Ethereum in 2024: Utility, Scale, and What Comes Next

In March 2024, Ethereum’s Dencun upgrade cut Layer-2 transaction costs by as much as 90%, pushing fees on networks like Base and Optimism to fractions of a cent. Weeks later, BlackRock’s tokenized U.S. dollar fund, BUIDL, crossed $1 billion in assets on Ethereum. And by mid-year, U.S. spot Ether ETFs went live, opening institutional access at scale. These milestones signal a shift: Ethereum isn’t just a crypto experiment—it’s becoming programmable financial infrastructure used by banks, fintechs, game studios, and global brands.

Ethereum is the world’s leading programmable blockchain. It matters now because the pillars required for mainstream adoption—scalability, compliant onchain assets, and enterprise-grade tooling—have moved from roadmap to reality. Below, we unpack how Ethereum works today, where it’s gaining traction, and what comes next.

Understanding Ethereum

At its core, Ethereum is a decentralized platform for building and running smart contracts—self-executing programs that enforce rules without intermediaries. Unlike Bitcoin, which focuses on peer-to-peer digital money, Ethereum functions as a general-purpose computation layer, often described as a “world computer.”

Key context for 2024:

• Consensus: Since The Merge (September 2022), Ethereum uses proof-of-stake (PoS), reducing energy consumption by ~99.95% versus proof-of-work.
• Scaling: Ethereum’s “rollup-centric” roadmap shifts most transactions to Layer-2 (L2) networks—rollups that execute off-chain but settle on Ethereum for security. The Dencun upgrade (March 2024) added EIP-4844 “blobs,” cutting L2 data costs by 5–10x.
• Ecosystem gravity: Ethereum and its EVM-compatible chains host the largest DeFi, NFT, and tokenization ecosystems, attracting developers, assets, and liquidity.

Why it matters: Ethereum’s neutrality, liquidity depth, and tooling make it a credible base layer for regulated finance (tokenized funds, payments), consumer apps (gaming, social), and novel market design (programmable money, onchain auctions, real-time royalties).

How It Works

Smart contracts and the EVM

Developers write smart contracts (typically in Solidity) that compile to bytecode executed by the Ethereum Virtual Machine (EVM). Contracts are immutable once deployed, and upgrades typically rely on modular patterns (proxies) with transparent governance.

• Gas: Every operation has a gas cost; users pay fees in ETH. Gas prices fluctuate with demand.
• Standards: ERC-20 (fungible tokens), ERC-721 (NFTs), ERC-1155 (multi-token), and newer standards like ERC-4626 (tokenized vaults) and ERC-4337 (account abstraction).

Proof-of-stake and validators

Ethereum’s PoS network is secured by validators who stake 32 ETH to propose and attest blocks. Misbehavior can be penalized via “slashing.” As of 2024, active validators number over one million, and about a quarter to a third of ETH supply is staked. This broad participation improves security and decentralization while keeping energy use minimal.

Rollups and the rollup-centric roadmap

Rollups process transactions off-chain and post compressed data to Ethereum for security and final settlement:

• Optimistic rollups (e.g., Optimism, Arbitrum, Base) assume transactions are valid by default with a dispute window (typically 7 days).
• Zero-knowledge (ZK) rollups (e.g., zkSync, Starknet, Scroll, Polygon zkEVM) generate cryptographic proofs for near-instant validity.

Dencun’s EIP-4844 introduced “blobs,” a cheaper data pathway for rollups that slashed costs dramatically. The result: L2s now process the majority of Ethereum ecosystem transactions—often several times L1 volume—at sub-cent fees.

Account abstraction and better UX

ERC-4337 and evolving proposals (like EIP-7702 under discussion) bring “smart accounts” with features like:

• Gas sponsorship via paymasters (apps can cover user fees)
• Recoverable wallets (no more losing everything with a seed phrase)
• Biometrics and passkeys (as seen in Coinbase’s Smart Wallet rollout in 2024)

These changes make Ethereum apps behave more like mainstream mobile apps.

