Vitalik's Talk: Exploring the Ethereum 2025 Vision, Fusion Innovation of POS, L2, Cryptography, and AI

By: blockbeats|2025/04/27 07:05:19

Original Title: "[DappLearning] Exclusive Interview with Vitalik Buterin"

Original Source: DappLearning

Vitalik's Talk: Exploring the Ethereum 2025 Vision, Fusion Innovation of POS, L2, Cryptography, and AI

On April 7, 2025, at the Pop-X HK Research House event co-hosted by DappLearning, ETHDimsum, Panta Rhei, and UETH, Vitalik and Xiao Wei made a joint appearance at the event.

During the event, Yan, the founder of DappLearning community, interviewed Vitalik. The interview covered various topics such as ETH POS, Layer2, cryptography, and AI. This interview was conducted in Chinese, and Vitalik's Chinese proficiency was excellent.

Below is the interview content (slightly reorganized for better readability):

01 Views on the POS Upgrade

Yan: Vitalik, hello, I'm Yan from the DappLearning community. It's a great honor to interview you here. I've been following Ethereum since 2017. I remember the intense discussions about POW and POS in 2018 and 2019. This topic may continue to be discussed.

Looking at it now, Ethereum's POS has been running steadily for over four years, with millions of Validators in the consensus network. However, the ETH to BTC exchange rate has been declining, presenting both positive and challenging aspects. So, at this point in time, how do you view Ethereum's POS upgrade?

Vitalik: I think the prices of BTC and ETH have nothing to do with POW or POS at all. There are many different voices in the BTC and ETH communities, and what these two communities are doing is completely different, with entirely different ways of thinking.

Regarding the price of ETH, I think there is one question. ETH has many possible futures, and in these futures, there will be many successful applications on Ethereum. However, the value these successful applications may bring to ETH might not be enough.

This is a concern that many people in the community worry about, but in reality, it is a very normal issue. For example, take Google as a company. They have created many products and done many interesting things. However, over 90% of their revenue is still related to their Search business.

The relationship between applications in the Ethereum ecosystem and ETH (price) is similar. Some applications pay high transaction fees, consuming a lot of ETH, while there are many successful applications that do not contribute proportionally to the success of ETH.

So this is an issue that we need to think about and continue to optimize. We need to support more applications that bring long-term value to Ethereum holders and ETH. Therefore, I believe that the future success of ETH may lie in these areas. I don't think it has much to do with improving the consensus algorithm.

02 PBS Architecture and Centralization Concerns

Yan: Right, the prosperity of the ETH ecosystem is also a key reason why developers are willing to build on it. OK, how do you view the PBS (Proposer & Builder Separation) architecture of ETH 2.0? This is a good direction, where in the future, everyone can use a mobile phone as a light node to verify (ZK) proofs, stake 1 ETH to become a Validator.

But the Builder may become more centralized. They have to combat MEV and generate ZK Proofs, and if using a Rollup-based solution, the Builder may have to do even more tasks, such as acting as a Sequencer. In this case, would the Builder become too centralized? Although Validators are decentralized enough, this is a chain. If one link in the middle has a problem, it will also affect the entire system's operation. How do you plan to address the censorship resistance issue in this area?

Vitalik: Yes, I think this is a very important philosophical question. In the early days of Bitcoin and Ethereum, there was a subconscious assumption: constructing a block and validating a block are the same operation.

Assume you are building a block. If your block contains 100 transactions, then your node needs to process that many transactions' gas. After you have built the block and broadcasted it to the world, every node in the world also needs to do the same amount of work (consume the same amount of gas). So if we set a gas limit that aims for every laptop, MacBook, or a certain-sized server in the world to be able to build blocks, then correspondingly sized nodes need to validate these blocks.

This was the previous technology; now we have ZK, we have DAS, we have many new technologies, and we also have Statelessness (stateless validation).

Before using these technologies, building blocks and validating blocks needed to be symmetric, but now it can become asymmetric. So, the difficulty of building a block may become very high, but the difficulty of validating a block may become very low.

Using a stateless client as an example: After adopting stateless technology, if we increase the gas limit tenfold, the computing power required to build a block will become enormous, and an ordinary computer may no longer be capable. At this point, a high-performance MAC studio or a more powerful server may be required.

However, the cost of validation will become lower because validation requires no storage at all, relying only on bandwidth and CPU computational resources. If we further add ZK technology, the cost of CPU for validation can also be eliminated. If we also include that DAS, the cost of validation will become very, very low. While the cost of building a block may increase, the cost of validation will decrease.

So, is this situation better compared to the current one? This question is quite complex. I would think that if there are some super nodes in the Ethereum network, meaning some nodes with higher computing power, we need them to perform high-performance computing.

So, how do we prevent them from malicious behavior? For example, there are several types of attacks:

First: Performing a 51% attack.

Second: A censorship attack. If they do not accept certain users' transactions, how do we mitigate this risk?

Third: How can we counter MEV-related operations and reduce these risks?

Regarding the 51% attack, as the validation process is done by the Attester, these Attester nodes need to validate DAS, ZK Proof, and the stateless client. The cost of this validation will be very low, so the barrier to entry for becoming a consensus node will still be relatively low.

For example, if some Super Nodes are building blocks, in a scenario where 90% of these nodes are controlled by you, 5% by him, and 5% by others, if you completely reject certain transactions, it is not necessarily a very bad thing. Why? Because you cannot disrupt the entire consensus process.

So, you cannot perform a 51% attack. The only thing you can do is to censor some users' transactions. Users may only need to wait for ten or twenty blocks for someone else to include their transactions in a block. That is the first point.

The second point is about the concept of Fossil, so what does Fossil do?

Fossil separates the role of "transaction selection" from the role of executing transactions. By doing this, the role of selecting which transactions to include in the next block can be more decentralized. Therefore, through the Fossil method, smaller nodes will have the ability to independently choose which transactions to include in the next block. Additionally, if you are a larger node, your rights are actually quite limited.

