchronous interoperability with other based rollups

Choose Type 3 (Polygon zkEVM) if:​

• You want a balance of compatibility and performance
• You can invest in thorough testnet validation
• Cost efficiency is a priority
• You don't rely on exotic EVM precompiles

Choose Type 4 (zkSync Era, StarkNet) if:​

• You're building from scratch without migration constraints
• Maximum performance justifies tooling investment
• Your use case benefits from ZK-native design patterns
• You have resources for specialized development

What Comes Next​

The type classifications won't remain static. Vitalik noted that zkEVM projects can "easily start at higher-numbered types and jump to lower-numbered types over time." We're seeing this in practice—projects that launched as Type 3 are advancing toward Type 2 as they complete precompile implementations.

More intriguingly, if Ethereum L1 adopts modifications to become more ZK-friendly, Type 2 and Type 3 implementations could become Type 1 without changing their own code.

The endgame appears increasingly clear: proving times will continue compressing, costs will continue declining, and the distinction between types will blur as hardware acceleration and algorithmic improvements close the performance gap. The question isn't which type will win—it's how quickly the entire spectrum converges toward practical equivalence.

For now, the framework remains valuable. Understanding where a zkEVM sits on the compatibility-performance spectrum tells you what to expect during development, deployment, and operation. That knowledge is essential for any team building on Ethereum's ZK-powered future.

---

Building on zkEVM infrastructure? BlockEden.xyz provides high-performance RPC endpoints across multiple zkEVM chains including Polygon zkEVM, Scroll, and Linea. Explore our API marketplace to access the infrastructure layer your ZK applications need.

What happens when the company behind a 1.4 billion-user payment network decides to build on Ethereum? The answer arrived in October 2025 when Ant Digital, the blockchain arm of Jack Ma's Ant Group, launched Jovay—a Layer-2 network designed to bring real-world assets on-chain at a scale the crypto industry has never seen.

This isn't another speculative L2 chasing retail traders. Jovay represents something far more significant: a $2 trillion fintech giant placing a strategic bet that public blockchain infrastructure—specifically Ethereum—will become the settlement layer for institutional finance.

The Technical Architecture: Built for Institutional Scale​

Jovay's specifications read like a wishlist for institutional adoption. During testnet trials, the network achieved 15,700–22,000 transactions per second, with a stated goal of reaching 100,000 TPS through node clustering and horizontal expansion. For context, Ethereum's mainnet processes roughly 15 TPS. Even Solana, celebrated for speed, averages around 4,000 TPS in real-world conditions.

The network operates as a zkRollup, inheriting Ethereum's security guarantees while achieving the throughput necessary for high-frequency financial operations. A single node, running on standard enterprise hardware (32-core CPU, 64GB RAM), can sustain 30,000 TPS for ERC-20 transfers with approximately 160ms end-to-end latency.

But raw performance tells only part of the story. Jovay's architecture centers on a five-stage pipeline specifically designed for asset tokenization: registration, structuring, tokenization, issuance, and trading. This structured approach reflects the compliance requirements of institutional finance—assets must be properly documented, legally structured, and regulatory-approved before they can be traded.

Critically, Jovay launched without a native token. This deliberate choice signals that Ant Digital is building infrastructure, not generating speculative assets. The network makes money through transaction fees and enterprise partnerships, not token inflation.

Chainlink Integration: The Oracle Infrastructure for RWA Markets​

In October 2025, Chainlink announced that its Cross-Chain Interoperability Protocol (CCIP) would serve as Jovay's canonical cross-chain infrastructure, with Data Streams providing real-time market data for tokenized assets.

This integration solves a fundamental problem in RWA tokenization: connecting on-chain assets to off-chain reality. A tokenized bond is only valuable if investors can verify coupon payments. A tokenized solar farm is only investable if performance data can be trusted. Chainlink's oracle network provides the trusted data feeds that make these verification systems possible.

The partnership also addresses cross-chain liquidity. CCIP enables secure asset transfers between Jovay and other blockchain networks, allowing institutions to move tokenized assets without relying on centralized bridges—the source of billions in hacks over the past few years.

Why a Chinese Fintech Giant Chose Ethereum​

For years, major corporations favored permissioned blockchains like Hyperledger for enterprise applications. The logic was simple: private networks offered control, predictability, and freedom from the volatility associated with public chains.

That calculus is changing. By building Jovay on Ethereum rather than a proprietary network, Ant Digital validates public blockchain infrastructure as a foundation for institutional finance. The reasons are compelling:

Network effects and composability: Ethereum hosts the largest ecosystem of DeFi protocols, stablecoins, and developer tools. Building on Ethereum means Jovay assets can interact with existing infrastructure—lending protocols, exchanges, and cross-chain bridges—without requiring custom integrations.

Credible neutrality: Public blockchains offer transparency that private networks cannot match. Every transaction on Jovay can be verified on Ethereum's mainnet, providing audit trails that satisfy both regulators and institutional compliance teams.

Settlement finality: Ethereum's security model, backed by approximately $100 billion in staked ETH, provides settlement guarantees that private networks cannot replicate. For institutions moving millions in assets, this security matters.

The decision is particularly notable given China's regulatory environment. While mainland China prohibits cryptocurrency trading and mining, Ant Digital has strategically positioned Jovay's global headquarters in Hong Kong and established a presence in Dubai—jurisdictions with forward-thinking regulatory frameworks.

The Hong Kong Regulatory Gateway​

Hong Kong's regulatory evolution has created a unique opportunity for Chinese tech giants to participate in crypto markets while maintaining mainland compliance.

In August 2025, Hong Kong enacted its Stablecoin Ordinance, establishing comprehensive requirements for stablecoin issuers including stringent KYC/AML standards. Ant Digital has engaged in multiple rounds of discussions with Hong Kong regulators and completed pioneering trials in the government-backed stablecoin sandbox (Project Ensemble).

The company designated Hong Kong as its international headquarters in early 2025, a strategic move that allows Ant Group to build crypto infrastructure for overseas markets while its mainland operations remain separate. This "one country, two systems" approach has become the template for Chinese companies seeking crypto exposure without violating mainland regulations.

Through partnerships with regulated entities like OSL, a licensed digital asset infrastructure provider in Hong Kong, Jovay is positioning itself as a "regulated RWA tokenization layer" for institutional investors—compliant by design rather than retrofit.

$8.4 Billion in Tokenized Energy Assets​

Ant Digital hasn't just built infrastructure—it's already using it. Through its AntChain platform, the company has linked $8.4 billion in Chinese energy assets to blockchain systems, tracking over 15 million renewable energy devices including solar panels, EV charging stations, and battery infrastructure.

This existing asset base provides immediate utility for Jovay. Green finance tokenization—representing ownership stakes in renewable energy projects—has emerged as one of the most compelling RWA use cases. These assets generate predictable cash flows (energy production), have established valuation methodologies, and align with growing ESG mandates from institutional investors.

The company has already raised 300 million yuan ($42 million) for three clean energy projects through tokenized asset issuances, demonstrating market demand for on-chain renewable energy investments.

The Competitive Landscape: Jovay vs. Other Institutional L2s​

Jovay enters a market with established institutional blockchain players:

Polygon has secured partnerships with Starbucks, Nike, and Reddit, but remains primarily focused on consumer applications rather than financial infrastructure.

Base (Coinbase's L2) has attracted significant DeFi activity but is US-focused and doesn't specifically target RWA tokenization.

Fogo, the "institutional Solana," targets similar high-throughput financial applications but lacks Ant Group's existing institutional relationships and asset base.

Canton Network (JPMorgan's blockchain) operates as a permissioned network for traditional finance, sacrificing public chain composability for institutional control.

Jovay's differentiation lies in the combination of public chain accessibility, institutional-grade compliance, and immediate connection to Ant Group's 1.4 billion-user ecosystem. No other blockchain network can claim comparable distribution infrastructure.

Market Timing: The $30 Trillion Opportunity​

Standard Chartered projects the tokenized RWA market will expand from $24 billion in mid-2025 to $30 trillion by 2034—a 1,250x increase. This projection reflects growing institutional conviction that blockchain settlement will eventually replace traditional financial infrastructure for many asset classes.

The catalyst for this transition is efficiency. Tokenized securities can settle in minutes rather than days, operate 24/7 rather than during market hours, and reduce intermediary costs by 60-80% according to various industry estimates. For institutions managing trillions in assets, even marginal efficiency gains translate to billions in savings.

BlackRock's BUIDL fund, Ondo Finance's tokenized treasuries, and Franklin Templeton's on-chain money market funds have demonstrated that major institutions are willing to embrace tokenized assets when the infrastructure meets their requirements.

Jovay's timing positions it to capture institutional capital as the RWA tokenization trend accelerates.

Risks and Open Questions​

Despite the compelling vision, significant uncertainties remain:

Regulatory risk: While Ant Digital has positioned strategically, Beijing reportedly instructed the company to pause stablecoin issuance plans in October 2025 due to concerns about capital flight. The company operates in regulatory gray areas that could shift unexpectedly.

Adoption timeline: Enterprise blockchain initiatives have historically taken years to achieve meaningful adoption. Jovay's success depends on convincing traditional financial institutions to migrate existing operations to a new platform.

Competition from TradFi: JPMorgan, Goldman Sachs, and other major banks are building their own blockchain infrastructure. These institutions may prefer networks they control over public chains built by potential competitors.

Token issuance uncertainty: Jovay's decision to launch without a native token could change. If the network eventually issues tokens, early institutional adopters may face unexpected regulatory complications.

What This Means for Web3​

Ant Group's entry into Ethereum's Layer-2 ecosystem represents validation of the thesis that public blockchains will become settlement infrastructure for global finance. When a company processing over $1 trillion in annual transactions chooses to build on Ethereum rather than a private network, it signals confidence in the technology's institutional readiness.

For the broader crypto industry, Jovay demonstrates that the "institutional adoption" narrative is materializing—just not in the form many expected. Instead of institutions buying Bitcoin as a treasury asset, they're building on Ethereum as operational infrastructure.