Key Features & Capabilities

• Programmability: Turing-complete smart contracts enable automated market makers (Uniswap), lending protocols (Aave), stablecoins (DAI, PYUSD), auctions, and more.
• Composability: Contracts are “money legos.” Developers can stack protocols (e.g., deposit collateral in Aave, mint a stablecoin, supply it to an AMM) with atomic transactions.
• Security and neutrality: Ethereum’s large validator set, high economic security, and public governance set it apart from permissioned chains.
• Liquidity density: DeFi liquidity and stablecoin float on Ethereum/EVM chains provide deep markets; Uniswap frequently clears tens of billions of dollars in monthly volume.
• Standards and tooling: Mature toolchains (Hardhat, Foundry), auditing practices, and cloud integrations (Infura, Alchemy, QuickNode) accelerate development.
• Data availability and scaling: Post-Dencun, L2 fees fell by 80–95% in many cases, enabling microtransactions, gaming actions, and high-frequency trading use cases.
• Oracles and off-chain connectivity: Chainlink and others provide price feeds and cross-chain messaging (CCIP), linking Ethereum to banks, markets, and other blockchains.
• Privacy progress: ZK proofs enable selective disclosure and private computations while settling to Ethereum for security.

Real-World Applications

Tokenized funds and real-world assets (RWAs)

• BlackRock BUIDL: Launched in 2024 on Ethereum with Securitize as transfer agent, BUIDL tokenizes a U.S. dollar institutional liquidity fund investing in Treasuries and cash. It passed $1 billion AUM within months, with daily yield distributed on-chain—a powerful proof of institutional-grade tokenization.
• Franklin Templeton: Its OnChain U.S. Government Money Fund began on Stellar and added Polygon (an EVM chain). The firm’s work shows how fund shares, transfer restrictions, and reporting can integrate with public chain tech.
• Société Générale–Forge: Issued euro-denominated stablecoins and tokenized bonds on Ethereum, including onchain money market instruments for institutional clients.

Why it matters: Tokenized Treasuries and funds exceeded a billion dollars in aggregate AUM by early 2024, and the trajectory points upward as asset managers prioritize intraday liquidity, programmable compliance, and 24/7 settlements.

Payments and stablecoins

• PayPal PYUSD: A dollar stablecoin on Ethereum issued by Paxos, integrated into PayPal and Venmo. This gives millions of users on-ramps to onchain dollars.
• Visa and USDC: Visa piloted USDC settlement on Ethereum with Crypto.com and has since expanded multi-chain support, illustrating how card networks can settle merchant obligations on-chain with near-real-time finality.
• Stripe: In 2024, Stripe announced a renewed crypto push starting with USDC on Solana, with plans and partners pointing to broader EVM integrations—another signal that payment giants view stablecoins as a settlement rail.

Why it matters: Onchain dollars enable low-friction, programmable payments. Combined with sub-cent L2 fees, cross-border payouts and merchant settlement can see 50–90% cost reductions compared to legacy rails.

DeFi as a programmable financial layer

• Uniswap: Decentralized exchange with billions in daily peak volume and deep liquidity across Ethereum and L2s. Its model eliminates traditional order books, relying on automated market makers and smart order routing.
• Aave and MakerDAO: Aave’s multi-chain lending markets hold double-digit billions in TVL across deployments; Maker’s DAI stablecoin remains a core unit of account and collateral hub for DeFi.
• Lido: Liquid staking on Ethereum enables staked ETH to remain usable in DeFi. Lido’s share of staked ETH sits around a third, creating both liquidity and centralization debates.

Why it matters: DeFi protocols are battle-tested, with multi-year uptime and risk frameworks. Institutions increasingly access DeFi yields via permissioned pools and KYC layers.

Consumer apps: NFTs, gaming, and social

• Nike .SWOOSH and Starbucks Odyssey: Both leveraged EVM-compatible networks (Polygon) for digital collectibles and loyalty, showing how brands deploy at scale without mainnet congestion.
• Sorare: A leading fantasy sports game uses Starknet’s ZK technology, enabling fast gameplay with Ethereum security.
• Farcaster on Base: The social protocol’s 2024 “Frames” feature catalyzed rapid growth, showcasing how inexpensive L2s unlock interactive onchain social experiences.

