Ethereum has long been considered the backbone of decentralized applications, smart contracts, and the broader Web3 ecosystem. But in 2025, that claim is under renewed scrutiny.
The recent Dencun upgrade, implemented in Q1 2024, promised to tackle Ethereum’s most pressing challenge—scalability. Now that the dust has settled, users and developers are asking: has Ethereum done enough to stay on top?
What Was the Dencun Upgrade?
Dencun was a major hard fork, combining two upgrades: “Deneb” on the consensus layer and “Cancun” on the execution layer. The star feature? Proto-danksharding—a key development to lower Layer 2 transaction fees and set the stage for full sharding later.
It introduced EIP-4844, which enabled “blobs” (large data packets for rollups) to reduce L2 gas costs significantly. The goal was to make Ethereum faster and cheaper without compromising decentralization.
Has It Delivered?
The results are promising—at least for now.
- Transaction fees on L2 networks like Optimism, Arbitrum, and Base have dropped dramatically. Some transactions now cost less than $0.01.
- Developer activity has surged. Monthly deployments of smart contracts hit a record high in early 2025, particularly on Base and zkSync.
- User adoption has improved. Daily active addresses across Ethereum and its rollups have steadily increased since the upgrade.
According to L2Beat, rollups now account for over 70% of Ethereum’s daily activity, indicating a shift toward a modular architecture that aligns with Ethereum’s long-term vision.
Competition Is Fierce
Still, Ethereum doesn’t operate in a vacuum. Other chains are catching up—or in some cases, outperforming it in specific areas.
- Solana has recovered from its earlier outages and now boasts sub-second finality with ultra-low fees, attracting NFT and gaming projects en masse.
- Avalanche and Sui are promoting parallel execution and advanced consensus to challenge Ethereum’s performance.
- Base, Coinbase’s Ethereum L2, is growing rapidly due to its tight Web2 integration and user-friendly onboarding.
While Ethereum remains dominant in terms of total value locked (TVL), its lead is not guaranteed. The rise of app-specific chains and “alt-L1s” shows that developers are increasingly choosing the best tools for the job—not just defaulting to Ethereum.
Decentralization vs. Efficiency
One of Ethereum’s strengths has always been its commitment to decentralization. But this has come at a cost: high fees, complex UX, and network congestion. Post-Dencun, Ethereum has taken steps to mitigate these issues, but critics argue it’s still not enough.
In contrast, chains like Solana prioritize speed and user experience, sometimes at the expense of decentralization. The market is now grappling with a key question: what trade-offs are acceptable in the name of scalability?
Ethereum’s bet is on Layer 2s—outsourcing execution to secondary chains while keeping security and consensus on the base layer. It’s a bold modular approach that differs from monolithic competitors, but it also introduces fragmentation and reliance on bridges, which remain a security risk.
The Ecosystem’s Evolution
Ethereum’s strength lies not just in its technology, but in its community and infrastructure:
- DeFi protocols like Aave, Uniswap, and MakerDAO still thrive on Ethereum and its L2s.
- NFT marketplaces such as OpenSea and Blur maintain significant Ethereum-based volume.
- DAOs and on-chain governance models are still most active within Ethereum’s ecosystem.
In essence, Ethereum has become more than a blockchain—it’s a platform, a brand, and a movement.
What’s Next for Ethereum?
Vitalik Buterin has hinted at more aggressive sharding roadmaps ahead. Full danksharding and improvements to data availability will be the next milestones in Ethereum’s development.
In addition, discussions around enshrined rollups—bringing L2s closer to native Ethereum functionality—are gaining momentum.
The Ethereum Foundation and community are also putting a strong emphasis on account abstraction, wallet UX, and social recovery features to make the ecosystem more accessible to mainstream users.
Final Thoughts: Still the Backbone?
In 2025, Ethereum remains the most active and well-supported platform for Web3 development. But it’s no longer the only game in town. Its post-Dencun improvements have strengthened its position—but not by default.
The race for Web3 dominance is far from over. Ethereum is still leading, but it’s now running with others close behind.
Whether it maintains its edge will depend on its ability to keep scaling without losing what made it unique in the first place.