The next two years will determine whether Jovay delivers on its ambitious vision or joins the long list of enterprise blockchain initiatives that promised revolution but delivered modest improvements. With 1.4 billion potential users, $8.4 billion in tokenized assets, and the backing of one of the world's largest fintech companies, Jovay has the foundation to succeed where others have failed.

The question isn't whether institutional-grade blockchain infrastructure will emerge—it's whether Ethereum's Layer-2 ecosystem, including projects like Jovay, will capture the opportunity or watch as traditional finance builds its own walled gardens.

---

BlockEden.xyz provides enterprise-grade blockchain API services supporting Ethereum, Layer-2 networks, and 20+ other chains. As institutional infrastructure like Jovay expands the RWA tokenization ecosystem, developers need reliable node infrastructure to build applications that connect traditional finance with on-chain assets. Explore our API marketplace to access the infrastructure powering the next generation of financial applications.

Eight independent implementations in 24 hours. That's what happened when the Ethereum Foundation released ERC-8004 "Trustless Agents" in August 2025. For comparison, ERC-20—the standard that enabled the ICO boom—took months to see its first implementations. ERC-721, which powered CryptoKitties, waited six months for broad adoption. ERC-8004 exploded overnight.

The reason? AI agents finally have a way to trust each other without trusting anyone.

The Problem: AI Agents Can't Coordinate​

The AI agent market has crossed $7.7 billion in token market capitalization, with daily trading volumes approaching $1.7 billion. Projections suggest this sector could hit $60 billion by the end of 2025, according to Bitget CEO Gracy Chen. But there's a fundamental problem: these agents operate in isolation.

When an AI trading agent needs a code audit, how does it find a trustworthy auditing agent? When a DeFi optimizer wants to hire a specialized yield strategist, how does it verify that strategist won't steal its funds? The answer, until now, has been centralized intermediaries—which defeats the entire purpose of decentralized systems.

Traditional coordination requires someone in the middle: a marketplace operator, a reputation aggregator, a payment processor. Each intermediary introduces fees, censorship risk, and single points of failure. For autonomous agents operating 24/7 across global markets, these friction points are unacceptable.

ERC-8004 solves this by creating a trustless coordination layer directly on Ethereum.

The Architecture: Three Registries, One Trust Layer​

ERC-8004 introduces three lightweight on-chain registries that serve as the backbone for autonomous agent interactions. The standard was co-authored by Marco De Rossi from MetaMask, Davide Crapis from the Ethereum Foundation, Jordan Ellis from Google, and Erik Reppel from Coinbase—a coalition representing wallet infrastructure, protocol development, cloud computing, and exchange operations.

The Identity Registry gives every agent a unique on-chain identity using the ERC-721 standard. Each agent receives a portable, censorship-resistant identifier that maps to their domain and Ethereum address. This creates a global namespace for autonomous agents—think DNS for the machine economy.

The Reputation Registry provides a standard interface for posting and retrieving feedback signals. Rather than storing complex reputation scores on-chain (which would be expensive and inflexible), the registry handles feedback authorization between agents. Scores range from 0-100, with optional tags and links to off-chain detailed feedback. The protocol supports x402 payment proofs to verify that only paying customers can leave reviews, preventing spam and fraudulent feedback.

The Validation Registry provides hooks for requesting and recording independent validator checks through crypto-economic staking mechanisms. If an agent claims it can optimize yield, validators can stake tokens to verify that claim—and earn rewards for accurate assessments or face slashing for false ones.

The genius of this architecture is what it leaves off-chain. Complex agent logic, detailed reputation histories, and sophisticated validation algorithms all live outside the blockchain. Only the essential trust anchors—identity proofs, authorization records, and validation commitments—touch the chain.

How Agents Will Actually Use This​

Picture this scenario: A portfolio management agent holding $10 million in DeFi positions needs to rebalance across three protocols. It queries the Identity Registry for specialized strategy agents, filters by reputation scores from the Reputation Registry, and ultimately selects an agent with 500+ positive feedback entries and a 94/100 trust score.

Before delegating any capital, the portfolio agent requests independent validation. Three validator agents, each with $50,000 staked, re-execute the proposed strategy in simulation. All three confirm the expected outcomes. Only then does the portfolio agent authorize the transaction.

This entire process—discovery, reputation checking, validation, and authorization—happens in seconds, without human intervention, and without any centralized coordinator.

The use cases extend far beyond trading:

• Code Auditing: Security agents can build verifiable track records of vulnerabilities discovered, with validation from other auditors who stake on their findings.
• DAO Governance: Proposal agents can demonstrate histories of successful governance participation, with reputation weighted by the outcomes of previous votes.
• Healthcare AI: Medical diagnostic agents can maintain privacy-preserving credentials validated by authorized healthcare institutions.
• Decentralized Marketplaces: Service agents can accumulate cross-platform reputation that follows them regardless of which marketplace they operate on.

The Ethereum Foundation's AI Bet​

The Ethereum Foundation isn't leaving ERC-8004's success to chance. In August 2025, it established the dAI team specifically to promote the standard and build supporting infrastructure. The team, led by core developer Davide Crapis, has two priorities: enabling AI agents to pay and coordinate without intermediaries, and building a decentralized AI stack that avoids reliance on a small number of large companies.

This represents a strategic bet that Ethereum can become the coordination layer for the machine economy—not just a settlement layer for human transactions. Within 24 hours of ERC-8004's release, social media saw over 10,000 spontaneous mentions.

The timing is deliberate. NEAR Protocol has branded itself "the blockchain for AI," developing frameworks like Shade Agents that let autonomous bots operate across chains while maintaining data privacy. Solana is pushing agent infrastructure through various DeFi integrations. The competition to become the AI economy's base layer is intensifying.

Ethereum's advantage is network effects: the largest developer ecosystem, the deepest liquidity, and the broadest smart contract compatibility. ERC-8004 aims to convert these advantages into dominance in agent coordination.

The x402 Connection: How Agents Pay Each Other​

ERC-8004 doesn't exist in isolation. It's designed to integrate with x402, the HTTP payment protocol that Coinbase and partners developed to enable machine-to-machine micropayments. The combination creates a complete stack for agent economies.

x402 revives the long-unused HTTP 402 "Payment Required" status code. When an agent requests a service, the provider can respond with payment terms. The requesting agent automatically negotiates and settles the payment—in stablecoins, ETH, or other tokens—without human intervention.

Google's Agent Payments Protocol (AP2), developed in collaboration with Coinbase, extends this further. Announced in consultation with over 60 firms including Salesforce, American Express, and Etsy, AP2 provides security and trust infrastructure for agent-based payments. The A2A x402 extension specifically targets production-ready crypto payments between agents.

The open-source Agent-8004-x402 project demonstrates how these standards combine. A trading agent can discover counterparties through ERC-8004's Identity Registry, verify their reputation, request validation of their strategies, and then settle trades through x402—all autonomously.

What Could Go Wrong​

The standard isn't without risks. Security vulnerabilities in agent private keys or smart contracts could be catastrophic. A bug in the Identity Registry could allow agent impersonation. A flaw in the Reputation Registry could enable reputation manipulation. The Validation Registry's staking mechanism could be gamed by coordinated attackers.

Regulatory uncertainty looms large. Questions about liability, accountability, and the enforceability of agent-executed contracts remain largely unresolved. If an AI agent causes financial losses, who is responsible? The agent's developer? The user who deployed it? The validators who approved its strategy?

There's also concentration risk. If ERC-8004 succeeds, a small number of high-reputation agents could dominate the ecosystem. Early movers with strong feedback histories might create barriers to entry for new agents, potentially recreating the centralization problems the standard aims to solve.

The Ethereum Foundation is aware of these concerns. The standard includes provisions for reputation decay (so inactive agents don't maintain inflated scores), validator rotation (so no single validator group dominates), and identity recovery mechanisms (so key compromises don't permanently destroy agent identities).

The $47 Billion Opportunity​

The global AI agent market hit $5.1 billion in 2024 and is projected to reach $47.1 billion by 2030. Token Metrics projects AI smart agents could reach 15-20% of DeFi transaction volume by late 2025, placing AI-integrated protocols in the $200-300 billion TVL range by end of 2026.

Gas usage for agent identity and execution contracts is projected to rise 30-40% quarter over quarter once standards like ERC-8004 see broad adoption. This creates a feedback loop: more agents mean more coordination, more coordination means more on-chain activity, more activity means higher network revenue.

For Ethereum, ERC-8004 represents both an opportunity and a necessity. If agents become significant economic actors—and all signs suggest they will—the blockchain that captures their coordination layer captures an outsized share of the machine economy.

What Comes Next​

ERC-8004 remains under review, but deployment is already happening. Experiments run on Ethereum mainnet and Layer-2 networks like Taiko and Base. In January 2026, multiple crypto and AI platforms began discussing ERC-8004 as a key building block for agent markets.

The standard may be included in Ethereum's 2026 hard forks—potentially Glamsterdam (Gloas-Amsterdam) or Hegota (Heze-Bogota). Full integration would mean native support for agent identity, reputation, and validation at the protocol level.

The eight implementations in 24 hours weren't a fluke. They were a signal that the market has been waiting for this infrastructure. AI agents exist. They have capital. They need to coordinate. ERC-8004 gives them a way to do it without trusting anyone but the math.

---

As AI agents become significant participants in blockchain ecosystems, the infrastructure supporting them becomes critical. BlockEden.xyz provides enterprise-grade API services across 20+ blockchains, ensuring developers building agent-based applications have the reliable infrastructure they need. Explore our API marketplace to build the autonomous systems of tomorrow.

Ethereum captured over 40% of all on-chain fees in 2021. By 2025, that number collapsed to less than 3%. This isn't a story of Ethereum's decline—it's a story of where value actually flows when transaction fees drop to fractions of a penny.

The fat protocol thesis, introduced by Joel Monegro in 2016, promised that base layer blockchains would capture the lion's share of value as applications built on top of them. For years, this held true. But something fundamental shifted in 2024-2025: applications started generating more fees than the blockchains they run on, and the gap is widening every quarter.

