Author: JAE, PANews With the frequent approvals and widespread adoption of spot ETFs, Ethereum seems to have completed its magnificent transformation from a "geek experiment" to a "global asset." However, under the spotlight of the crypto market, this largest smart contract platform in the industry is now standing at a historical crossroads. Beneath the prosperity, undercurrents are surging. Recently, Ethereum co-founder Vitalik Buterin warned at the Devconnect conference that Ethereum is currently facing three major risks: the threat of quantum computing, increased control by Wall Street, and governance fairness. These three pressures will test Ethereum's long-term sustainability and resilience as a trusted and neutral infrastructure. With the threat of quantum technology looming large, quantum-resistant upgrades have been incorporated into the roadmap. Beyond the blockchain trilemma, another, more fundamental risk is looming: cryptographic security. The most destructive risk facing Ethereum comes from the disruption of modern cryptography by quantum computing. This technological threat is sudden and non-linear; once a critical point is crossed, all defenses will crumble instantly. Ethereum, and most other blockchain networks, rely on the Elliptic Curve Digital Signature Algorithm (ECDSA) for account security. This algorithm depends on the computational difficulty of solving the Elliptic Curve Discrete Logarithm Problem (ECDLP) to achieve security. In the classic model, deriving the private key from the public key requires exponential time, which is considered computationally infeasible. However, this assumption is becoming increasingly precarious in the face of the rapid development of quantum computing. Peter Shor's algorithm, developed in 1994, poses a fatal threat to ECDLP-based cryptographic systems. Leveraging the properties of quantum superposition and quantum entanglement, Shor's algorithm reduces the computational complexity of ECDLP from exponential to polynomial time under traditional models. This is considered "efficient" or "processable" computation time because the time increase is relatively controllable as the input size grows. Compared to exponential time, polynomial-time algorithms can handle much larger-scale problems in practice. This means that if a fault-tolerant quantum computer (FTQC) with sufficient computing power were to emerge, it would be able to efficiently deduce a user's private key from an exposed public key (which is typically exposed on-chain when a user initiates a transaction), thereby forging digital signatures and enabling unauthorized control and theft of user funds. This risk represents a fundamental disruption to ownership of crypto assets and forces the Ethereum ecosystem to complete a massive cryptographic migration before quantum advantage arrives. Vitalik Buterin warned on Devconnect that quantum computers may be able to break elliptic curve cryptography by 2028, and the community should prepare in advance. Industry predictions for Quantum Advantage Day are accelerating. According to Metaculus, the emergence of a quantum computer capable of RSA factorization has been moved forward from 2052 to 2034. IBM plans to deliver its first FTQC in 2029. In response to the quantum threat, Ethereum has included PQC (post-quantum cryptography) as one of the key objectives of the Splurge phase in its long-term roadmap. Ethereum's preventative strategy is proactive and flexible. Ethereum will use L2 as a test sandbox. Quantum-resistant cryptographic algorithms will first be tested on L2 to assess their performance and security, while avoiding disruption or risk to L1. This tiered upgrade strategy will allow the network to cautiously mitigate evolving technological threats. Regarding candidate algorithms, Ethereum is also exploring various PQC schemes, mainly including: Lattice-based cryptography: This type of algorithm is considered to have strong mathematical resistance to quantum attacks. Hash-based cryptography, such as SPHINCS and its component HORST, can construct a scalable and quantum-safe signature system using a Merkle tree structure. This invocation of L2 solutions provides Ethereum with a flexibility advantage. Compared to rigid protocols like Bitcoin, whose design philosophy emphasizes immutability, Ethereum's structured design allows for faster iteration and deployment of the PQC algorithm, and in the future, it can seamlessly integrate PQC into the user experience layer through mechanisms such as account abstraction. We should emphasize strengthening community cohesion and correcting technological deviations to prevent the risks of community fragmentation and centralization. Ethereum's second potential threat stems from changes in market structure: the large-scale intervention of Wall Street institutional capital is reshaping Ethereum's economic and governance structure, which may erode Ethereum's decentralized spirit, thereby triggering the dual risks of community division and infrastructure centralization. Institutional investors are showing growing interest in Ethereum, locking up significant amounts of ETH in structured financial products. Latest data from SER shows that institutions (including spot ETFs and DAT treasuries) hold a total of 12.58 million ETH, representing 10.4% of the total supply. This large-scale capital accumulation is bringing about two structural changes: Contraction in effective circulating supply: Glassnode research reveals that ETH's share on centralized exchanges (CEXs) has plummeted from approximately 29% to around 11%. As institutions move ETH from high-liquidity venues like CEXs to low-liquidity structures such as ETFs or DATs, the market's effective circulating supply will continue to contract. Shifting asset characterization: This type of change will also solidify ETH's position as productive collateral and a long-term savings asset. VanEck's CEO even called ETH a "Wall Street token," which reflects institutional interest in the financialization of ETH. In the Proof-of-Stake (PoS) consensus mechanism, ETH