This method is more complex than before. Previously, we thought of each node as a personal laptop. However, if you look at Bitcoin now, it is actually a more hybrid architecture. This is because Bitcoin miners are all part of mining data centers.

So in PoS, it is done roughly like this: some nodes require more computing power and more resources. However, these nodes' rights are restricted, while other nodes can be very decentralized, ensuring network security and decentralization. But this method is more complex, so it is also a challenge for us.

Yan: A very good idea. Centralization is not necessarily a bad thing, as long as we can limit malicious behavior.

Vitalik: Yes.

03 Issues Between Layer1 and Layer2, and Future Direction

Yan: Thank you for answering my long-standing questions. Let's move on to the second part of the discussion. As a witness to Ethereum's journey, Layer2 has been quite successful. The TPS issue has indeed been resolved. Unlike during the ICO craze, there is no longer unbearable congestion.

Personally, I think L2 is pretty user-friendly now. However, the current liquidity fragmentation issue for L2 has also prompted many proposals. How do you view the relationship between Layer1 and Layer2? Is the current Ethereum mainnet too laissez-faire, too decentralized, with no constraints on Layer2? Does Layer1 need to establish rules with Layer2 or create some profit-sharing models, or adopt solutions like Based Rollup? Justin Drake recently proposed this solution on Bankless, which I also agree with. What is your perspective, and I am also curious about when, if there are corresponding solutions, they will go live?

Vitalik: I think right now our Layer2 has a few issues.

The first one is that their progress in terms of security is not fast enough. So, I have been pushing for all Layer2s to upgrade to Stage 1 and hope that this year they can upgrade to Stage 2. I have been urging them to do so, while also supporting L2BEAT in doing more transparency work in this regard. The second one is the issue of L2 interoperability. That is, cross-chain transactions and communication between two L2s. If two L2s are within one ecosystem, interoperability needs to be simpler, faster, and lower cost than it is now.

We started this work last year, now called the Open Intents Framework, and there is that Chain-specific addresses, which is mostly UX work.

In fact, I think the cross-chain issue of L2 is probably 80% a UX issue. Although the process of solving UX issues may be painful, as long as the direction is right, complex problems can be made simple. This is also the direction we are working towards.

Some things need to go further, such as the Withdrawal time of Optimistic Rollup, which is one week. If you have a coin (Token) on Optimism or Arbitrum, you need to wait for one week to cross-chain that coin to L1 or to another L2.

You can make Market Makers wait a week (at a corresponding fee to them). For regular users, they can cross-chain from one L2 to another L2 through methods like Open Intents Framework Across Protocol for small transactions. But for larger transactions, Market Makers still have liquidity restrictions. So the transaction fee they require will be higher. I published an article [2] last week, which is in support of the 2 of 3 validation method, which is the OP + ZK + TEE method.

Because if you do that 2 of 3, it can satisfy three requirements simultaneously.

The first requirement is completely trustless, without needing a Security Council, TEE technology is in a secondary role, so you don't need to trust it completely either.

Second, we can start using ZK technology, but ZK technology is relatively early-stage, so we cannot fully rely on this technology yet.

Third, we can reduce the withdrawal time from one week to 1 hour.

You can imagine that if users use the Open Intents Framework, the liquidity cost for Market Makers will be reduced by 168 times. This is because Market Makers' wait time (for rebalancing) will be reduced from 1 week to 1 hour. In the long term, we plan to reduce the withdrawal time from 1 hour to 12 seconds (the current block time), and if we adopt SSF, it can be reduced to 4 seconds.

Currently, we will also adopt technologies like zk-SNARK Aggregation to parallelize the ZK proof process and reduce latency slightly. Of course, if users do this with ZK, they do not need to do it through Intents. But if they do it through Intents, the cost will be very low, all part of Interactability.

Regarding the role of L1, perhaps in the early stages of the L2 Roadmap, many people will think that we can completely replicate Bitcoin's Roadmap, where the usage of L1 will be very minimal, only for verification (doing a small amount of work), and L2 can do everything else.

However, we have found that if L1 does not play any role at all, this is dangerous for ETH. As we discussed before, one of our biggest concerns is that the success of Ethereum applications cannot become the success of ETH.

If ETH is not successful, it will cause our community to be without money, without a way to support the next round of applications. So if L1 doesn't play any role, the user experience and the entire architecture will be controlled by L2 and some applications. There will be no one representing ETH. So it would be better for ETH if we could allocate more roles to L1 in some applications.

Next, one question we need to answer is what will L1 do? What will L2 do?

In February, I wrote an article [3], in a world that is L2-centric, where many important things need L1 to do. For example, L2 needs to submit proofs to L1, if an L2 has a problem, users will need to cross-chain to another L2 through L1, in addition to Key Store Wallet, and Oracle Data can be placed on L1, and so on. Many mechanisms like this need to rely on L1.

There are some high-value applications that are better suited for L1, such as Defi. One key reason why some Defi applications are better suited for L1 is their Time Horizon, where users need to wait for a long time, such as one year, two years, or three years.

This is particularly evident in the prediction markets, where sometimes questions are asked about what will happen in 2028.

Here lies a problem: if there is an issue with L2 governance, theoretically, all users there can Exit, they can move to L1, or they can move to another L2. But if there is an application in this L2, and its assets are all locked in a long-term smart contract, then users have no way to exit. Therefore, many of those theoretically secure Defi applications are not actually very secure.

For these reasons, some applications should still be built on L1, so we are once again focusing more on L1 scalability. We now have a roadmap, and by 2026, there are about four to five methods to enhance L1 scalability.

The first is Delayed Execution, where block validation and execution are separated, meaning we only validate blocks in each slot and execute them in the next slot. This has the advantage that the maximum acceptable execution time could increase from 200 milliseconds to 3 seconds or 6 seconds. This provides more processing time.

The second is Block Level Access List, where each block needs to specify in its information which accounts' states need to be read and their related storage states. This is somewhat like stateless witnesses and allows for parallel processing of EVM execution and I/O, providing a simple way to implement parallel processing.