The Numbers That Flipped the Script​

In H1 2025, $9.7 billion was paid to protocols across the crypto ecosystem. The breakdown tells the real story: 63% went to DeFi and finance applications—led by trading fees from DEXs and perpetual derivatives platforms. Only 22% went to blockchains themselves, primarily L1 transaction fees and MEV capture. L2 and L3 fees remained marginal.

The shift accelerated throughout the year. DeFi and finance applications are on track for $13.1 billion in fees for 2025, representing 66% of total on-chain fees. Meanwhile, blockchain valuations continue to command over 90% of total market cap among fee-generating protocols, despite their share of actual fees declining from over 60% in 2023 to just 12% in Q3 2025.

This creates a striking disconnect: blockchains are valued at Price-to-Fee ratios in the thousands, while applications trade at ratios between 10 and 100. The market still prices infrastructure as if it captures the majority of value—even as that value migrates upward.

The Fee Collapse That Changed Everything​

Transaction costs on major chains have plummeted to levels that would have seemed impossible three years ago. Solana processes transactions for $0.00025—less than one-tenth of a cent. Ethereum mainnet gas prices hit record lows of 0.067 gwei in November 2025, with sustained periods below 0.2 gwei. Layer 2 networks like Base and Arbitrum routinely process transactions for under $0.01.

The Dencun upgrade in March 2024 triggered a 95% drop in average gas fees on Ethereum mainnet. The effects compounded throughout 2025 as major rollups optimized their batching systems to take full advantage of blob-based data posting. Optimism cut DA costs by more than half by switching from call data to blobs.

This isn't just good for users—it fundamentally restructures where value accumulates. When transaction fees drop from dollars to fractions of pennies, the protocol layer can no longer capture meaningful economic value through gas alone. That value has to go somewhere, and increasingly, it flows to applications.

Pump.fun: The $724 Million Case Study​

No example illustrates the app-over-infrastructure shift more clearly than Pump.fun, the Solana-based memecoin launchpad. As of August 2025, Pump.fun generated over $724 million in cumulative revenue—more than many Layer 1 blockchains.

The platform's business model is simple: a 1% swap fee on all tokens traded and 1.5 SOL when a coin graduates after hitting a $90,000 market cap. This captured more value than Solana itself earned in network fees during many periods. In July 2025, Pump.fun raised $1.3 billion through a token offering—$600 million public, $700 million private.

Pump.fun wasn't alone. Seven Solana applications generated more than $100 million in revenue during 2025: Axiom Exchange, Meteora, Raydium, Jupiter, Photon, and Bullx joined the list. Total app revenue across Solana reached $2.39 billion, up 46% year over year.

Meanwhile, Solana's network REV (realized extractable value) climbed to $1.4 billion—impressive growth, but increasingly overshadowed by the applications running on top of it. The apps are eating the protocol's lunch.

The New Power Centers​

The concentration of value at the application layer has created new power dynamics. In DEXs, the landscape shifted dramatically: Uniswap's dominance fell from roughly 50% to around 18% in a single year. Raydium and Meteora captured share by riding Solana's surge, while Uniswap lagged on Ethereum.

In perpetual derivatives, the shift was even more dramatic. Jupiter grew its fee share from 5% to 45%. Hyperliquid, launched less than a year ago, now contributes 35% of subsector fees and became a top-three crypto asset by fee revenue. The decentralized perpetuals market exploded as these platforms captured value that might otherwise flow to centralized exchanges.

Lending remained the domain of Aave, holding 62% of DeFi lending market share with $39 billion in TVL by August 2025. But even here, challengers emerged: Morpho increased its share to 10% from nearly zero in H1 2024.

The top five protocols (Tron, Ethereum, Solana, Jito, Flashbots) captured approximately 80% of blockchain fees in H1 2025. But that concentration obscured the real trend: a market once dominated by two or three platforms capturing 80% of fees is now far more balanced, with ten protocols collectively accounting for that same 80%.

The Fat Protocol Thesis on Life Support​

Joel Monegro's 2016 theory proposed that base layer blockchains, like Bitcoin and Ethereum, would accrue more value than their application layers. This inverted the traditional internet model, where protocols like HTTP and SMTP captured no economic value while Google, Facebook, and Netflix extracted billions.

Two mechanisms were supposed to drive this: shared data layers that reduced barriers to entry, and cryptographic access tokens with speculative value. Both mechanisms worked—until they didn't.

The emergence of modular blockchains and the abundance of blockspace fundamentally changed the equation. Protocols are becoming "thinner" as they outsource data availability, execution, and settlement to specialized layers. Applications, meanwhile, focus on what makes them successful: user experience, liquidity, and network effects.

Transaction fees trending toward zero make it harder for protocols to capture value. The 180-day cumulative revenue data backs this argument: seven of the ten largest revenue generators are now applications, not protocols.

The Revenue Redistribution Revolution​

Major protocols that historically avoided explicit value distribution are changing course. While only around 5% of protocol revenue was redistributed to holders before 2025, that number has tripled to roughly 15%. Aave and Uniswap, which long resisted direct value sharing, are moving in this direction.

This creates an interesting tension. Applications can now share more revenue with token holders because they're capturing more value. But this also highlights the gap between L1 valuations and actual revenue generation.

Pump.fun's approach illustrates the complexity. The platform's value accrual mechanism relies on token buybacks rather than direct dividends. Community members increasingly call for mechanisms like fee burns, validator incentives, or revenue redistribution that translate network success more directly into tokenholder benefits.

What This Means for 2026​

Projections suggest 2026 on-chain fees could reach $32 billion or more—60% year-over-year growth from 2025's projected $19.8 billion. Nearly all of that growth is attributable to applications rather than infrastructure.

Infrastructure tokens face continued pressure despite regulatory clarity in key markets. High inflation schedules, insufficient demand for governance rights, and concentration of value at the base layer suggest further consolidation ahead.

For builders, the implications are clear: application-layer opportunities now rival or exceed infrastructure plays. The path to sustainable revenue runs through user-facing products rather than raw blockspace.

For investors, the valuation disconnect between infrastructure and applications presents both risk and opportunity. L1 tokens trading at Price-to-Fee ratios in the thousands while applications trade at 10-100x face potential repricing as the market recognizes where value actually flows.

The New Equilibrium​

The infrastructure-to-application shift doesn't mean blockchains become worthless. Ethereum, Solana, and other L1s remain critical infrastructure that applications depend on. But the relationship is inverting: applications increasingly choose chains based on cost and performance rather than ecosystem lock-in, while chains compete on being the cheapest and most reliable substrate.

This mirrors the traditional tech stack. AWS and Google Cloud are enormously valuable, but the applications built on top of them—Netflix, Spotify, Airbnb—capture outsized attention and, increasingly, outsized value relative to their infrastructure costs.

The $2.39 billion in Solana app revenue versus sub-penny transaction fees tells the story. The value is there. It's just not where the 2016 thesis predicted it would be.

---

The infrastructure-to-application shift creates new opportunities and challenges for builders. BlockEden.xyz provides enterprise-grade API services across 20+ blockchains, helping developers build the applications capturing value in this new landscape. Explore our API marketplace to access the infrastructure powering the next generation of revenue-generating applications.

In December 2025, two seismic upgrades landed within weeks of each other: Ethereum's Pectra hard fork on May 7 and Solana's Firedancer validator client on December 12. For the first time in years, the performance narrative isn't hypothetical—it's measurable, deployed, and fundamentally reshaping the Ethereum vs Solana debate.

The old talking points are obsolete. Ethereum isn't just "slow but decentralized" anymore, and Solana isn't just "fast but risky." Both chains delivered their most ambitious infrastructure upgrades since The Merge and the network restart crisis, respectively. The question isn't which chain is "better"—it's which architecture wins specific use cases in a multi-chain world where L2s process 40,000 TPS and Solana aims for 1 million.

Let's dissect what actually changed, what the data shows, and where each chain stands heading into 2026.

Pectra: Ethereum's Biggest Upgrade Since The Merge​

Ethereum's Pectra upgrade combined the Prague execution layer and Electra consensus layer updates, delivering 11 EIPs focused on three core improvements: account abstraction, validator efficiency, and L2 scalability.

Account Abstraction Goes Mainstream​

EIP-7702 introduces temporary smart contract functionality to Externally Owned Accounts (EOAs), enabling gas abstraction (pay fees in any token), batched transactions, and customizable security—all without permanently converting to a contract account. This bridges the UX gap between EOAs and smart wallets, making Ethereum accessible to users who don't want to manage gas tokens or sign every transaction individually.

For developers, this means building wallet experiences that rival Web2 apps: social recovery, sponsored transactions, and automated workflows—without forcing users into smart wallet migration. The upgrade eliminates a major onboarding friction point that has plagued Ethereum since inception.

Validator Staking Overhaul​

Pectra raised the maximum effective balance from 32 ETH to 2,048 ETH per validator—a 64x increase. For institutional stakers running thousands of validators, this change dramatically simplifies operations. Instead of managing 1,000 separate 32 ETH validators, institutions can consolidate into ~16 validators staking 2,048 ETH each.

Deposit activation time dropped from hours to approximately 13 minutes due to simpler processing. Validator queue times, which previously stretched to weeks during high-demand periods, are now negligible. Staking became operationally cheaper and faster—critical for attracting institutional capital that views validator management overhead as a barrier.

Blob Throughput Doubles​

Ethereum increased the target blob count from 3 to 6 per block, with a maximum of 9 (up from 6). This effectively doubles the data availability bandwidth for L2 rollups, which rely on blobs to post transaction data affordably.

Combined with PeerDAS (activated December 8, 2025), which expands blob capacity from 6 to 48 per block by distributing blob data across nodes, Layer 2 fees are expected to drop an additional 50-70% through 2026 on top of the 70-95% reduction achieved post-Dencun. Data availability currently represents 90% of L2 operating costs, so this change directly impacts rollup economics.

What Didn't Change​

Ethereum's base layer still processes 15-30 TPS. Pectra didn't touch Layer 1 throughput—because it doesn't need to. Ethereum's scaling thesis is modular: L1 provides security and data availability, while L2s (Arbitrum, Optimism, Base) handle execution. Arbitrum already achieves 40,000 TPS theoretically, and PeerDAS aims to push combined L2 capacity toward 100,000+ TPS.