holdings are directly linked to staking rights and governance rights. Although ETH held through ETFs does not directly participate in on-chain staking, the large-scale economic concentration will endow major stakeholders with significant potential governance influence. This economic concentration may gradually translate into governance control over the protocol's decision-making process. Ethereum's core competitiveness stems from its vibrant open-source community and idealistic developer group. However, the will of institutional capital often runs counter to the cypherpunk spirit. The first risk of institutional capital involvement is the potential for community fragmentation. When governance power is concentrated in the hands of a few institutional stakeholders, the fairness and neutrality of the governance process face challenges. When Wall Street giants become major holders, the power in community governance will subtly shift towards the interests of capital. Even if Ethereum maintains its decentralization on the surface, actual power will be concentrated in the hands of a "small circle" composed of institutions such as BlackRock, Fidelity, and Bitmine. The development of the Ethereum ecosystem will no longer rely on pure technological advantages, but rather on its proximity to capital, which will lead to a decoupling of economic value from community spirit. Ethereum will also shift from idealism to capitalism, thereby undermining the decentralized development foundation of the protocol. Furthermore, institutions tend to prioritize compliance, stability, and auditability, while developers often seek privacy, innovation, and censorship resistance. If governance is excessively concentrated in the hands of institutions with substantial capital, even without overt corruption, community decisions may inadvertently favor maximizing stakeholder commercial value rather than upholding the protocol's inherent fairness and decentralized principles. This could alienate a large number of developers, leading to talent drain and undermining Ethereum's trustworthiness and neutrality as a world computer. Another far-reaching risk is that the pursuit of returns and operational efficiency by institutional capital may subtly alter Ethereum's technology roadmap, transforming decentralization at the consensus mechanism level into centralization at the physical level. First, in order to meet the extreme demands of institutions for transaction processing speed and compliance, the underlying technology is very likely to be tilted towards high-performance nodes, which will significantly raise the threshold for ordinary users to run nodes. Secondly, existing research indicates that despite Ethereum's large validator cluster, its validator community exhibits significant geographical centralization, primarily concentrated in regions with the lowest network latency, particularly North America (the US East Coast) and Europe. North America is, in most cases, the network's "focal point," providing a geographical advantage for validators there. This trend is expected to intensify further if staking ETFs issued by BlackRock, Fidelity, and other issuers are approved. Since lower latency (i.e., faster block reception and proposal) directly translates into higher staking rewards and MEV (Maximum Extractable Value) capture efficiency, institutional validators will also accelerate their influx into these "lowest latency" regions. This profit-driven behavior pattern may solidify and exacerbate the current trend of geographical centralization. In reality, this physical centralization also introduces single-point risks. Institutional ETH holdings are often staked through custodians, leading to a large concentration of validator nodes in data centers governed by US law. This not only creates geographical centralization but also exposes the Ethereum network to regulatory scrutiny (such as OFAC compliance requirements). Once the base layer loses its censorship resistance, Ethereum will degenerate into merely a "financial database" running on distributed servers. Therefore, the coupling of economic motives and geography is transforming decentralization at the protocol consensus mechanism level into physical centralization, which violates the fundamental security goals of blockchain. To prevent institutional capital from indirectly dominating governance, Ethereum can drive improvements at multiple levels. In terms of community cohesion, Ethereum can grant developers greater governance weight to balance the capital advantage of institutional giants. Community funding support will be an important supplement; the Ethereum Foundation should significantly expand the Grant program and collaborate with platforms like Gitcoin to subsidize open-source contributions, preventing talent from leaving due to capital bias. Regarding technical roadmap correction, Ethereum should promote a solution that emphasizes both technology and incentives. Ethereum can encourage institutions to adopt a combination of multi-signature + DVT (Distributed Validator Technology) or restaking through incentive measures. This would allow institutions to distribute their staked ETH across more independent nodes, balancing custody and compliance needs while improving decentralization. To address the issue of geographical concentration, Ethereum should introduce latency balancing algorithms at the protocol layer and launch a node distribution subsidy program, focusing on reducing the proportion of North American validators to a reasonable range. Simultaneously, hardware barriers need to be lowered, along with client-side optimizations, to make the cost for independent validators to run full nodes affordable. Looking at the history of Ethereum's evolution, it is essentially a history of racing against potential crises. Faced with the relentless advances of quantum computing and the enticing allure of Wall Street capital, Ethereum can actually build new competitive advantages through quantum-resistant upgrades, balancing community governance, and combining