The third is Multidimensional Gas Pricing, which sets a maximum block capacity, crucial for security. Another aspect is (EIP4444) historical data processing, where not every node needs to permanently store all information. For example, each node could store only 1%, and we can employ a peer-to-peer method to distribute that information more evenly.

So if we can combine these four schemes together, we now think we can possibly increase L1's Gaslimit by 10 times, and all our applications will have the opportunity to start relying more on L1, doing more things on L1, which is beneficial for L1 and also for ETH.

Yan: Okay, next question, are we likely to see the Pectra upgrade this month?

Vitalik: Actually, we hope to do two things, to have the Pectra upgrade at the end of this month, and then to have the Fusaka upgrade in Q3 or Q4.

Yan: Wow, so soon?

Vitalik: Hopefully.

Yan:

My next question is also related to this. As someone who has been watching Ethereum grow all the way, we know that Ethereum, in order to ensure security, usually has about five or six clients (consensus and execution clients) under development simultaneously, with a lot of coordination work in between, resulting in a relatively long development cycle.

There are pros and cons to this. It may indeed be slower compared to other L1 solutions, but it is also more secure. However, are there any solutions that would allow us to not have to wait a year and a half for an upgrade? I've seen you mention some solutions, could you elaborate on them?

Vitalik:

Yes, there is one solution where we can improve coordination efficiency. We now also have more people who can move between different teams, ensuring more efficient communication between teams. If a client team encounters an issue, they can raise it so that the research team is aware. One advantage of Thomas becoming one of our new EIP editors is this—he is with the client (team), and now he is also with the EF (team). He can handle this coordination, which is the first point.

The second point is that we can be a bit stricter with the client teams. Our current approach is, for example, if there are five teams, then we need all five teams to be fully ready before we announce the next hard fork. We are now considering starting the upgrade as soon as four teams are ready, so we don't have to wait for the slowest one, and we can also boost everyone's motivation.

04 How to View Cryptography and AI

Yan: So appropriate competition is necessary. It's great, really looking forward to each upgrade, but don't make everyone wait too long. Next, I want to ask another question related to cryptography, a more broad question.

Back in 2021 when our community was just established, developers from major domestic exchanges and researchers from Ventures gathered to discuss Defi. In 2021, everyone indeed participated in understanding Defi, learning, and designing Defi. It was a stage of nationwide participation and enthusiasm.

Looking ahead, for ZK, whether for the general public or developers, learning ZK, such as Groth16, Plonk, Halo2, etc., the further developers go, they find it challenging to catch up, especially considering how rapidly the technology is advancing.

Furthermore, now we see a trend where ZKVM is developing rapidly, leading to ZKEVM's direction not being as popular as before. Once ZKVM matures, developers may not need to focus too much on the underlying ZK. What are your suggestions and views on this?

Vitalik:

I think the best direction for some of the ZK ecosystems is that most ZK developers know some high-level language (HLL). They can write their application code in HLL, and the Proof System researchers can continue to enhance and optimize the underlying algorithms. Developers need a layered approach; they don't need to know what's happening in the next layer.

One potential issue now is that Circom and Groth16's ecosystem is highly developed, but this poses a significant limitation to the ZK ecosystem application. Groth16 has many disadvantages, such as each application needing to handle its Trusted Setup, and its efficiency is not very high. Therefore, we are also considering allocating more resources here and helping more modern HLLs succeed.

Another aspect is the ZK RISC-V route, which is also promising. Because RISC-V can be considered an HLL, many applications, including EVM and some others, can be written on top of RISC-V.

Yan: Okay, so this way, developers only need to learn Rust, which is great. I attended Devcon in Bangkok last year and also heard about the development of applied cryptography, which was very enlightening to me. Regarding applied cryptography, what is your view on the direction of combining ZKP with MPC and FHE, and what advice would you give to developers in this regard?

Vitalik:

Yes, this is very interesting. I think the future of FHE looks very promising, but there is a concern that both MPC and FHE always require a Committee, meaning you need to select, for example, seven or more nodes. If those nodes could potentially be attacked by 51% or 33%, your system will encounter issues. It's like the system has a Security Council, which is actually more severe than a Security Council. Because if an L2 is Stage 1, the Security Council needs 75% of the nodes to be attacked for issues to arise [7], which is the first point.

The second point is that if the Security Council is reliable, the majority of them will keep their funds in cold storage, meaning they will be mostly offline. However, in most MPC and FHE scenarios, their Committee needs to be online to keep the system running. Therefore, they might be deployed on a VPS or other servers, making it easier to attack them. This worries me a bit. I think many applications can still be developed, which have advantages but are not perfect.

Yan: Lastly, I want to ask a relatively light-hearted question. I see you have also been focusing on AI recently. I want to list a few viewpoints, such as Elon Musk's statement that humans may only be a boot loader for silicon-based civilization.

Then there is a viewpoint in "The Network Nation" that authoritarian states may prefer AI, while democratic states may prefer blockchain. From our experience in the crypto world, decentralized systems rely on everyone following the rules, mutual checks and balances, and understanding the risks, which ultimately leads to oligarchical politics. So, what is your take on these viewpoints? Just discussing the viewpoints is sufficient.

Vitalik: Yes, I'm considering where to start in answering.

Because the field of AI is very complex, for example, five years ago, no one might have predicted that the U.S. would have the world's best Closed-Source AI while China would have the best Open-Source AI. AI has the potential to enhance everyone's abilities, and sometimes it may empower certain centralized entities.

However, AI can sometimes have a somewhat democratizing effect. When I use AI myself, I find that in those areas where I am already in the global top one thousand, such as some ZK development areas, AI actually helps me less in the ZK part, and I still need to write most of the code myself. But in those areas where I am more of a newbie, AI can help me a lot, for example, in Android app development, which I have never done before. I did an app ten years ago, using a framework, written in JavaScript, and then converted to an app. Besides that, I have never written a native Android app before.