The trade-off remains: Ethereum prioritizes decentralization (8,000+ nodes) and security, accepting lower L1 throughput in exchange for credible neutrality and censorship resistance.

Firedancer: Solana's Path to 1 Million TPS​

Solana's Firedancer validator client, developed by Jump Crypto and written in C for hardware-level optimization, went live on mainnet December 12, 2024, after 100 days of testing and 50,000 blocks produced. This isn't a protocol upgrade—it's a complete reimplementation of the validator software designed to eliminate bottlenecks in the original Agave (formerly Labs) client.

Architecture: Parallel Processing at Scale​

Unlike Agave's monolithic architecture, Firedancer uses a "tile-based" modular design where different validator tasks (consensus, transaction processing, networking) run in parallel across CPU cores. This allows Firedancer to extract maximum performance from commodity hardware without requiring specialized infrastructure.

The results are measurable: Kevin Bowers, Chief Scientist at Jump Trading Group, demonstrated over 1 million transactions per second on commodity hardware at Breakpoint 2024. While real-world conditions haven't reached that yet, early adopters report significant improvements.

Real-World Performance Gains​

Figment's flagship Solana validator migrated to Firedancer and reported:

• 18-28 basis points higher staking rewards compared to Agave-based validators
• 15% reduction in missed voting credits (improved consensus participation)
• Vote latency optimized at 1.002 slots (near-instantaneous consensus contributions)

The rewards boost comes primarily from better MEV capture and more efficient transaction processing—Firedancer's parallel architecture allows validators to process more transactions per block, increasing fee revenue.

As of late 2025, the hybrid "Frankendancer" client (combining Firedancer's consensus with Agave's execution layer) captured over 26% of validator market share within weeks of mainnet launch. Full Firedancer adoption is expected to accelerate through 2026 as remaining edge cases are resolved.

The 1 Million TPS Timeline​

Firedancer's 1 million TPS capability was demonstrated in controlled environments, not production. Solana currently processes 3,000-5,000 real-world TPS, with peak capacity around 4,700 TPS. Reaching 1 million TPS requires not just Firedancer, but network-wide adoption and complementary upgrades like Alpenglow (expected Q1 2026).

The path forward involves:

1. Full Firedancer migration across all validators (currently ~26% hybrid, 0% full Firedancer)
2. Alpenglow upgrade to optimize consensus and state management
3. Network hardware improvements as validators upgrade infrastructure

Realistically, 1 million TPS is a 2027-2028 target, not 2026. However, Firedancer's immediate impact—doubling or tripling effective throughput—is already measurable and positions Solana to handle consumer-scale applications today.

Head-to-Head: Where Each Chain Wins in 2026​

Transaction Speed and Cost​

Solana: 3,000-5,000 real-world TPS, with $0.00025 average transaction cost. Firedancer adoption should push this toward 10,000+ TPS by mid-2026 as more validators migrate.

Ethereum L1: 15-30 TPS, with variable gas fees ($1-50+ depending on congestion). L2 solutions (Arbitrum, Optimism, Base) achieve 40,000 TPS theoretically, with transaction costs of $0.10-1.00—still 400-4,000x more expensive than Solana.

Winner: Solana for raw throughput and cost efficiency. Ethereum L2s are faster than Ethereum L1 but remain orders of magnitude more expensive than Solana for high-frequency use cases (payments, gaming, social).

Decentralization and Security​

Ethereum: ~8,000 validators (each representing a 32+ ETH stake), with client diversity (Geth, Nethermind, Besu, Erigon) and geographically distributed nodes. Pectra's 2,048 ETH staking limit improves institutional efficiency but doesn't compromise decentralization—large stakers still run multiple validators.

Solana: ~3,500 validators, with Firedancer introducing client diversity for the first time. Historically, Solana ran exclusively on the Labs client (now Agave), creating single-point-of-failure risks. Firedancer's 26% adoption is a positive step, but full client diversity remains years away.

Winner: Ethereum maintains a structural decentralization advantage through client diversity, geographic distribution, and a larger validator set. Solana's history of network outages (most recently September 2022) reflects centralization trade-offs, though Firedancer mitigates single-client risk.

Developer Ecosystem and Liquidity​

Ethereum: $50B+ TVL across DeFi protocols, with established infrastructure for RWA tokenization (BlackRock's BUIDL), NFT markets, and institutional integrations. Solidity remains the dominant smart contract language, with the largest developer community and audit ecosystem.

Solana: $8B+ TVL (growing rapidly), with dominance in consumer-facing apps (Tensor for NFTs, Jupiter for DEX aggregation, Phantom wallet). Rust-based development attracts high-performance engineers but has a steeper learning curve than Solidity.

Winner: Ethereum for DeFi depth and institutional trust; Solana for consumer apps and payment rails. These are increasingly divergent use cases, not direct competition.

Upgrade Path and Roadmap​

Ethereum: Fusaka upgrade (Q2/Q3 2026) will expand blob capacity to 48 per block, with PeerDAS pushing L2s toward 100,000+ combined TPS. Long-term, "The Surge" aims to enable L2s to scale indefinitely while maintaining L1 as the settlement layer.

Solana: Alpenglow (Q1 2026) will optimize consensus and state management. Firedancer's full rollout should complete by late 2026, with 1 million TPS feasible by 2027-2028 if network-wide migration succeeds.

Winner: Ethereum has a clearer, more predictable roadmap. Solana's roadmap depends heavily on Firedancer adoption rates and potential edge cases that emerge during migration.

The Real Debate: Monolithic vs Modular​

The Ethereum vs Solana comparison increasingly misses the point. These chains solve different problems:

Ethereum's modular thesis: L1 provides security and data availability; L2s handle execution. This separates concerns, allowing L2s to specialize (Arbitrum for DeFi, Base for consumer apps, Optimism for governance experiments) while inheriting Ethereum's security. The trade-off is complexity—users must bridge between L2s, and liquidity fragments across chains.

Solana's monolithic thesis: One unified state machine maximizes composability. Every app shares the same liquidity pool, and atomic transactions span the entire network. The trade-off is centralization risk—higher hardware requirements (validators need powerful machines) and single-client dependency (mitigated but not eliminated by Firedancer).

Neither approach is "correct." Ethereum dominates high-value, low-frequency use cases (DeFi, RWA tokenization) where security justifies higher costs. Solana dominates high-frequency, low-value use cases (payments, gaming, social) where speed and cost are paramount.

What Developers Should Know​

If you're building in 2026, here's the decision framework:

Choose Ethereum (+ L2) if:

• Your application requires maximum security and decentralization (DeFi protocols, custody solutions)
• You're targeting institutional users or RWA tokenization
• You need access to Ethereum's $50B+ TVL and liquidity depth
• Your users tolerate $0.10-1.00 transaction costs

Choose Solana if:

• Your application requires high-frequency transactions (payments, gaming, social)
• Transaction costs must be sub-cent ($0.00025 avg)
• You're building consumer-facing apps where UX latency matters (400ms Solana finality vs 12-second Ethereum finality)
• You prioritize composability over modular complexity

Consider both if:

• You're building cross-chain infrastructure (bridges, aggregators, wallets)
• Your application has distinct high-value and high-frequency components (DeFi protocol + consumer payment layer)

Looking Ahead: 2026 and Beyond​

The performance gap is narrowing, but not converging. Pectra positioned Ethereum to scale L2s toward 100,000+ TPS, while Firedancer set Solana on a path toward 1 million TPS. Both chains delivered on multi-year technical roadmaps, and both face new challenges:

Ethereum's challenge: L2 fragmentation. Users must bridge between dozens of L2s (Arbitrum, Optimism, Base, zkSync, Starknet), fragmenting liquidity and complicating UX. Shared sequencing and native L2 interoperability are 2026-2027 priorities to address this.

Solana's challenge: Proving decentralization at scale. Firedancer introduces client diversity, but Solana must demonstrate that 10,000+ TPS (and eventually 1 million TPS) doesn't require hardware centralization or sacrifice censorship resistance.

The real winner? Developers and users who finally have credible, production-ready options for both high-security and high-performance applications. The blockchain trilemma isn't solved—it's bifurcated into two specialized solutions.

BlockEden.xyz provides enterprise-grade API infrastructure for both Ethereum (L1 and L2s) and Solana, with dedicated nodes optimized for Pectra and Firedancer. Explore our API marketplace to build on infrastructure designed to scale with both ecosystems.

Sources​

• Ethereum's Pectra Upgrade: What Should Investors Know? - Fidelity Digital Assets
• Ethereum Pectra upgrade: What it means for ETH holders - Kraken
• From Pectra to Fusaka: How Ethereum's protocol changed in 2025 - The Block
• Ethereum Pectra Upgrade: Everything you need to know - Consensys
• What is the Ethereum Pectra Upgrade? Dev Guide to 11 EIPs - Alchemy
• Jump Crypto's Firedancer hits Solana mainnet as the network aims to unlock 1 million TPS - The Block
• Figment's Migration to Firedancer: Unlocking Next-Generation Solana Validator Performance - Figment
• Solana vs Ethereum: Which is Better in 2026? - Backpack
• Solana vs Ethereum TPS Comparison - Chainspect
• The Fusaka Upgrade: Scaling Meets Value Accrual - Fidelity Digital Assets
• Layer 2 Adoption 2026 Predictions - Cryptopolitan
• 2026 Layer 2 Outlook - The Block

In 2025, something unprecedented happened in crypto: a single decentralized exchange generated more revenue than the entire Ethereum blockchain. Hyperliquid, a purpose-built Layer 1 for perpetual futures trading, closed the year with $844 million in revenue, $2.95 trillion in trading volume, and over 80% market share in decentralized derivatives.

The numbers force a question: How did a protocol that didn't exist three years ago surpass networks with $100 billion+ in total value locked?

The answer reveals a fundamental shift in how value accrues in crypto—from general-purpose chains to application-specific protocols optimized for a single use case. While Ethereum struggles with revenue concentration in lending and liquid staking, and Solana builds its brand on memecoins and retail speculation, Hyperliquid quietly became the most profitable trading venue in DeFi.

