As Ethereum marks its anniversary today, July 30, we celebrate its transformative impact on blockchain technology and decentralized applications. Since its launch, Ethereum has redefined our interaction with digital assets, smart contracts, and decentralized finance.

This article reflects on Ethereum’s journey, noting the key milestones, technological breakthroughs, and influence on the blockchain ecosystem.

The birth of Ethereum

Ethereum was conceptualized in late 2013 by a then-19-year-old programmer, Vitalik Buterin. Vitalik envisioned a blockchain platform beyond financial transactions, allowing developers to build decentralized applications (dApps) using smart contracts. In January 2014, the Ethereum project was publicly announced, and a whitepaper outlining its capabilities and potential was released.

On July 30, 2015, the Ethereum blockchain officially went live with the launch of its first version, called "Frontier." This marked the beginning of a new era in blockchain technology, enabling developers to create programmable applications and laying the foundation for the subsequent growth of the Ethereum ecosystem.

Key milestones in Ethereum's journey

1. Frontier (2015)

The launch of the Frontier marked the beginning of Ethereum's journey. It provided the basic functionalities needed for developers to start building decentralized applications. Although it was a nascent platform, Frontier paved the way for the future evolution of Ethereum.

2. Homestead (2016)

In March 2016, Ethereum underwent its first major upgrade, known as "Homestead." This update improved the stability and security of the network, making it more suitable for mainstream adoption. Homestead was key to preparing Ethereum for the growing demand for dApps and smart contracts.

3. The DAO and the Ethereum Classic Fork (2016)

In 2016, one of the first and most notable dApps on Ethereum, The DAO (Decentralized Autonomous Organization), raised over $150 million through a crowdfunding campaign. However, a vulnerability in the smart contract code was exploited, resulting in a significant portion of the funds being siphoned.

This incident led to a controversial decision to hard fork the Ethereum blockchain, reversing the hack and returning the stolen funds. The hard fork resulted in two blockchains: Ethereum (ETH) and Ethereum Classic (ETC), with the latter maintaining the original chain.

4. Metropolis: Byzantium and Constantinople (2017-2019)

The Metropolis phase consisted of two major upgrades: Byzantium and Constantinople. Byzantium, implemented in October 2017, introduced several enhancements, including increased privacy and scalability features. Constantinople, which took place in February 2019, focused on further optimizing gas costs and improving the efficiency of smart contracts.

5. The Rise of DeFi (Decentralized Finance) (2019-Present)

Ethereum's open and programmable nature paved the way for the explosive growth of decentralized finance (DeFi) applications. DeFi platforms enable users to lend, borrow, trade, and earn interest on their digital assets without intermediaries. The DeFi movement has unlocked new possibilities for financial inclusion and innovation, driving substantial adoption of the Ethereum network.

6. Ethereum 2.0 (Eth2) and the Beacon Chain (2020-Present)

The transition to Ethereum 2.0, also known as Eth2, represents a significant milestone in Ethereum's evolution. Eth2 aims to address the scalability and energy consumption challenges of the original Ethereum network. It introduces a shift from the energy-intensive proof-of-work (PoW) consensus mechanism to the more sustainable proof-of-stake (PoS) model.

The first phase of Ethereum 2.0, the Beacon Chain, was launched on December 1, 2020. This marked the beginning of the transition to a PoS network, with validators taking on the role of miners to secure the blockchain. Subsequent phases will introduce shard chains, further increasing Ethereum's scalability and transaction throughput.

7. London Hard Fork and EIP-1559 (2021)

The London hard fork, implemented in August 2021, brought significant changes to the Ethereum network. One of the most notable changes was the introduction of Ethereum Improvement Proposal (EIP) 1559, which reformed Ethereum's fee structure.

EIP-1559 introduced a base fee mechanism that dynamically adjusts transaction fees based on network demand. This change aimed to improve the user experience by reducing fee volatility and introducing a deflationary mechanism, as a portion of the transaction fees is burned.

8. The Merge (Paris Upgrade) (2022)

The Merge, also known as the Paris Upgrade, was a landmark event for Ethereum, marking its complete transition from a proof-of-work (PoW) to a proof-of-stake (PoS) network. This upgrade occurred on block 15,537,394 on September 15, 2022, and saw the Beacon Chain live on the mainnet.

Before The Merge, the Ethereum Foundation set requirements for validators transitioning to the PoS network. Validators were required to deposit their ETH to begin the new consensus paradigm. Over 400,000 validators participated, collectively staking approximately 13 million ETH before The Merge.

The Merge did not disrupt the operation of the Ethereum blockchain, and users did not need to take any special actions to prepare for it. Following The Merge, validators could continue staking their Ether (ETH) to secure the blockchain and earn rewards. At the time of The Merge, Ether was trading at less than 50% of its all-time high.