At the beginning of this year, I did an experiment, which was to try to write an app using GPT, and I completed it within an hour. The gap between an expert and a newbie has been greatly reduced with the help of AI, and AI can also bring many new opportunities.

Yan: Just to add, I really appreciate the new perspective you've given me. I used to think that with AI, experienced programmers might learn faster, while it might not be friendly to newbies. But in some ways, it does improve the abilities of beginners as well. It might be a kind of equalization instead of differentiation, right?

Vitalik: Yes, but now a very important issue that needs to be considered is the effect of some of the technologies we are working on, including blockchain, AI, cryptography, and some other technologies, when they are combined (on society).

Yan: So, you still hope that humanity won't just be ruled by elites, right? You also hope to achieve the Pareto optimality of the whole society. Ordinary people empowered by AI and blockchain become super individuals.

Vitalik: Yes, super individuals, super communities, superhumans.

05 Expectations for the Ethereum Ecosystem and Advice for Developers

Yan: Okay, moving on to our final question, what are your expectations and messages for the developer community? Is there anything you would like to say to the Ethereum developer community?

Vitalik: To those developers of Ethereum applications, you should think about it. There are many opportunities to develop applications on Ethereum now, many things that could not be done before can now be done.

Here are many reasons, such as:

First: previously, the TPS of L1 was completely insufficient, but now this issue has been resolved;

Second: previously, there was no way to address the privacy issue, but now there is;

Third: it's because of that AI, the difficulty of developing anything has been reduced, so even though the complexity of the Ethereum ecosystem may have increased, through AI, everyone can better understand Ethereum.

So I think there are many things that failed in the past, including ten years ago or five years ago, that may now succeed.

In the current application ecology of blockchain, I think the biggest issue is that we have two types of applications. The first type can be said to be very open, decentralized, secure, and particularly idealistic (applications). But they only have 42 users. The second type can be said to be a casino. The problem is that these two extremes, both of them are unhealthy.

So what we hope to do is to create some applications that users will like to use, that will have real value. Applications that will make the world a better place. Second, there are really some business models, such as economically viable ones, that can sustainably operate without relying on limited foundation or other organizational funding, which is also a challenge.

But now I think everyone has more resources than before, so now if you can find a good idea, if you can execute it well, then your chances of success are very high.

Yan: Looking back on the journey, I think Ethereum has actually been quite successful, always leading the industry and striving to solve industry problems under the premise of decentralization.

One other point with deep feelings, our community has always been nonprofit. Through grants from Gitcoin in the Ethereum ecosystem, as well as retroactive rewards from OP, and other project teams' airdrop rewards, we find that in the Ethereum community, Building can receive a lot of support, and we are also thinking about how to make the community continue to operate stably.

The construction of Ethereum is really exciting, and we also hope to see the realization of the world computer soon. Thank you for your valuable time.

Interview conducted at Victoria Peak, Hong Kong

April 7, 2025

Finally, attached is a photo with Vitalik

In-article References Mentioned by Vitalik are summarized by the editor as follows:

[1]：https://ethresear.ch/t/fork-choice-enforced-inclusion-lists-focil-a-simple-committee-based-inclusion-list-proposal/19870

[2]：https://ethereum-magicians.org/t/a-simple-l2-security-and-finalization-roadmap/23309

[3]：https://vitalik.eth.limo/general/2025/02/14/l1scaling.html

[4]：https://ethresear.ch/t/delayed-execution-and-skipped-transactions/21677

[5]：https://vitalik.eth.limo/general/2024/05/09/multidim.html

[6]:https://ethereum-magicians.org/t/long-term-l1-execution-layer-proposal-replace-the-evm-with-risc-v/23617

[7]:https://specs.optimism.io/protocol/stage-1.html?highlight=75#stage-1-rollup

This article is contributed content and does not represent the views of BlockBeats.

On May 13, S&P Dow Jones Indices announced that Coinbase would officially replace Discover Financial Services in the S&P 500 on May 19. While other companies like Block and MicroStrategy, closely tied to Bitcoin, were already part of the S&P 500, Coinbase became the first cryptocurrency exchange whose primary business is in the index. This also signifies that cryptocurrency is gradually moving from the fringes to the mainstream in the U.S.

On the day of the announcement, Coinbase's stock price surged by 23%, surpassing the $250 mark. However, just 3 days later, Coinbase was hit by two consecutive events: a hack where employees were bribed to steal customer data and a demand for a $20 million ransom, and an investigation by the U.S. Securities and Exchange Commission (SEC) into the authenticity of its claim of having over 100 million "verified users" in its securities filings and marketing materials. These two events acted as mini-bombs, and at the time of writing, Coinbase's stock had already dropped by over 7.3%.

Coincidentally, Discover Financial Services, being replaced by Coinbase, can also be considered the "Coinbase" of the previous payment era. Discover is a U.S.-based digital banking and payment services company headquartered in Illinois, founded in 1960. Its payment network, Discover Network, is the fourth largest payment network apart from Visa, Mastercard, and American Express.

In April, after the approval of the acquisition of Discover by the sixth-largest U.S. bank, Capital One, this well-established digital banking company of over 60 years smoothly handed over its S&P 500 "seat" to this emerging cryptocurrency "bank." This unexpected coincidence also portrayed the handover between the new and old eras in Coinbase's entry into the S&P 500, resembling a relay race scene. However, this relay baton also brought Coinbase's accumulated "external troubles and internal strife" to a tipping point.

Side Effects of ETFs

Over the past decade, cryptocurrency exchanges have been the most stable "profit machines." They play a role in providing liquidity to the entire industry and rely on trading fees to sustain their operations. However, with the comprehensive rollout of ETF products in the U.S. market, this profit model is facing unprecedented challenges. As the leader in the "American stack," with over 80% of its business coming from the U.S., Coinbase is most affected by this.

Starting from the approval of Bitcoin and Ethereum spot ETFs, traditional financial capital has significantly onboarded users and funds that originally belonged to exchanges in a more cost-effective, compliant, and transparent manner. The transaction fee revenue of cryptocurrency exchanges has started to decline, and this trend may further intensify in the coming months.