The Revenue Landscape: Where the Money Actually Goes​

The 2025 blockchain revenue rankings shattered assumptions about which networks capture value.

According to CryptoRank data, Solana led all blockchains with $1.3-1.4 billion in revenue, driven by its spot DEX volume and memecoin trading. Hyperliquid ranked second with $814-844 million—despite being an L1 with a single primary application. Ethereum, the blockchain that supposedly anchors DeFi, came in fourth with roughly $524 million.

The implications are stark. Ethereum's share of app revenue has declined from 50% in early 2024 to just 25% by Q4 2025. Meanwhile, Hyperliquid controlled over 35% of all blockchain revenue at its peak.

What's remarkable is the concentration. Solana's revenue comes from hundreds of applications—Pump.fun, Jupiter, Raydium, and dozens of others. Ethereum's revenue distributes across thousands of protocols. Hyperliquid's revenue comes almost entirely from one thing: perpetual futures trading on its native DEX.

This is the new economics of crypto: specialized protocols that do one thing extremely well can outperform generalized chains that do everything adequately.

How Hyperliquid Built a Trading Machine​

Hyperliquid's architecture represents a fundamental bet against the "general-purpose blockchain" thesis that dominated 2017-2022 thinking.

The Technical Foundation​

The platform runs on HyperBFT, a custom consensus algorithm inspired by Hotstuff. Unlike chains that optimize for arbitrary smart contract execution, HyperBFT is purpose-built for high-frequency order matching. The result: theoretical throughput of 200,000 orders per second with sub-second finality.

The architecture splits into two components. HyperCore handles the core trading infrastructure—fully on-chain order books for perpetuals and spot markets, with every order, cancellation, trade, and liquidation happening transparently on-chain. HyperEVM adds Ethereum-compatible smart contracts, letting developers build on top of the trading primitive.

This dual approach means Hyperliquid isn't choosing between performance and composability—it's achieving both by separating concerns.

The Order Book Advantage​

Most DEXs use Automated Market Makers (AMMs), where liquidity pools determine pricing. Hyperliquid implements a Central Limit Order Book (CLOB), the same architecture used by every major centralized exchange.

The difference matters enormously for professional traders. CLOBs deliver precise price discovery, minimal slippage on large orders, and familiar trading interfaces. For anyone accustomed to trading on Binance or CME, Hyperliquid feels native in a way that Uniswap or GMX never could.

By processing perpetual futures—the highest-volume derivative in crypto—through an on-chain order book, Hyperliquid captured professional trading flow that previously had no viable decentralized alternative.

Zero Gas Fees, Maximum Velocity​

Perhaps most importantly, Hyperliquid eliminated gas fees for trading. When you place or cancel an order, you pay nothing. This removes the friction that prevents high-frequency strategies from working on Ethereum or even Solana.

The result is trading behavior that matches centralized exchanges. Traders can place and cancel thousands of orders without worrying about transaction costs eating into returns. Market makers can quote tight spreads knowing they won't be penalized for cancellations.

The Numbers That Matter​

Hyperliquid's 2025 performance validates the application-specific thesis with brutal clarity.

Trading Volume: $2.95 trillion cumulative, with peak months exceeding $400 billion. For context, Robinhood's crypto trading volume in 2025 was roughly $380 billion—Hyperliquid briefly surpassed it.

Market Share: 70%+ of decentralized perpetual futures volume in Q3 2025, with peaks above 80%. The protocol's aggregate market share versus centralized exchanges reached 6.1%, a record for any DEX.

User Growth: 609,000 new users onboarded during the year, with $3.8 billion in net inflows.

TVL: Approximately $4.15 billion, making it one of the largest DeFi protocols by locked value.

Token Performance: HYPE launched at $3.50 in November 2024 and peaked above $35 in January 2025—a 10x return in under three months.

The revenue model is elegantly simple. The platform collects trading fees and uses 97% of them to buy and burn HYPE tokens. This creates constant buy pressure that scales with trading volume, turning Hyperliquid into a revenue-sharing machine for token holders.

The JELLY Wake-Up Call​

Not everything was smooth. In March 2025, Hyperliquid faced its most serious crisis when a sophisticated exploit nearly drained $12 million from the protocol.

The attack exploited how Hyperliquid handled liquidations for illiquid tokens. An exploiter deposited $7 million across three accounts, took leveraged long positions on JELLY (a low-liquidity token) on two accounts, and opened a massive short on the third. By pumping JELLY's price 429%, they triggered their own liquidation—but the position was too large to liquidate normally, forcing it onto Hyperliquid's insurance fund.

What happened next revealed uncomfortable truths. Within two minutes, Hyperliquid's validators reached consensus to delist JELLY and settled all positions at $0.0095 (the attacker's entry price) rather than the $0.50 market price. The attacker walked away with $6.26 million.

The rapid validator consensus exposed significant centralization. Bitget's CEO called the response "immature, unethical, and unprofessional," warning Hyperliquid risked becoming "FTX 2.0." Critics pointed out that the same protocol that ignored North Korean hackers trading with stolen funds acted immediately when its own treasury was threatened.

Hyperliquid responded by refunding affected traders and implementing stricter controls on illiquid asset listings. But the incident revealed the tension inherent in "decentralized" exchanges that can freeze accounts and reverse transactions when convenient.

Hyperliquid vs. Solana: Different Games​

The comparison between Hyperliquid and Solana illuminates different visions for crypto's future.

Solana pursues the general-purpose blockchain dream: a single high-performance network hosting everything from memecoins to DeFi to gaming. Its $1.6 trillion in spot DEX volume during 2025 came from hundreds of applications and millions of users.

Hyperliquid bets on vertical integration: one chain, one application, one mission—being the best perpetual futures exchange in existence. Its $2.95 trillion in volume came almost entirely from derivatives traders.

The revenue comparison is instructive. Solana processed roughly $343 billion in 30-day perp volume through multiple protocols. Hyperliquid processed $343 billion through a single platform—and generated comparable revenue despite lower spot trading activity.

Where Solana wins: broad ecosystem diversity, consumer applications, and memecoin speculation. Solana's DEX volume exceeded $100 billion monthly for six consecutive months, driven by platforms like Pump.fun.

Where Hyperliquid wins: professional trading execution, perpetual futures liquidity, and institutional-grade infrastructure. Professional traders migrated specifically because Hyperliquid rivals centralized exchanges in execution quality.

The verdict? Different markets. Solana captures retail enthusiasm and speculative activity. Hyperliquid captures professional trading flow and derivatives volume. Both generated massive revenue in 2025—suggesting there's room for multiple approaches.

Competition Is Coming​

Hyperliquid's dominance isn't guaranteed. By late 2025, competitors Lighter and Aster briefly surpassed Hyperliquid in perpetual trading volume by capturing memecoin liquidity rotations. The protocol's market share fragmented from 70% to a more contested landscape.

This mirrors Hyperliquid's own history. In 2023-2024, it disrupted incumbents dYdX and GMX with superior execution and zero-fee trading. Now new entrants apply the same playbook against Hyperliquid.

The broader perpetual market tripled to $1.8 trillion in 2025, suggesting rising tides could lift all participants. But Hyperliquid will need to defend its moat against increasingly sophisticated competitors.

The real competition may come from centralized exchanges. When analysts were asked who could realistically challenge Hyperliquid, they pointed not to other DEXs but to Binance, Coinbase, and other CEXs that might copy its features while offering deeper liquidity.

What Hyperliquid's Success Means​

Hyperliquid's breakout year offers several lessons for the industry.

Application-specific chains work. The thesis that dedicated L1s optimized for single use cases would outperform general-purpose chains just received a $844 million proof point. Expect more projects to follow this model.

Professional traders want real exchanges, not AMMs. The success of on-chain order books validates that sophisticated traders will use DeFi when it matches CEX execution quality. AMMs may be adequate for casual swaps, but derivatives require proper market structure.

Revenue beats TVL as a metric. Hyperliquid's TVL is modest compared to Ethereum DeFi giants like Aave or Lido. But it generates far more revenue. This suggests crypto is maturing toward businesses valued on actual economic activity rather than locked capital.

Centralization concerns persist. The JELLY incident showed that "decentralized" protocols can act very centralized when their treasuries are threatened. This tension will define DeFi's evolution in 2026.

Looking Forward​

Analysts project HYPE could reach $80 by late 2026 if current trends continue, assuming the stablecoin market expands and Hyperliquid maintains its trading share. More conservative estimates depend on whether the protocol can fend off emerging competitors.

The broader shift is unmistakable. Ethereum's declining revenue share, Solana's memecoin-driven growth, and Hyperliquid's derivatives dominance represent three different visions of how crypto creates value. All three are generating meaningful revenue—but the application-specific approach is punching far above its weight.

For builders, the lesson is clear: find a specific high-value activity, optimize relentlessly for it, and capture the entire value chain. For traders, Hyperliquid offers what DeFi always promised—permissionless, non-custodial, professional-grade trading—finally delivered at scale.

The question for 2026 isn't whether decentralized trading can generate revenue. It's whether any single platform can maintain dominance in an increasingly competitive market.

---

This article is for educational purposes only and should not be considered financial advice. The author holds no positions in HYPE, SOL, or ETH.

On February 21, 2025, North Korean hackers stole $1.5 billion in cryptocurrency from Dubai-based exchange Bybit in approximately 30 minutes. It wasn't just the largest crypto heist in history—if Bybit were a bank, it would rank as the largest bank robbery ever recorded by Guinness World Records.

The attack didn't exploit a smart contract bug or brute-force a private key. Instead, hackers compromised a single developer's laptop at a third-party wallet provider, waited patiently for weeks, and struck when Bybit employees were approving what looked like a routine internal transfer. By the time anyone realized something was wrong, 500,000 ETH had vanished into a labyrinth of wallets controlled by North Korea's Lazarus Group.

This is the story of how it happened, why it matters, and what it reveals about the state of crypto security in 2025.