Why it matters: As fees drop, consumer apps get viable. Microtransactions, in-game assets, and creator royalties work better when transactions cost less than a penny.

Enterprise and public sector

• EY OpsChain and Nightfall: EY built privacy-preserving tooling on Ethereum for supply chains and enterprise operations, enabling private transactions anchored to a public chain.
• Brazil’s Drex CBDC pilot: Built on Hyperledger Besu (an Ethereum client) in a permissioned setting, Drex signals how central banks can adopt Ethereum-compatible tech while maintaining regulatory control.

Industry Impact & Market Trends

• Market position: Ethereum remains the second-largest crypto network by market capitalization, often in the $400–500B range in 2024 depending on price conditions.
• DeFi and stablecoins: Ethereum consistently captures the largest share of DeFi total value locked (often ~50–60% of industry TVL), with stablecoins like USDC and PYUSD natively issued on Ethereum, and USDT widely bridged and used across EVM chains.
• L2 dominance: Post-Dencun, L2s routinely process multiples of L1 activity; daily L2 transactions can be 5–10x mainnet volumes. Fees under $0.01–$0.05 have opened new categories of onchain apps.
• Developer ecosystem: According to the Electric Capital Developer Report, Ethereum and EVM ecosystems have the largest smart contract developer base, with thousands of monthly active open-source contributors and the richest library/tooling stack.
• Institutional access: U.S. spot Ether ETFs launched in mid-2024, quickly attracting billions in assets. Combined with qualified custodians, SOC 2–compliant infrastructure, and regulated tokenization platforms, the institutional rails are in place.
• RWAs surge: Tokenized U.S. Treasuries and funds crossed the $1B threshold in 2024, with BlackRock’s BUIDL becoming a flagship. Banks and asset managers are piloting repo, funds, and collateral flows on Ethereum and EVM networks.
• MEV research and market structure: Proposer-builder separation (PBS, currently via relays) and MEV-Boost have matured, improving fairness and reducing missed-slot penalties. There’s active work toward enshrined PBS to better align incentives.

Challenges & Limitations

• UX and key management: Seed phrases, gas, and chain selection remain confusing. Account abstraction is improving things, but developers must still hide crypto-native complexity.
• Fragmentation across L2s: While rollups cut costs, they fragment liquidity and user experience. Bridging between L2s introduces friction and risk. Standardized messaging (e.g., Chainlink CCIP, Hyperlane) helps, but there’s no universal standard yet.
• Bridge and smart contract risk: Cross-chain bridges and unaudited contracts have led to billions in cumulative losses across the industry. Security has improved since 2022’s peak exploits, but the attack surface remains large.
• Staking concentration: Liquid staking providers (notably Lido) control a significant share of staked ETH, raising questions about governance influence and validator diversity.
• Regulatory uncertainty: While ETF approvals and tokenized funds are positives, differing global rules for stablecoins, DeFi KYC, and tokenized securities create compliance complexity. Financial institutions often need permissioning, whitelists, and robust identity frameworks.
• Data availability and censorship resistance: While blobs lowered L2 costs, long-term data availability scaling (full danksharding) and censorship concerns (e.g., OFAC-related considerations in block building) remain active areas of research and governance.
• Finality and settlement nuances: Optimistic rollups offer cheap throughput but rely on dispute windows (often 7 days), complicating fast withdrawals. ZK rollups offer quicker finality but are still evolving toward EVM-equivalence and cost efficiency.

Future Outlook

From proto to full danksharding

Dencun’s EIP-4844 was a waypoint. Full danksharding will increase data availability by orders of magnitude using data availability sampling. Expect:

• Sustained sub-cent L2 fees even during peak demand
• High-throughput consumer apps (social, gaming) with onchain actions indistinguishable from Web2 latency
• Professional market structure on L2s (options, perps, RFQ networks) rivaling centralized venues

Pectra and better wallets

The next major upgrade cycle, often referred to as Pectra (Prague + Electra), is expected to include improvements like enhanced account abstraction (EIP-7702 discussions) and usability enhancements. This could make gas sponsorship, transaction batching, and recoverable wallets standard, reducing drop-off in onboarding by double-digit percentages.