According to Coinbase's 2024 Q4 financial report, the platform's total trading revenue was $417 million, a 45% year-on-year decrease. The contribution of BTC and ETH's trading revenue dropped from 65% in the same period last year to less than 50%.

This decline is not a result of a decrease in market enthusiasm. In fact, since the approval of the Bitcoin ETF in January 2024, the inflow of BTC into the U.S. market has continued to reach new highs, with asset management giants like BlackRock and Fidelity rapidly expanding their management scale. Data shows that BlackRock's iShares Bitcoin ETF (IBIT) alone has surpassed $17 billion in assets under management. As of mid-May 2025, the cumulative net inflow of 11 major institutional Bitcoin spot ETFs on the market has exceeded $41.5 billion, with a total net asset value of $1214.69 billion, accounting for approximately 5.91% of the total Bitcoin market capitalization.

Chart showing the trend of net outflows for Grayscale among the 11 institutions

Institutional investors and some retail investors are shifting towards ETF products, partly due to compliance and tax considerations. On one hand, ETFs have much lower trading costs compared to cryptocurrency exchanges. While Coinbase's spot trading fee rate varies annually in a tiered manner but averages around 1.49%, for example, the management fee for IBIT ETF is only 0.25%, and the majority of ETF institution fees fluctuate around 0.15% to 0.25%.

In other words, the more rational users are, the more likely they are to move from exchanges to ETF products, especially for investors aiming for long-term holdings.

According to multiple sources, several institutions, including VanEck and Grayscale, have submitted applications to the SEC for a Solana (SOL) ETF, with some institutions also planning to submit an XRP ETF proposal. Once approved, this may trigger a new round of fund migration. According to a report submitted by Coinbase to the SEC, as of April, the platform's trading revenue from XRP and Solana accounted for 18% and 10%, nearly one-third of the platform's fee revenue.

However, the Bitcoin and Ethereum ETFs passed in 2024 also reduced the fees for these two tokens on Coinbase from 30% and 15% to 26% and 10%, respectively. If the SOL and XRP ETFs are approved, it will further undermine the core fee revenue of exchanges like Coinbase.

The expansion of ETF products is gradually weakening the financial intermediary status of cryptocurrency exchanges. From their original roles as matchmakers and clearers to now gradually becoming mere "on-ramps and off-ramps" for funds, exchanges are seeing their marginal value squeezed by ETFs.

Robinhood Takes a Stand, Traditional Brokerages Join the Fray

On May 12, 2025, SEC Chairman Paul S. Atkins gave a keynote speech at the Tokenization and Cryptocurrency Working Group roundtable. The theme of his speech revolved around "It is a new day at the SEC," where he indicated that the SEC would not approach enforcement and regulation the same way as before but would instead pave the way for cryptocurrency assets in the U.S. market.

With signs of cryptocurrency compliance such as the SEC's "NEW DAY" declaration, an increasing number of traditional brokerages are attempting to enter the cryptocurrency industry. One of the most representative cases is the well-known U.S. brokerage Robinhood, which began expanding its crypto business in 2018. By the time of its IPO in 2021, Robinhood's crypto business revenue accounted for over 50% of the company, with a significant boost from the Dogecoin "moonshot" promoted by Musk.

In Q1 2025 earnings report, Robinhood showcased strong growth, especially in revenue from cryptocurrency and options trading. Fueled by Trump's Memecoin, cryptocurrency-related revenue reached $250 million, nearly doubling year-over-year. Consequently, Robinhood Gold subscription users reached 3.5 million, a 90% increase from the previous year, with the rapid growth of Robinhood Gold providing the company with a stable source of income.

Meanwhile, RobinHood is actively pursuing acquisitions in the cryptocurrency space. In 2024, it announced a $2 billion acquisition of the long-standing European cryptocurrency exchange Bitstamp. Additionally, Canada's largest cryptocurrency CEX, WonderFi, which recently went public on the Toronto Stock Exchange, also announced its integration with RobinHood Crypto. After obtaining virtual asset licenses in the UK, Canada, Singapore, and other markets, RobinHood has taken a proactive approach in the compliant cryptocurrency trading market.

Furthermore, an increasing number of brokerage firms are exploring the same path. Futu Securities, Tiger Brokers, and others are also dipping their toes into cryptocurrency trading, with some having applied for or obtained the VA license from the Hong Kong SFC. Although their user bases are currently small, traditional brokerages have a natural advantage in user trust, regulatory licenses, and low fee structures. This could pose a threat to native cryptocurrency platforms in the future.

User Data Breach: Is Coinbase Still Secure?

In April 2025, security researchers discovered that some Coinbase user data was leaked on the dark web. While the platform initially responded by attributing it to a "technical misinformation," it still raised concerns among users regarding its security and privacy protection. Just two days before Dow Jones Indexes announced Coinbase's addition to the S&P 500 Index, on May 11, 2025, Coinbase received an email from an unknown threat actor claiming to have obtained customer account information and internal documents, demanding a $20 million ransom to keep the data private. Subsequent investigations confirmed the data breach.

Cybercriminals obtained the data by bribing overseas customer service agents and support staff, mainly in "non-U.S. regions such as India." These agents abused their access to Coinbase's internal customer support system and stole customer data. As early as February this year, blockchain detective ZachXBT revealed on X platform that between December 2024 and January 2025, Coinbase users lost over $65 million to social engineering scams, with the actual amount potentially higher.

Among the victims was a well-known figure, 67-year-old Ed Suman, an established artist in the art world for nearly two decades, having been involved in the creation of artworks such as Jeff Koons' "Balloon Dog" sculpture. Earlier this year, he fell victim to an impersonation scam involving fake Coinbase customer support, resulting in a loss of over $2 million in cryptocurrency. ZachXBT critiqued Coinbase for its inadequate handling of such scams, noting that other major exchanges have not faced similar issues and recommending Coinbase to enhance its security measures.