The Attack: A Masterclass in Patience and Precision​

The Bybit hack wasn't a smash-and-grab. It was a surgical operation that unfolded over weeks.

Phase 1: Compromising the Developer​

On February 4, 2025, a developer at Safe{Wallet}—a widely-used multi-signature wallet platform that Bybit relied on for securing large transfers—downloaded what appeared to be a legitimate Docker project called "MC-Based-Stock-Invest-Simulator-main." The file likely arrived via a social engineering attack, possibly disguised as a job opportunity or investment tool.

The malicious Docker container immediately established a connection to an attacker-controlled server. From there, the hackers extracted AWS session tokens from the developer's workstation—the temporary credentials that grant access to Safe{Wallet}'s cloud infrastructure.

With these tokens, the attackers bypassed multi-factor authentication entirely. They now had the keys to Safe{Wallet}'s kingdom.

Phase 2: The Dormant Code​

Rather than act immediately, the attackers injected subtle JavaScript code into Safe{Wallet}'s web interface. This code was specifically designed for Bybit—it would lie dormant until detecting that a Bybit employee had opened their Safe account and was about to authorize a transaction.

The sophistication here is remarkable. The entire Safe{Wallet} application functioned normally for every other user. Only Bybit was targeted.

Phase 3: The Heist​

On February 21, 2025, Bybit employees initiated what should have been a routine transfer from a cold wallet (secure, offline storage) to a warm wallet (for active trading). This required multiple signatures from authorized personnel—a standard security practice called multisig.

When the signers opened Safe{Wallet} to approve the transaction, the interface displayed what appeared to be the correct destination address. But the malicious code had already swapped in a different command. The employees unknowingly approved a transaction that drained Bybit's entire cold wallet.

Within minutes, 500,000 ETH—worth approximately $1.5 billion—flowed to addresses controlled by the attackers.

The Technical Exploit: Delegatecall​

The key vulnerability was Ethereum's delegatecall function, which allows a smart contract to execute another contract's code within its own storage context. The attackers tricked Bybit's signers into changing their wallet's contract logic to a malicious version, effectively granting full control to the hackers.

This wasn't a bug in Ethereum or in Safe{Wallet}'s core protocol. It was an attack on the human layer—the moment when trusted employees verify and approve transactions.

North Korea's Lazarus Group: The World's Most Profitable Hackers​

Within 24 hours of the attack, blockchain investigator ZachXBT submitted evidence to Arkham Intelligence definitively connecting the hack to North Korea's Lazarus Group. The FBI confirmed this attribution on February 26, 2025.

Lazarus Group—also known as TraderTraitor and APT38—operates under North Korea's Reconnaissance General Bureau. It's not a criminal gang seeking profit for personal enrichment. It's a state-sponsored operation whose proceeds fund North Korea's nuclear weapons and ballistic missile programs.

The numbers are staggering:

• 2025 alone: North Korean hackers stole $2.02 billion in cryptocurrency
• Bybit's share: $1.5 billion (74% of North Korea's 2025 haul from a single attack)
• Since 2017: North Korea has stolen over $6.75 billion in crypto assets
• 2025 vs 2024: 51% year-over-year increase in stolen value

North Korea accounted for 59% of all cryptocurrency stolen globally in 2025 and 76% of all exchange compromises. No other threat actor comes close.

The Industrialization of Crypto Theft​

What makes North Korea different isn't just the scale—it's the sophistication of their operation.

Social Engineering Over Technical Exploits​

The majority of 2025's major hacks were perpetrated through social engineering rather than technical vulnerabilities. This represents a fundamental shift. Hackers are no longer primarily hunting for smart contract bugs or cryptographic weaknesses. They're targeting people.

Lazarus Group operatives have embedded themselves as IT workers inside crypto companies. They've impersonated executives. They've sent job offers containing malware to developers. The Bybit attack began with a developer downloading a fake stock trading simulator—a classic social engineering vector.

The Chinese Laundromat​

Stealing crypto is only half the challenge. Converting it to usable funds without getting caught is equally complex.

Rather than cash out directly, North Korea has outsourced money laundering to what investigators call the "Chinese Laundromat"—a sprawling network of underground bankers, OTC brokers, and trade-based laundering intermediaries. These actors wash stolen assets across chains, jurisdictions, and payment rails.

By March 20, 2025—less than a month after the Bybit hack—CEO Ben Zhou reported that hackers had already converted 86.29% of the stolen ETH to Bitcoin through multiple intermediary wallets, decentralized exchanges, and cross-chain bridges. The 45-day laundering cycle following major thefts has become a predictable pattern.

Despite these efforts, Zhou noted that 88.87% of the stolen assets remained traceable. But "traceable" doesn't mean "recoverable." The funds flow through jurisdictions with no cooperative relationship with U.S. or international law enforcement.

Bybit's Response: Crisis Management Under Fire​

Within 30 minutes of discovering the breach, CEO Ben Zhou took command and began providing real-time updates on X (formerly Twitter). His message was blunt: "Bybit is Solvent even if this hack loss is not recovered, all of clients assets are 1 to 1 backed, we can cover the loss."

The exchange processed over 350,000 withdrawal requests within 12 hours—a signal to users that despite the catastrophic loss, operations would continue normally.

Emergency Funding​

Within 72 hours, Bybit had replenished its reserves by securing 447,000 ETH through emergency funding from partners including Galaxy Digital, FalconX, and Wintermute. Bitget loaned 40,000 ETH to ensure withdrawals continued uninterrupted—a loan Bybit repaid within three days.

Cybersecurity firm Hacken conducted a proof-of-reserves audit confirming that Bybit's major assets were backed by more than 100% collateral. The transparency was unprecedented for a crisis of this magnitude.

The Bounty Program​

Zhou declared "war against Lazarus" and launched a global bounty program offering up to 10% rewards for information leading to frozen assets. By year's end, Bybit had paid $2.18 million in USDT to contributors who helped trace or recover funds.

The Market's Verdict​

By the end of 2025, Bybit had crossed 80 million users globally, recorded $7.1 billion in daily trading volume, and ranked 5th among cryptocurrency spot exchanges. The crisis response had become a case study in how to survive a catastrophic hack.

2025: The Year Crypto Theft Hit $3.4 Billion​

The Bybit hack dominated headlines, but it was part of a broader pattern. Total cryptocurrency theft reached $3.4 billion in 2025—a new record and the third consecutive year of increases.

Key statistics:

• 2023: $2 billion stolen
• 2024: $2.2 billion stolen
• 2025: $3.4 billion stolen

North Korea's share grew from roughly half to nearly 60% of all crypto theft. The DPRK achieved larger thefts with fewer incidents, demonstrating increasing efficiency and sophistication.

Lessons Learned: Where Security Failed​

The Bybit hack exposed critical vulnerabilities that extend far beyond a single exchange.

Third-Party Risk Is Existential​

Bybit didn't have a security failure. Safe{Wallet} did. But Bybit suffered the consequences.

The crypto industry has built complex dependency chains where exchanges rely on wallet providers, wallet providers rely on cloud infrastructure, and cloud infrastructure relies on individual developer workstations. A compromise anywhere in this chain can cascade catastrophically.

Cold Storage Isn't Enough​

The industry has long treated cold wallets as the gold standard of security. But Bybit's funds were in cold storage when they were stolen. The vulnerability was in the process of moving them—the human approval step that multisig was designed to protect.

When transfers become routine, signers develop a false sense of security, treating approvals as formalities rather than critical security decisions. The Bybit attack exploited exactly this behavioral pattern.

The UI Is a Single Point of Failure​

Multisig security assumes that signers can verify what they're approving. But if the interface displaying transaction details is compromised, verification becomes meaningless. The attackers showed signers one thing while executing another.

Pre-signing simulations—allowing employees to preview the actual destination of a transaction before approval—could have prevented this attack. So could delays for large withdrawals, giving time for additional review.

Social Engineering Beats Technical Security​

You can have the most sophisticated cryptographic security in the world, and a single employee downloading the wrong file can bypass all of it. The weak point in cryptocurrency security is increasingly human, not technical.

Regulatory and Industry Implications​

The Bybit hack is already reshaping the regulatory landscape.

Expect mandatory requirements for:

• Hardware security modules (HSMs) for key management
• Real-time transaction monitoring and anomaly detection
• Regular third-party security audits
• Enhanced AML frameworks and transaction delays for large transfers

Security and compliance are becoming thresholds for market access. Projects that cannot demonstrate strong key management, permission design, and credible security frameworks will find themselves cut off from banking partners and institutional users.

What This Means for the Industry​

The Bybit hack reveals an uncomfortable truth: crypto's security model is only as strong as its weakest operational link.

The industry has invested heavily in cryptographic security—zero-knowledge proofs, threshold signatures, secure enclaves. But the most sophisticated cryptography is irrelevant if an attacker can trick a human into approving a malicious transaction.

For exchanges, the message is clear: security innovation must extend beyond technology to encompass operational processes, third-party risk management, and continuous employee training. Regular audits, collaborative threat intelligence sharing, and incident response planning are no longer optional.

For users, the lesson is equally stark: even the largest exchanges with the most sophisticated security can be compromised. Self-custody, hardware wallets, and distributed asset storage remain the safest long-term strategies—even if they're less convenient.

Conclusion​

North Korea's Lazarus Group has industrialized cryptocurrency theft. They've stolen over $6.75 billion since 2017, with 2025 marking their most successful year yet. The Bybit hack alone—$1.5 billion in a single operation—demonstrates capabilities that would make any intelligence agency envious.

The crypto industry is in an arms race with state-sponsored hackers who have unlimited patience, sophisticated technical capabilities, and no fear of consequences. The Bybit attack succeeded not because of any novel exploit but because attackers understood that humans, not code, are the weakest link.

Until the industry treats operational security with the same rigor it applies to cryptographic security, these attacks will continue. The question isn't whether another billion-dollar hack will happen—it's when, and whether the target will respond as effectively as Bybit did.

---

This article is for educational purposes only and should not be considered financial advice. Always conduct your own research and prioritize security when interacting with cryptocurrency exchanges and wallets.