hardware and software solutions. This battle between technology and human nature will determine whether Ethereum ultimately becomes a backend for Wall Street's fintech or a public infrastructure for digital civilization.Author: JAE, PANews With the frequent approvals and widespread adoption of spot ETFs, Ethereum seems to have completed its magnificent transformation from a "geek experiment" to a "global asset." However, under the spotlight of the crypto market, this largest smart contract platform in the industry is now standing at a historical crossroads. Beneath the prosperity, undercurrents are surging. Recently, Ethereum co-founder Vitalik Buterin warned at the Devconnect conference that Ethereum is currently facing three major risks: the threat of quantum computing, increased control by Wall Street, and governance fairness. These three pressures will test Ethereum's long-term sustainability and resilience as a trusted and neutral infrastructure. With the threat of quantum technology looming large, quantum-resistant upgrades have been incorporated into the roadmap. Beyond the blockchain trilemma, another, more fundamental risk is looming: cryptographic security. The most destructive risk facing Ethereum comes from the disruption of modern cryptography by quantum computing. This technological threat is sudden and non-linear; once a critical point is crossed, all defenses will crumble instantly. Ethereum, and most other blockchain networks, rely on the Elliptic Curve Digital Signature Algorithm (ECDSA) for account security. This algorithm depends on the computational difficulty of solving the Elliptic Curve Discrete Logarithm Problem (ECDLP) to achieve security. In the classic model, deriving the private key from the public key requires exponential time, which is considered computationally infeasible. However, this assumption is becoming increasingly precarious in the face of the rapid development of quantum computing. Peter Shor's algorithm, developed in 1994, poses a fatal threat to ECDLP-based cryptographic systems. Leveraging the properties of quantum superposition and quantum entanglement, Shor's algorithm reduces the computational complexity of ECDLP from exponential to polynomial time under traditional models. This is considered "efficient" or "processable" computation time because the time increase is relatively controllable as the input size grows. Compared to exponential time, polynomial-time algorithms can handle much larger-scale problems in practice. This means that if a fault-tolerant quantum computer (FTQC) with sufficient computing power were to emerge, it would be able to efficiently deduce a user's private key from an exposed public key (which is typically exposed on-chain when a user initiates a transaction), thereby forging digital signatures and enabling unauthorized control and theft of user funds. This risk represents a fundamental disruption to ownership of crypto assets and forces the Ethereum ecosystem to complete a massive cryptographic migration before quantum advantage arrives. Vitalik Buterin warned on Devconnect that quantum computers may be able to break elliptic curve cryptography by 2028, and the community should prepare in advance. Industry predictions for Quantum Advantage Day are accelerating. According to Metaculus, the emergence of a quantum computer capable of RSA factorization has been moved forward from 2052 to 2034. IBM plans to deliver its first FTQC in 2029. In response to the quantum threat, Ethereum has included PQC (post-quantum cryptography) as one of the key objectives of the Splurge phase in its long-term roadmap. Ethereum's preventative strategy is proactive and flexible. Ethereum will use L2 as a test sandbox. Quantum-resistant cryptographic algorithms will first be tested on L2 to assess their performance and security, while avoiding disruption or risk to L1. This tiered upgrade strategy will allow the network to cautiously mitigate evolving technological threats. Regarding candidate algorithms, Ethereum is also exploring various PQC schemes, mainly including: Lattice-based cryptography: This type of algorithm is considered to have strong mathematical resistance to quantum attacks. Hash-based cryptography, such as SPHINCS and its component HORST, can construct a scalable and quantum-safe signature system using a Merkle tree structure. This invocation of L2 solutions provides Ethereum with a flexibility advantage. Compared to rigid protocols like Bitcoin, whose design philosophy emphasizes immutability, Ethereum's structured design allows for faster iteration and deployment of the PQC algorithm, and in the future, it can seamlessly integrate PQC into the user experience layer through mechanisms such as account abstraction. We should emphasize strengthening community cohesion and correcting technological deviations to prevent the risks of community fragmentation and centralization. Ethereum's second potential threat stems from changes in market structure: the large-scale intervention of Wall Street institutional capital is reshaping Ethereum's economic and governance structure, which may erode Ethereum's decentralized spirit, thereby triggering the dual risks of community division and infrastructure centralization. Institutional investors are showing growing interest in Ethereum, locking up significant amounts of ETH in structured financial products. Latest data from SER shows that institutions (including spot ETFs and DAT treasuries) hold a total of 12.58 million ETH, representing 10.4% of the total supply. This large-scale capital accumulation is bringing about two structural changes: Contraction in effective circulating supply: Glassnode research reveals that ETH's share on centralized exchanges (CEXs) has plummeted from approximately 29% to around 11%. As institutions move ETH from high-liquidity venues like CEXs to low-liquidity structures such as ETFs or DATs, the market's effective circulating supply will continue to contract. Shifting asset characterization: This type of change will also solidify ETH's position as