Amidst a series of ongoing social engineering incidents, although there has not been any impact on user assets at the technical level so far, it has raised concerns among many retail and institutional investors. Especially institutions holding massive assets on Coinbase. Just considering the U.S. BTC ETF institutions, as of mid-May 2025, they collectively hold nearly 840,000 BTC, and 75% of these are custodied by Coinbase. If we price BTC at $100,000, this amount reaches a staggering $63 billion, which is equivalent to the nominal GDP of two Iceland in the year 2024.

Visualization: ChatGPT, Source: Farside

In addition, Coinbase Custody also serves over 300 institutional clients, including hedge funds, family offices, pension funds, and endowments. As of the Q1 2025 financial report, Coinbase's total assets under management (including institutional and retail clients) reached $404 billion. The specific amount of institutional custodied assets was not explicitly disclosed in the latest report, but it should still be over 50% based on the Q4 2024 report.

Visualization: ChatGPT

Once this security barrier is breached, not only could the rate of user attrition far exceed expectations, but more importantly, institutional trust in it would undermine the foundation of its business. Therefore, after a hacking event, Coinbase's stock price plummeted significantly.

CEXs are All in Self-Rescue Mode

Facing a decline in spot trading fee revenue, Coinbase is also accelerating its transformation, attempting to find growth opportunities in derivatives and emerging assets. Coinbase acquired a stake in the options platform Deribit at the end of 2024 and announced the official launch of perpetual contract products in 2025. This acquisition fills in Coinbase's gap in options trading and its relatively small global market share.

Deribit has a strong presence in non-U.S. markets, especially in Asia and Europe. The acquisition has enabled Coinbase to gain a dominant position in bitcoin and ethereum options trading on Deribit, accounting for approximately 80% of the global options trading volume, with daily trading volume remaining above $2 billion.

Meanwhile, 80-90% of Deribit's customer base consists of institutional investors, with their professionalism and liquidity in the Bitcoin and Ethereum options market highly favored by institutions. Coinbase's compliance advantage, coupled with its already robust institutional ecosystem, makes it even more suitable. By using institutions as an entry point, it can face the squeeze from giants like Binance and OKX in the derivatives market.

Facing a similar dilemma is Kraken, which is attempting to replicate Binance Futures' model in non-U.S. markets. Since the derivatives market relies more on professional users, fee rates are relatively higher and stickiness is stronger, making it a significant source of revenue for exchanges. In the first half of 2025, Kraken completed the acquisition of TradeStation Crypto and a futures exchange, aiming to build a complete derivatives trading ecosystem to hedge the risk of declining spot transaction fee income.

With the surge of Memecoin in 2024, Binance, OKX, and various CEX platforms began massively listing small-market-cap, highly volatile tokens to activate active trading users. Due to the wealth effect and trading activity of Memecoins, Coinbase was also forced to join the battle, successively listing popular tokens from the Solana ecosystem such as BOOK OF MEME and Dogwifhat. Although these coins are controversial, they are frequently traded, with fee rates several times higher than mainstream coins, serving as a "blood-boosting" method for spot trading.

However, due to its status as a publicly traded company, this practice is a riskier endeavor for Coinbase. Even in the current crypto-friendly environment, the SEC is still investigating whether tokens like SOL, ADA, and SAND constitute securities.

In addition to the forced transformation strategies carried out by the aforementioned CEXs, they are also starting to lay out RWAs and the most talked-about stablecoin payment fields, such as the PYUSD launched through a collaboration between Coinbase and Paypal, Coinbase's support for the Euro stablecoin EURC by Circle that complies with EU MiCA regulatory requirements, or the USD1 launched through a collaboration between Binance and WIFL. In the increasingly crowded trading field, many CEXs have shifted their focus from just the trading market to the application field.

The golden age of transaction fees has quietly ended, and the second half of the crypto exchange platform game has silently begun.

Arthur Hayes: Why I'm Betting on ETH While the Market Is Obsessed with SOL

"I personally have also allocated 20% to gold, expecting the price of gold to potentially rise to $10,000-20,000 by the end of this market cycle."

Key Market Insights for May 16th, how much did you miss out on?

1. On-chain Flows: $111.3M inflow to Ethereum this week; $237.6M outflow from Berachain 2. Largest Price Swings: $ETHFI, $NEIRO 3. Top News: Data: Solana Network's revenue reached $7.9M on the 13th, surpassing the sum of all other L1 and L2 chains

CryptoPunks Changes Hands Twice, Did the Originator of NFTs Finally Find Its "Forever Home" This Time?

The original NFT pioneer CryptoPunks has once again officially changed ownership after being sold to the Bored Ape Yacht Club (BAYC) developer Yuga Labs.

STARTUP's Price Surges 40x in 30 Minutes: How did he become the Emotion King of Believe?

He is both a KOL and understands the market script, playing a game where attention is the currency.

Key Market Intelligence on May 14th, how much did you miss out on?

Within 24 hours, GOONC's market cap soared to 70 million, could GOONC be the next billion-dollar dog on the Believe platform?

Bitcoin has broken $100,000, Ethereum has surpassed 2500, and is Solana's hot streak about to make a comeback?

The current market is in a state of macro euphoria, with GOONC riding the wave today, skyrocketing 10x in just a few hours, reaching a market cap of tens of millions of dollars, trading volume soaring past 50 million, and rumors swirling that the developer may be from OpenAI (unconfirmed but intriguing enough).

The "gooning" Culture in Forums

A ludicrous and absurd Solana meme that some actually buy into.

GOONC is a meme coin that has sprouted from the "gooning" subculture, offering no technological innovation or practical use, its sole function being speculation.

It takes inspiration from an NSFW term "gooning," which refers to a person being deeply immersed in certain content (you know what), eventually entering a nearly religious-like trance.

In Reddit (such as r/GOONED, r/GoonCaves) and some counterculture media outlets (such as MEL Magazine in 2020), "gooning" has gradually transitioned from an adult label to a meme-addicted, digital content and virtual self-indulgence synonym, arguably the epitome of Degen spirit.