Data availability is the new battleground for blockchain dominance—and the stakes have never been higher. As Layer 2 TVL climbs past $47 billion and rollup transactions eclipse Ethereum mainnet by a factor of four, the question of where to store transaction data has become the most consequential infrastructure decision in crypto.

Three protocols are racing to become the backbone of the modular blockchain era: Celestia, the pioneer that proved the concept; EigenDA, the Ethereum-aligned challenger leveraging $19 billion in restaked assets; and Avail, the universal DA layer aiming to connect every ecosystem. The winner won't just capture fees—they'll define how the next generation of blockchains are built.

---

The Economics That Started a War​

Here's the brutal math that launched the modular blockchain movement: posting data to Ethereum costs approximately $100 per megabyte. Even with the introduction of EIP-4844's blobs, that figure only dropped to $20.56 per MB—still prohibitively expensive for high-throughput applications.

Enter Celestia, with data availability at roughly $0.81 per MB. That's a 99% cost reduction that fundamentally changed what's economically viable on-chain.

For rollups, data availability isn't a nice-to-have—it's their largest variable cost. Every transaction a rollup processes must be posted somewhere for verification. When that somewhere charges a 100x premium, the entire business model suffers. Rollups must either:

1. Pass costs to users (killing adoption)
2. Subsidize costs indefinitely (killing sustainability)
3. Find cheaper DA (killing nothing)

By 2025, the market has spoken decisively: over 80% of Layer 2 activity now relies on dedicated DA layers rather than Ethereum's base layer.

---

Celestia: The First-Mover Advantage​

Celestia was built from scratch for a single purpose: being a plug-and-play consensus and data layer. It doesn't support smart contracts or dApps. Instead, it offers blobspace—the ability for protocols to publish large chunks of data without executing any logic.

The technical innovation that makes this work is Data Availability Sampling (DAS). Rather than requiring every node to download every block, DAS allows lightweight nodes to confirm data availability by randomly sampling tiny pieces. This seemingly simple change unlocks massive scalability without sacrificing decentralization.

By the Numbers (2025)​

Celestia's ecosystem has exploded:

• 56+ rollups deployed (37 mainnet, 19 testnet)
• 160+ gigabytes of blob data processed to date
• Eclipse alone has posted over 83 GB through the network
• 128 MB blocks enabled after the November 2025 Matcha upgrade
• 21.33 MB/s throughput achieved in testnet conditions (16x mainnet capacity)

The network's namespace activity hit an all-time high on December 26, 2025—ironically, while TIA experienced a 90% yearly price decline. Usage and token price have decoupled spectacularly, raising questions about value capture in pure DA protocols.

Finality characteristics: Celestia creates blocks every 6 seconds with Tendermint consensus. However, because it uses fraud proofs rather than validity proofs, true DA finality requires a ~10 minute challenge period.

Decentralization trade-offs: With 100 validators and a Nakamoto Coefficient of 6, Celestia offers meaningful decentralization but remains susceptible to validator centralization risks inherent to delegated proof-of-stake systems.

---

EigenDA: The Ethereum Alignment Play​

EigenDA takes a fundamentally different approach. Rather than building a new blockchain, it leverages Ethereum's existing security through restaking. Validators who stake ETH on Ethereum can "restake" it to secure additional services—including data availability.

This design offers two killer features:

Economic security at scale: EigenDA is backed by $335+ million in restaked assets specifically allocated to DA services, drawing from EigenLayer's $19 billion+ TVL pool. No new trust assumptions, no new token to secure.

Raw throughput: EigenDA claims 100 MB/s on mainnet—achievable because it separates data dispersal from consensus. While Celestia processes at roughly 1.33 MB/s live (8 MB blocks / 6 seconds), EigenDA can move data an order of magnitude faster.

Adoption Momentum​

Major rollups have committed to EigenDA:

• Mantle Network: Upgraded from MantleDA (10 operators) to EigenDA (200+ operators), reporting up to 80% cost reduction
• Celo: Leveraging EigenDA for their L2 transition
• ZKsync Elastic Network: Designated EigenDA as preferred alternative DA solution for its customizable rollup ecosystem

The operator network now exceeds 200 nodes with over 40,000 individual restakers delegating ETH.

The centralization critique: Unlike Celestia and Avail, EigenDA operates as a Data Availability Committee rather than a publicly verified blockchain. End users cannot independently verify data availability—they rely on economic guarantees and slashing risks. For applications where pure decentralization matters more than throughput, this is a meaningful trade-off.

Finality characteristics: EigenDA inherits Ethereum's finality timeline—between 12 and 15 minutes, significantly longer than Celestia's native 6-second blocks.

---

Avail: The Universal Connector​

Avail emerged from Polygon but was designed from day one to be chain-agnostic. While Celestia and EigenDA focus primarily on Ethereum ecosystem rollups, Avail positions itself as the universal DA layer connecting every major blockchain.

The technical differentiator is how Avail implements data availability sampling. While Celestia relies on fraud proofs (requiring a challenge period for full security), Avail combines validity proofs with DAS through KZG commitments. This provides faster cryptographic guarantees of data availability.

2025 Milestones​

Avail's year has been marked by aggressive expansion:

• 70+ partnerships secured including major L2 players
• Arbitrum, Optimism, Polygon, StarkWare, and zkSync announced integrations following mainnet launch
• 10+ rollups currently in production
• $75 million raised including $45M Series A from Founders Fund, Dragonfly Capital, and Cyber Capital
• Avail Nexus launched November 2025, enabling cross-chain coordination across 11+ ecosystems

The Nexus upgrade is particularly significant. It introduced a ZK-powered cross-chain coordination layer that lets applications interact with assets across Ethereum, Solana (coming soon), TRON, Polygon, Base, Arbitrum, Optimism, and BNB without manual bridging.

The Infinity Blocks roadmap targets 10 GB block capacity—an order of magnitude beyond any current competitor.

Current constraints: Avail's mainnet runs at 4 MB per 20-second block (0.2 MB/s), the lowest throughput of the three major DA layers. However, testing has proven capability for 128 MB blocks, suggesting significant headroom for growth.

---

The Rollup Economics Breakdown​

For rollup operators, choosing a DA layer is one of the most consequential decisions they'll make. Here's how the math works:

Cost Comparison (Per MB, 2025)​

DA Solution	Cost per MB	Notes
Ethereum L1 (calldata)	~$100	Legacy approach
Ethereum Blobs (EIP-4844)	~$20.56	Post-Pectra with 6 blob target
Celestia	~$0.81	PayForBlob model
EigenDA	Tiered	Reserved bandwidth pricing
Avail	Formula-based	Base + length + weight

Throughput Comparison​

DA Solution	Live Throughput	Theoretical Max
EigenDA	15 MB/s (claimed 100 MB/s)	100 MB/s
Celestia	~1.33 MB/s	21.33 MB/s (tested)
Avail	~0.2 MB/s	128 MB blocks (tested)

Finality Characteristics​

DA Solution	Block Time	Effective Finality
Celestia	6 seconds	~10 minutes (fraud proof window)
EigenDA	N/A (uses Ethereum)	12-15 minutes
Avail	20 seconds	Faster (validity proofs)

Trust Model​

DA Solution	Verification	Trust Assumption
Celestia	Public DAS	1-of-N honest light node
EigenDA	DAC	Economic (slashing risk)
Avail	Public DAS + KZG	Cryptographic validity

---

Security Considerations: The DA-Saturation Attack​

Recent research has identified a new vulnerability class specific to modular rollups: DA-saturation attacks. When DA costs are externally priced (by the parent L1) but locally consumed (by the L2), malicious actors can saturate a rollup's DA capacity at artificially low cost.

This decoupling of pricing and consumption is intrinsic to the modular architecture and opens attack vectors absent from monolithic chains. Rollups using alternative DA layers should implement:

• Independent capacity pricing mechanisms
• Rate limiting for suspicious data patterns
• Economic reserves for DA spikes

---

Strategic Implications: Who Wins?​

The DA wars aren't winner-take-all—at least not yet. Each protocol has carved out distinct positioning:

Celestia wins if you value:

• Proven production track record (50+ rollups)
• Deep ecosystem integration (OP Stack, Arbitrum Orbit, Polygon CDK)
• Transparent per-blob pricing
• Strong developer tooling

EigenDA wins if you value:

• Maximum throughput (100 MB/s)
• Ethereum security alignment via restaking
• Predictable capacity-based pricing
• Institutional-grade economic guarantees

Avail wins if you value:

• Cross-chain universality (11+ ecosystems)
• Validity proof-based DA verification
• Long-term throughput roadmap (10 GB blocks)
• Chain-agnostic architecture

---

The Road Ahead​

By 2026, the DA layer landscape will look dramatically different:

Celestia is targeting 1 GB blocks with its continued network upgrades. The inflation reduction from Matcha (2.5%) and Lotus (33% lower issuance) suggests a long-term play for sustainable economics.

EigenDA benefits from EigenLayer's growing restaking economy. The proposed Incentives Committee and fee-sharing model could create powerful flywheel effects for EIGEN holders.

Avail aims for 10 GB blocks with Infinity Blocks, potentially leapfrogging competitors on pure capacity while maintaining its cross-chain positioning.

The meta-trend is clear: DA capacity is becoming abundant, competition is driving costs toward zero, and the real value capture may shift from charging for blobspace to controlling the coordination layer that routes data between chains.

For rollup builders, the takeaway is straightforward: DA costs are no longer a meaningful constraint on what you can build. The modular blockchain thesis has won. Now it's just a question of which modular stack captures the most value.

---

References​

• Choosing Your Data Availability Layer - Eclipse Labs
• A Guide to Selecting the Right Data Availability Layer - Avail
• L2 Data Availability Layer: A Comparison - Technorely
• The Business Model of Rollups - Alchemy
• Celestia in 2025: Milestones and the Road to 1GB Blockspace - Medium
• EigenLayer expands restaking links with Mantle and ZKsync - Blockworks
• Avail Launches Nexus Mainnet - Chainwire
• 2026 Layer 2 Outlook - The Block
• EigenLayer's Restaking Economy Hits $25B TVL - Mitosis University

"The trilemma has been solved—not on paper, but with live running code."