9. Capella and Shanghai Upgrades (2023)

The Capella and Shanghai upgrades, commonly called "Shapella," took place simultaneously on April 12, 2023. These upgrades allowed validators to withdraw their staked ETH for the first time since The Merge.

Before these upgrades, there were concerns that significant withdrawal of staked tokens could lead to a drastic decline in ETH's market value. However, on-chain data following the upgrades indicated that most withdrawals consisted of profits earned from staking rather than the originally deposited ETH.

The token's price also experienced an upward trend, attributed to increased confidence among validators and stakers, knowing they now had the freedom to initiate withdrawals at any time. This newfound flexibility in withdrawing staked ETH contributed to a more favorable perception of the Ethereum 2.0 staking mechanism compared to the period before the upgrades when such withdrawals were not possible.

10. Ethereum Dencun Upgrade (2024)

On March 13, 2024, Ethereum marked a major milestone with the Dencun upgrade, combining the Deneb and Cancun enhancements to improve both the consensus and execution layers. This upgrade significantly reduces transaction fees for layer-2 networks like Polygon and Optimism by introducing proto-danksharding, which shifts bulky transaction data off-chain to alleviate network congestion.

The key to this upgrade is EIP-4844, which uses data blobs to optimize storage and lower costs. Dencun sets the stage for future scalability with its innovative approach, while also enhancing security through improvements like EIP-4788 and EIP-6780.

Overall, the Dencun upgrade moves Ethereum closer to its goal of being a scalable and user-friendly platform, boosting adoption across NFTs and DeFi by making transactions more affordable and efficient.

11. The first spot Ethereum ETF (2024)

While not a direct development of the Ethereum network, the approval of the first spot exchange-traded funds (ETFs) for Ethereum (ETH) on July 23, 2024, marks a significant milestone for ETH’s broader adoption. This decision by the US Securities and Exchange Commission (SEC) expands the availability of crypto investment vehicles and follows the successful launch of Bitcoin (BTC) ETFs earlier in the year, which have drawn tens of billions of dollars since January. The introduction of Ethereum ETFs opens the second-largest cryptocurrency to a broader range of investors who prefer trading through traditional brokerage accounts.

The introduction of Ethereum ETFs is expected to significantly affect Ethereum’s price. Analysts predict that while inflows might not match those of Bitcoin ETFs due to Ethereum’s lack of a first-mover advantage, the new investment vehicle could still attract billions of dollars in the first year. Some analysts forecast that Ethereum’s price could surge to $6,500, driven by the increased accessibility and demand facilitated by the ETFs.

What is the next upgrade after ETH Dencun? 

Ethereum Prague-Electra (Pectra) Upgrade

The Ethereum Prague-Electra (Pectra) upgrade, scheduled for the first quarter of 2025, combines two significant upgrades: Prague, which focuses on the network's execution layer, and Electra, which impacts the consensus layer. This upgrade follows the Dencun upgrade from March 2024, designed to lower transaction fees for layer-2 solutions and enhance Ethereum’s scalability.

Key features of the Pectra upgrade include:

EIP-3074: This proposal aims to improve Ethereum wallets by allowing users to batch transactions and sign them in one step, making wallets function more like smart contracts. Alternatively, developers may replace it with EIP-7702 for enhanced account abstraction compatibility.

EIP-7251: The upgrade will increase the staking limit for validators from 32 ETH to 2,048 ETH. This change aims to reduce the number of validators, easing network communication and improving efficiency.

PeerDAS: This feature will extend the data management improvements introduced in the Dencun upgrade, allowing more efficient roll-up scaling through the use of data blobs for off-chain storage.

EVM Improvements: Enhancements to the Ethereum Virtual Machine (EVM), such as the EVM Object Format (EOF), will improve smart contract security, developer experience, and overall performance on both layer 1 and layer 2.

Following the Pectra upgrade, Ethereum will continue to evolve with the anticipated introduction of Verkle trees, a new data system allowing nodes to handle large data volumes with minimal hardware requirements. Verkle trees are expected to be part of a subsequent upgrade, potentially in 2025 or later, as part of Ethereum's ongoing development roadmap.

The Pectra upgrade is a crucial step in Ethereum's post-Merge roadmap, part of a broader effort to enhance scalability, efficiency, and user experience in the Ethereum ecosystem.

Disclaimer

The content above is neither a recommendation for investment and trading strategies nor does it constitute an investment offer, solicitation, or recommendation of any product or service. The information provided in this article is for general informational purposes only and does not constitute financial, investment, legal, or professional advice of any kind.

Cryptocurrencies involve significant risk and are NOT suitable for the majority of investors. The value of digital currencies can be extremely volatile, and you should carefully consider your investment objectives, level of experience, and risk appetite before participating in any staking or investment activities. We strongly recommend that you seek independent advice from a qualified professional before making any investment or financial decisions related to cryptocurrencies. We shall in NO case be liable for any loss or damage arising directly or indirectly from the use of or reliance on the information contained in this article.