GOONC is playing around with this concept, packaging the addictive nature, uselessness, and irony of gooning into a tradable financial product. The project team has made it clear: "We do not solve blockchain problems, we only trade absurdity." Blunt but oddly genuine.

GOONC launched on May 13, 2025, using the meme coin launch platform Believe App's LaunchCoin module on Solana. This tool is highly Degen: zero technical barriers, a few clicks to create a coin, perfect for projects like GOONC that can come up with ideas out of the blue.

The mastermind behind GOONC is also quite something and is the most talked-about, with KOL @basedalexandoor on X platform (alias "Pata van Goon") personally involved. His profile even caught the attention of Marc Andreessen, co-founder of a16z, making onlookers unable to resist speculating if GOONC has a hint of OpenAI lineage.

While this 'OpenAI Endorsement' is currently just community speculation, it is definitely a good card to play to fuel hype. Saying "we are pure speculation" on one hand, while tagging a few "AI + a16z" on the other.

From Wasteland to Moon in One Night

GOONC took off as soon as it launched. After its launch on May 13, 2025, its market capitalization skyrocketed to $22 million within 4 hours, with a trading volume exceeding $25.6 million in 24 hours. According to platform data, the first day of trading saw an astonishing +41,100% surge, soaring from $0.0000001 to $0.02, becoming a "missed-the-boat" situation.

GOONC quickly formed an active trading community post-launch, with a lot of discussion and trading signals appearing on X platform (such as the 292x return signal provided by DeBot). Liquidity pools on exchanges like Raydium and Meteora grew rapidly, supporting high trading volumes and price increases.

The real climax occurred between May 13 and May 14, with the market cap rising to $5.5 million in the morning and directly surpassing $55 million in the afternoon. By the 14th, it briefly approached a $70 million market cap, with the trading volume soaring to $59 million. Some community members even posted screenshots claiming an increase of +85,000%, creating a new myth out of the ruins.

As of 1:30 pm on May 14, the price stabilized around $0.039, with a total market cap and FDV both around $39.6 million, and a 24-hour trading volume of $5.43 million. Active platforms include XT.COM, LBank, Meteora, and others.

Although there was a slight pullback from the peak ($0.07), the coin's popularity remains strong. For a coin that relies purely on "irony + community + X post" to thrive, this performance is already at a stellar level.

Currently, the background of the token's development team is not transparent, increasing the potential risk of a rug pull. Rugcheck.xyz warns that the creator of the GOONC contract may have permission to modify the contract (e.g., change fees or mint additional tokens), posing certain security risks.

Community members speculate that the meteoric rise of GOONC may be the "last hurrah".

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After Surging 40%, Has Ethereum Price Peaked Upon Exiting the Craze?

Whether you are an insider or an outsider, these days you must be familiar with the news about Ethereum. The reason is simple, causing Ethereum enthusiasts to sigh with emotion and almost throwing off-guard those who defend Ethereum, Ethereum, with a "3-day surge of 40%," climbed to the top of the Douyin Hot List.

Where Does the Rally Come From?

As we all know, Ethereum launched the Pectra upgrade on May 7th. This most significant network upgrade since early 2024 integrates the Prague execution layer hard fork and the Electra consensus layer upgrade, significantly improving Ethereum's performance through 11 improvement proposals. The account abstraction feature (EIP-7702) allows users to flexibly manage wallets through social media accounts or multi-signature schemes, reducing the user threshold, attracting more users and developers. The staking mechanism optimization increases the validator ETH cap from 32ETH to 2048ETH and introduces a flexible withdrawal method, making it easier for institutions and individuals to participate in network security, enhancing the market's confidence in Ethereum's long-term value.

At the same time, Pectra optimized the interaction efficiency of Layer 2 networks such as Arbitrum and Optimism, making transactions faster and cheaper, leading to a surge in on-chain activity. As a crucial step for Ethereum's transition from "2G" to "5G," the Pectra upgrade not only enhances network vitality but also "recharges confidence" in the market, directly driving the price increase.

Related Reading: "Ethereum Skyrockets 22% in One Day, E Enthusiasts Rejoice"

It's not just Ethereum itself, as Wall Street also brought important bullish news.

The world's largest asset management company, BlackRock, proposed to the SEC allowing Ethereum ETFs for staking. This proposal is expected to elevate Ethereum ETFs from a mere investment tool to a bond-like "interest-bearing asset," bringing investors both capital appreciation and passive income, igniting market optimism about Ethereum's future potential.

Specifically, BlackRock has proposed to amend its S-1 filing to allow investors to create and redeem ETF shares directly with Ethereum instead of the U.S. dollar (i.e., in-kind redemption). This move, combined with its $2.9 billion BUIDL Fund launched in March 2024, aims to deepen the integration of traditional finance with blockchain. The BUIDL Fund is a tokenized fund operating on the Ethereum network, investing in traditional assets such as U.S. Treasury bonds. This setup is highly attractive to institutional investors, as they can not only benefit from Ethereum's price appreciation but also earn stable cash flow through staking.

Robert Mitchnick, BlackRock's Head of Digital Assets, stated in a CNBC interview in March 2025 that the addition of staking functionality will significantly enhance the appeal of the Ethereum ETF. He admitted that when the Ethereum spot ETF was launched in July 2024 without staking functionality, the market demand was lackluster, and staking could be the key to reversing this trend.

Meanwhile, the SEC's shifting stance on cryptocurrency regulation has also fueled this upward trend. During the tenure of the previous SEC chairman, the regulatory approach was tough, and staking was strictly viewed through the Howey test as a potential unregistered security. Therefore, when approving the Ethereum spot ETF in May 2024, staking functionality was explicitly prohibited.

However, with Trump back in the White House and Paul Atkins taking over the SEC, there has been a noticeable relaxation in crypto regulation. Apart from BlackRock, ETF issuers such as Invesco Galaxy, VanEck, WisdomTree, and 21Shares have also submitted applications for similar staking and in-kind redemption.

