What impact does the Ethereum upgrade have on DeFi projects?

Ethereum upgrades (EIP-7251, 7691, 7702) enhance security, scalability, and user experience in DeFi, boosting investor confidence, lowering costs, and fostering innovation through improved smart contract functionality and cross-chain interaction.

Mar 04, 2025 at 01:22 pm

• EIP - 7251 Increases the maximum stake of validator from 32 ETH to 2,048 ETH. This greatly increases the cost of malicious attacks and enhances the Ethereum network's ability to resist attacks. DeFi projects rely on a more secure network, and the security of funds has also been improved, reducing the risk of user assets being stolen.

• Security improvements reduce security incidents caused by smart contract vulnerabilities. In the past, capital losses caused by contract loopholes occurred from time to time. After upgrading, it can be effectively prevented, allowing DeFi projects to operate in a more reliable environment and ensuring the long-term and stable development of the projects.

• EIP - 7691 Increase the maximum number of blobs and strengthen the Rollup expansion capability. Rollup can package a large number of transactions to reduce the burden on the main network. When DeFi projects face high transaction volumes, they can use this upgrade to quickly process transactions to avoid congestion.

• Scalability optimization improves transaction speed. In the past, DeFi transaction confirmation time was long, and the transaction could be completed faster after upgrading, and the user experience was improved. For example, when trading on decentralized exchanges, funds can be received faster and improve capital turnover efficiency.

• Improved scalability to attract more users to use DeFi projects. When transactions no longer stutter and operations are smoother, new users are more willing to try, old users will also increase their usage frequency, promoting the growth of DeFi project users.

• EIP - 7702 Improves crypto wallet user experience and account abstraction. Account abstraction allows users to get rid of complex private key management, and operate DeFi projects as easily as using traditional accounts, lowering the threshold for use.

• Simplify the operation process to attract more ordinary users to the DeFi field. Users who were originally denied due to complex operations can now easily get started, expanding the user base of DeFi projects.

• Improved user experience increases user trust in DeFi projects. When users operate smoothly in the project and can easily solve problems when encountering problems, they will be more willing to use them for a long time, which is conducive to the spread of word-of-mouth in DeFi projects.

• The security and scalability improvements brought by the upgrade may reduce the operating costs of DeFi projects. Due to the reduction of security incidents, the project does not need to invest too much money for security maintenance, and the improvement of transaction processing efficiency also reduces transaction costs.

• Reduced project costs can be converted into user benefits. For example, reduce transaction fees, attract more users to participate, or allow project parties to invest more funds in innovative functional development and enhance project competitiveness.

• However, in the early stage of upgrading, the project party may need to invest a certain amount of money to adapt to the new functions. For example, updating the smart contract code ensures compatibility with the upgraded Ethereum network, which will increase project costs in the short term.

• Ethereum upgrade brings new features to smart contracts. New functional instructions and an optimized execution environment allow DeFi project developers to write more complex and efficient smart contracts and achieve more innovative applications.

• For example, you can create more flexible lending contracts. It can dynamically adjust lending interest rates based on real-time market interest rates to better meet users' diverse needs and enhance the competitiveness of projects in the market.

• Smart contract function expansion promotes DeFi project innovation. Developers can explore new financial products and service models, such as designing new insurance contracts based on upgrade characteristics, injecting new vitality into the DeFi ecosystem.

• Improved security and scalability enhance investor confidence, and more funds flow into DeFi projects and increase market liquidity. Adequate funds make project transactions more active and asset prices fluctuate more stably.

• After the upgrade, trading efficiency will be improved, and liquidity providers can adjust their asset allocation more quickly. It is more convenient to transfer funds between different DeFi projects, optimize the efficiency of fund use, and promote the rational allocation of liquidity.

• However, if some DeFi projects are not adapted and upgraded in time, it may lead to capital outflows and affect their own liquidity. Project parties need to keep up with the pace of upgrading to ensure the financial vitality of the project in the new environment.

• The Ethereum upgrade may improve cross-chain interaction with other blockchains. Better cross-chain compatibility allows DeFi projects to access more external assets and users and expand their business scope.

• For example, it can interact more smoothly with stablecoins in other public chains. Users can easily use other chain stablecoins in Ethereum DeFi projects, enrich trading pairs, and increase project transaction activity.

• Cross-chain interaction upgrades are also conducive to building a cross-chain DeFi ecosystem. DeFi projects on different chains can collaborate and launch joint products and services to provide users with more comprehensive financial services.

• Ethereum upgrade brings new opportunities to developers. New features and improvements prompt developers to explore new application scenarios, stimulate enthusiasm for innovation, and promote the continuous evolution of DeFi projects.

• At the same time, it also puts higher requirements on developers. We need to master the technical knowledge related to new upgrades, such as the application of EIPs, to develop high-quality DeFi projects that are suitable for the new network environment.

• Changes in the developer ecosystem attract more technical talents to pay attention to the DeFi field. New challenges and opportunities attract knowledgeable people to join in, inject fresh blood into the development of DeFi projects and promote ecological prosperity.