Institutionalization of tokenized finance

What started with money market funds will expand to:

• Tokenized credit and private markets with real-time NAV and composable collateral
• Onchain repo and intraday liquidity for treasurers, cutting settlement cycles from days to minutes
• Interoperability between custodians, banks, and public chains via standardized messaging (e.g., Swift pilots with Chainlink connected to Ethereum and other networks in 2023/24)

Expect tokenized assets to grow from billions to tens of billions over the next 12–24 months as legal, KYC, and audit frameworks standardize.

Restaking and modular security

Protocols like EigenLayer introduced “restaking,” letting staked ETH secure additional services (oracles, data availability). In 2024, restaking TVL jumped into the tens of billions, enabling a marketplace for cryptoeconomic security. Watch for:

• New middleware networks (data availability, sequencing) bootstrapped via restaking
• Standardized risk frameworks to prevent correlated slashing and contagion
• Enterprise use cases consuming these services with SLAs and audits

Privacy and compliance

Advances in zero-knowledge proofs will enable:

• Selective disclosure for regulated token flows (prove compliance without revealing entire transaction history)
• Private order flow and dark pools secured by Ethereum settlement
• Improved MEV mitigation via encrypted mempools and enshrined PBS proposals

Consolidation across L2s

While the L2 landscape is vibrant, gravity will likely pull toward a handful of high-liquidity, high-reliability networks with shared standards (e.g., OP Stack’s Superchain, zk-powered ecosystems). Expect:

• Better cross-L2 UX through native bridging and shared sequencing
• App-chains that feel invisible to users, anchored to Ethereum for finality

Actionable Takeaways

• If you’re a fintech or marketplace: Pilot stablecoin settle on a major L2 (Base, Optimism, Arbitrum). Measure fee savings; 50–90% reductions versus card and cross-border wires are realistic for certain flows.
• If you’re an asset manager: Start with tokenized cash equivalents (Treasuries, funds) on Ethereum using regulated transfer agents (e.g., Securitize). Integrate onchain KYC to permit only whitelisted wallets.
• If you’re a consumer app builder: Design for account abstraction from day one. Use sponsored transactions and passkeys to slash onboarding friction and support sub-cent actions post-Dencun.
• If you’re an enterprise: Consider permissioned EVM networks (Hyperledger Besu, Quorum) that interoperate with Ethereum. Anchor proofs to mainnet for auditability.
• For all teams: Treat security as a first-class product feature. Insist on multiple independent audits, formal verification where possible, and circuit breakers. Avoid bespoke bridges; favor battle-tested interoperability layers.

Conclusion

Ethereum in 2024 looks fundamentally different from the high-fee, speculation-heavy era of 2021. The network’s shift to proof-of-stake, the rise of low-cost rollups, institutional-grade tokenization, and ETF-driven access have turned it into credible financial and application infrastructure. Real companies are shipping real products: BlackRock’s BUIDL tokenized fund, PayPal’s PYUSD stablecoin, Coinbase’s Base for low-cost consumer apps, and EY’s enterprise workflows anchored to Ethereum.

The opportunities are concrete: programmable payments, 24/7 tokenized markets, sub-cent consumer transactions, and composable financial primitives. The challenges are real: UX, security, regulatory clarity, and economic centralization risks. But the roadmap—danksharding, account abstraction, restaking, and privacy tech—targets those head-on.

The next 12–24 months will determine leadership in L2 ecosystems, standardize onchain compliance, and scale tokenized assets from billions to tens of billions. For builders and businesses, the playbook is clear: start with an L2, leverage audited primitives, integrate compliant identity, and measure outcomes. Ethereum’s trajectory is toward becoming a neutral, global settlement and computation layer—one that blends internet openness with institutional-grade finance. The teams that learn to operate on this programmable substrate now will define the next decade of digital commerce.