Those words from Vitalik Buterin on January 3, 2026, marked a watershed moment in blockchain history. For nearly a decade, the blockchain trilemma—the seemingly impossible task of achieving scalability, security, and decentralization simultaneously—had haunted every serious protocol designer. Now, with PeerDAS running on mainnet and zkEVMs reaching production-grade performance, Ethereum claims to have done what many thought impossible.

But what exactly changed? And what does this mean for developers, users, and the broader crypto ecosystem heading into 2026?

---

The Fusaka Upgrade: Ethereum's Biggest Leap Since the Merge​

On December 3, 2025, at slot 13,164,544 (21:49:11 UTC), Ethereum activated the Fusaka network upgrade—its second major code change of the year and arguably its most consequential since the Merge. The upgrade introduced PeerDAS (Peer Data Availability Sampling), a networking protocol that fundamentally transforms how Ethereum handles data.

Before Fusaka, every Ethereum node had to download and store all blob data—the temporary data packets that rollups use to post transaction batches to Layer 1. This requirement created a bottleneck: increasing data throughput meant demanding more from every node operator, threatening decentralization.

PeerDAS changes this equation entirely. Now, each node is responsible for only 1/8th of the total blob data, with the network using erasure coding to ensure any 50% of pieces can reconstruct the full dataset. Validators who previously downloaded 750 MB of blob data per day now need only about 112 MB—an 85% reduction in bandwidth requirements.

The immediate results speak for themselves:

• Layer 2 transaction fees dropped 40-60% within the first month
• Blob targets increased from 6 to 10 per block (with 21 coming in January 2026)
• The L2 ecosystem can now theoretically handle 100,000+ TPS—exceeding Visa's average of 65,000

---

How PeerDAS Actually Works: Data Availability Without the Download​

The genius of PeerDAS lies in sampling. Instead of downloading everything, nodes verify that data exists by requesting random portions. Here's the technical breakdown:

Extended blob data is divided into 128 pieces called columns. Each regular node participates in at least 8 randomly chosen column subnets. Because the data was extended using erasure coding before distribution, receiving just 8 of 128 columns (about 12.5% of the data) is mathematically sufficient to prove the full data was made available.

Think of it like checking a jigsaw puzzle: you don't need to assemble every piece to verify the box isn't missing half of them. A carefully chosen sample tells you what you need to know.

This design achieves something remarkable: theoretical 8x scaling compared to the previous "everyone downloads everything" model, without increasing hardware requirements for node operators. Solo stakers running validator nodes from home can still participate—decentralization preserved.

The upgrade also includes EIP-7918, which ties blob base fees to L1 gas demand. This prevents fees from dropping to meaningless 1-wei levels, stabilizing validator rewards and reducing spam from rollups gaming the fee market.

---

zkEVMs: From Theory to "Production-Quality Performance"​

While PeerDAS handles data availability, the second half of Ethereum's trilemma solution involves zkEVMs—zero-knowledge Ethereum Virtual Machines that allow blocks to be validated using cryptographic proofs instead of re-execution.

The progress here has been staggering. In July 2025, the Ethereum Foundation published "Shipping an L1 zkEVM #1: Realtime Proving," formally introducing the roadmap for ZK-based validation. Nine months later, the ecosystem crushed its targets:

• Proving latency: Dropped from 16 minutes to 16 seconds
• Proving costs: Collapsed by 45x
• Block coverage: 99% of all Ethereum blocks proven in under 10 seconds on target hardware

These numbers represent a fundamental shift. The main participating teams—SP1 Turbo (Succinct Labs), Pico (Brevis), RISC Zero, ZisK, Airbender (zkSync), OpenVM (Axiom), and Jolt (a16z)—have collectively demonstrated that real-time proving isn't just possible, it's practical.

The ultimate goal is what Vitalik calls "Validate instead of Execute." Validators would verify a small cryptographic proof rather than re-computing every transaction. This decouples security from computational intensity, allowing the network to process far more throughput while maintaining (or even improving) its security guarantees.

---

The zkEVM Type System: Understanding the Trade-offs​

Not all zkEVMs are created equal. Vitalik's 2022 classification system remains essential for understanding the design space:

Type 1 (Full Ethereum Equivalence): These zkEVMs are identical to Ethereum at the bytecode level—the "holy grail" but also the slowest to generate proofs. Existing apps and tools work out of the box with zero modifications. Taiko exemplifies this approach.

Type 2 (Full EVM Compatibility): These prioritize EVM equivalence while making minor modifications to improve proof generation. They might replace Ethereum's Keccak-based Merkle Patricia tree with ZK-friendlier hash functions like Poseidon. Scroll and Linea take this path.

Type 2.5 (Semi-Compatibility): Slight modifications to gas costs and precompiles in exchange for meaningful performance gains. Polygon zkEVM and Kakarot operate here.

Type 3 (Partial Compatibility): Greater departures from strict EVM compatibility to enable easier development and proof generation. Most Ethereum applications work, but some require rewrites.

The December 2025 announcement from the Ethereum Foundation set clear milestones: teams must achieve 128-bit provable security by year-end 2026. Security, not just performance, is now the gating factor for wider zkEVM adoption.

---

The 2026-2030 Roadmap: What Comes Next​

Buterin's January 2026 post outlined a detailed roadmap for Ethereum's continued evolution:

2026 Milestones:

• Large gas limit increases independent of zkEVMs, enabled by BALs (Block Auction Limits) and ePBS (enshrined Proposer-Builder Separation)
• First opportunities to run a zkEVM node
• BPO2 fork (January 2026) raising gas limit from 60M to 80M
• Max blobs reaching 21 per block

2026-2028 Phase:

• Gas repricings to better reflect actual computational costs
• Changes to state structure
• Execution payload migration into blobs
• Other adjustments to make higher gas limits safe

2027-2030 Phase:

• zkEVMs become the primary validation method
• Initial zkEVM operation alongside standard EVM in Layer 2 rollups
• Potential evolution to zkEVMs as default validators for Layer 1 blocks
• Full backward compatibility for all existing applications maintained

The "Lean Ethereum Plan" spanning 2026-2035 aims for quantum resistance and sustained 10,000+ TPS at the base layer, with Layer 2s pushing aggregate throughput even higher.

---

What This Means for Developers and Users​

For developers building on Ethereum, the implications are significant:

Lower costs: With L2 fees dropping 40-60% post-Fusaka and potentially 90%+ reductions as blob counts scale in 2026, previously uneconomical applications become viable. Micro-transactions, frequent state updates, and complex smart contract interactions all benefit.

Preserved tooling: The focus on EVM equivalence means existing development stacks remain relevant. Solidity, Hardhat, Foundry—the tools developers know continue to work as zkEVM adoption grows.

New verification models: As zkEVMs mature, applications can leverage cryptographic proofs for previously impossible use cases. Trustless bridges, verifiable off-chain computation, and privacy-preserving logic all become more practical.

For users, the benefits are more immediate:

Faster finality: ZK proofs can provide cryptographic finality without waiting for challenge periods, reducing settlement times for cross-chain operations.

Lower fees: The combination of data availability scaling and execution efficiency improvements flows directly to end users through reduced transaction costs.

Same security model: Importantly, none of these improvements require trusting new parties. The security derives from mathematics—cryptographic proofs and erasure coding guarantees—not from new validator sets or committee assumptions.

---

The Remaining Challenges​

Despite the triumphant framing, significant work remains. Buterin himself acknowledged that "safety is what remains" for zkEVMs. The Ethereum Foundation's security-focused 2026 roadmap reflects this reality.

Proving security: Achieving 128-bit provable security across all zkEVM implementations requires rigorous cryptographic auditing and formal verification. The complexity of these systems creates substantial attack surface.

Prover centralization: Currently, ZK proving is computationally intensive enough that only specialized entities can economically produce proofs. While decentralized prover networks are in development, premature zkEVM rollout risks creating new centralization vectors.

State bloat: Even with execution efficiency improvements, Ethereum's state continues to grow. The roadmap includes state expiry and Verkle Trees (planned for the Hegota upgrade in late 2026), but these are complex changes that could disrupt existing applications.

Coordination complexity: The number of moving pieces—PeerDAS, zkEVMs, BALs, ePBS, blob parameter adjustments, gas repricings—creates coordination challenges. Each upgrade must be sequenced carefully to avoid regressions.

---

Conclusion: A New Era for Ethereum​

The blockchain trilemma defined a decade of protocol design. It shaped Bitcoin's conservative approach, justified countless "Ethereum killers," and drove billions in alternative L1 investment. Now, with live code running on mainnet, Ethereum claims to have navigated the trilemma through clever engineering rather than fundamental compromise.

The combination of PeerDAS and zkEVMs represents something genuinely new: a system where nodes can verify more data while downloading less, where execution can be proven rather than re-computed, and where scalability improvements strengthen rather than weaken decentralization.

Will this hold up under the stress of real-world adoption? Will zkEVM security prove robust enough for L1 integration? Will the coordination challenges of the 2026-2030 roadmap be met? These questions remain open.

But for the first time, the path from current Ethereum to a truly scalable, secure, decentralized network runs through deployed technology rather than theoretical whitepapers. That distinction—live code versus academic papers—may prove to be the most significant shift in blockchain history since the invention of proof-of-stake.

The trilemma, it seems, has met its match.

---

References​

• Vitalik Buterin Claims ZK-EVMs And PeerDAS Have Solved Blockchain Trilemma
• Ethereum Nears Breakthrough With PeerDAS and zkEVMs Live
• PeerDAS | ethereum.org
• EIP-7594: PeerDAS - Peer Data Availability Sampling
• What Is the Fusaka Upgrade | CoinGecko
• Fusaka Mainnet Announcement | Ethereum Foundation Blog
• Ethereum Activates Fusaka Upgrade | CoinDesk
• The different types of ZK-EVMs | Vitalik.ca
• Shipping an L1 zkEVM #2: The Security Foundations | Ethereum Foundation Blog
• zkEVM - Scaling Ethereum Without Compromise