Related reading: "New Chairman Takes Office, SEC Transforms into 'Crypto Daddy' Within 48 Hours"

If staking ETFs are approved, the benefits are likely to go beyond price appreciation. The introduction of staking functionality could redefine the role of crypto assets, making them more similar to traditional financial products that provide returns and value appreciation, thereby driving Ethereum closer to mainstream finance.

Currently, the SEC still needs to address several decisions related to crypto ETFs, including whether to approve ETFs for Solana, XRP, Litecoin, and even Dogecoin. With the calls for an "altcoin season" growing louder, Ethereum's strong performance may just be the beginning of a larger crypto market frenzy.

In addition, the Trump family-related DeFi project WLFI is also bullish on this wave of rise, with frequent on-chain activities. According to on-chain data analyst @ai_9684xtpa's monitoring, a WLFI-related address is currently borrowing coins to go long on ETH, borrowing 4 million U from Aave to buy 1590 ETH at an average price of $2515 per ETH.

Has Ethereum's Price Peaked in This Wave?

For this epic surge of Ethereum after half a year of silence, the community has indeed gained more confidence and hope, which has also led to a revival of the entire altcoin market. However, amidst the joy, there are also voices of pessimism. Below is a summary conducted by BlockBeats based on community discussions.

The optimists point out that the current market structure is similar to the eve of the bull markets in 2016 and 2020, predicting a life-changing surge in the next 3-6 months, where some altcoins may even achieve astonishing single-day gains of up to 40%.

@liuwei16602825 stated that this surge signifies the return of the bull market as a sure thing. There is no need to worry about a pullback. The driving force behind the surge uses a high-cost isolated operation, fearing a drop more than any retail investor and will definitely do everything to support the price.

Related Reading: "Ethereum Leads the Surge Triggering the 'Altcoin Season' Speculation, How Do Traders View the Future Market?"

The bears mainly believe that this surge is different from the bull market of 2021, as the current market lacks the confidence of large-scale retail investors entering and holding positions for the long term, with funds rotating too quickly.

@market_beggar observed that a Bitfinex E/B whale has started to close positions and believes that if this whale maintains its high-speed position-closing operation for the next few days, it can be inferred that the whale no longer sees the upside potential of ETH, preparing to take profits and exit. The closing time will be a key focus going forward.

@FLS_OTC stated that there are still many uncertainties at the macro level, and the liquidity cannot support a major bull market. At this stage, it is a "last hurrah," not a complete reversal, and will continue to remain in a short position.

@off_thetarget believes that after ETH transitioned from POW to POS, it lost the "gold standard" of mining machine power cost support. The staking economic model led to a breakdown in value anchoring. Additionally, the L2 ecosystem (such as Starknet, zkSync, etc.) suffered from liquidity fragmentation, failing to establish an effective capital inflow mechanism, causing the collapse of the split disc pattern. Furthermore, the ETH community's excessive pursuit of technical narratives divorced from real-world needs resulted in a weak ecosystem growth. Therefore, he believes that ETH's intrinsic value system has crumbled, and the price is bound to plummet to the 800-1200 range, with a decisive short position at 1800.

@Airdrop_Guard, based on the core logic of the "High Probability Trading Strategy," where three sets of underlying logic different trading systems (such as volume depletion, price supply-demand, long/short position funding rate, etc.) simultaneously issue a short signal at the same point (2580), creating a high-probability trading opportunity. He emphasizes that these systems must be based on different algorithms and logics (rather than mere technical indicator overlays). The current ETH trend aligns with the short conditions in multiple independent dimensions of his trading system, hence the decision to short.

Overall, Bitcoin still maintains over 54% market dominance, and institutional funds' continued preference for it may limit the altcoin's upward potential. The market's future direction will depend on multiple factors, such as Bitcoin's price trend, global macroeconomic conditions, and whether funds can effectively rotate from Bitcoin to the altcoin sector.

Although Ethereum's recent leadership in the market has brought about optimistic sentiment, investors still need to remain rational as different sectors of altcoins are likely to show divergence in trends. Whether this round of Ethereum's rise will usher in a true altcoin frenzy may require more time and conducive conditions.

How to Get Rich in Crypto Without Relying on Luck? Financial Veteran Raoul Pal's Macro Insights and Investment Path

2008 Financial Crisis "Oracle" Raoul Pal on Cryptocurrency, Resilient Wealth, and Macro Insights.

Stablecoins Driving Global B2B Payment Innovation: How to Break Through Workflow Bottlenecks and Unlock Trillion-Dollar Market Potential?

The challenge of cross-border B2B payments is not "how to pay," but "how to ensure everything is right before payment."

These startups are building cutting-edge AI models without the need for a data center

A new approach to federated learning over the network, potentially shaking up the AI industry later this year with a gargantuan billion-parameter model.

After CEX and Wallet, OKX enters the payment game

「Road to the Next Billion Users」. — OKX CEO Star

a16z Leads $18M Seed Round for Catena Labs, Crypto Industry Bets on Stablecoin AI Payment

Traditional finance is still stuck in a "human-to-human" model, while Catena aims to achieve "AI-to-AI" interaction.

Pharos, deeply integrated with AntChain, is about to launch. How can we get involved?

What is the relationship between the $8 million funded NewChain and Ant, and how will they interact?

$COIN Joins S&P 500, but Coinbase Isn't Celebrating

Side Effects of ETFs

Chart showing the trend of net outflows for Grayscale among the 11 institutions

In other words, the more rational users are, the more likely they are to move from exchanges to ETF products, especially for investors aiming for long-term holdings.

Robinhood Takes a Stand, Traditional Brokerages Join the Fray

User Data Breach: Is Coinbase Still Secure?

Visualization: ChatGPT, Source: Farside

Visualization: ChatGPT

CEXs are All in Self-Rescue Mode

The golden age of transaction fees has quietly ended, and the second half of the crypto exchange platform game has silently begun.