productive collateral and a long-term savings asset. VanEck's CEO even called ETH a "Wall Street token," which reflects institutional interest in the financialization of ETH. In the Proof-of-Stake (PoS) consensus mechanism, ETH holdings are directly linked to staking rights and governance rights. Although ETH held through ETFs does not directly participate in on-chain staking, the large-scale economic concentration will endow major stakeholders with significant potential governance influence. This economic concentration may gradually translate into governance control over the protocol's decision-making process. Ethereum's core competitiveness stems from its vibrant open-source community and idealistic developer group. However, the will of institutional capital often runs counter to the cypherpunk spirit. The first risk of institutional capital involvement is the potential for community fragmentation. When governance power is concentrated in the hands of a few institutional stakeholders, the fairness and neutrality of the governance process face challenges. When Wall Street giants become major holders, the power in community governance will subtly shift towards the interests of capital. Even if Ethereum maintains its decentralization on the surface, actual power will be concentrated in the hands of a "small circle" composed of institutions such as BlackRock, Fidelity, and Bitmine. The development of the Ethereum ecosystem will no longer rely on pure technological advantages, but rather on its proximity to capital, which will lead to a decoupling of economic value from community spirit. Ethereum will also shift from idealism to capitalism, thereby undermining the decentralized development foundation of the protocol. Furthermore, institutions tend to prioritize compliance, stability, and auditability, while developers often seek privacy, innovation, and censorship resistance. If governance is excessively concentrated in the hands of institutions with substantial capital, even without overt corruption, community decisions may inadvertently favor maximizing stakeholder commercial value rather than upholding the protocol's inherent fairness and decentralized principles. This could alienate a large number of developers, leading to talent drain and undermining Ethereum's trustworthiness and neutrality as a world computer. Another far-reaching risk is that the pursuit of returns and operational efficiency by institutional capital may subtly alter Ethereum's technology roadmap, transforming decentralization at the consensus mechanism level into centralization at the physical level. First, in order to meet the extreme demands of institutions for transaction processing speed and compliance, the underlying technology is very likely to be tilted towards high-performance nodes, which will significantly raise the threshold for ordinary users to run nodes. Secondly, existing research indicates that despite Ethereum's large validator cluster, its validator community exhibits significant geographical centralization, primarily concentrated in regions with the lowest network latency, particularly North America (the US East Coast) and Europe. North America is, in most cases, the network's "focal point," providing a geographical advantage for validators there. This trend is expected to intensify further if staking ETFs issued by BlackRock, Fidelity, and other issuers are approved. Since lower latency (i.e., faster block reception and proposal) directly translates into higher staking rewards and MEV (Maximum Extractable Value) capture efficiency, institutional validators will also accelerate their influx into these "lowest latency" regions. This profit-driven behavior pattern may solidify and exacerbate the current trend of geographical centralization. In reality, this physical centralization also introduces single-point risks. Institutional ETH holdings are often staked through custodians, leading to a large concentration of validator nodes in data centers governed by US law. This not only creates geographical centralization but also exposes the Ethereum network to regulatory scrutiny (such as OFAC compliance requirements). Once the base layer loses its censorship resistance, Ethereum will degenerate into merely a "financial database" running on distributed servers. Therefore, the coupling of economic motives and geography is transforming decentralization at the protocol consensus mechanism level into physical centralization, which violates the fundamental security goals of blockchain. To prevent institutional capital from indirectly dominating governance, Ethereum can drive improvements at multiple levels. In terms of community cohesion, Ethereum can grant developers greater governance weight to balance the capital advantage of institutional giants. Community funding support will be an important supplement; the Ethereum Foundation should significantly expand the Grant program and collaborate with platforms like Gitcoin to subsidize open-source contributions, preventing talent from leaving due to capital bias. Regarding technical roadmap correction, Ethereum should promote a solution that emphasizes both technology and incentives. Ethereum can encourage institutions to adopt a combination of multi-signature + DVT (Distributed Validator Technology) or restaking through incentive measures. This would allow institutions to distribute their staked ETH across more independent nodes, balancing custody and compliance needs while improving decentralization. To address the issue of geographical concentration, Ethereum should introduce latency balancing algorithms at the protocol layer and launch a node distribution subsidy program, focusing on reducing the proportion of North American validators to a reasonable range. Simultaneously, hardware barriers need to be lowered, along with client-side optimizations, to make the cost for independent validators to run full nodes affordable. Looking at the history of Ethereum's evolution, it is essentially a history of racing against potential crises. Faced with the relentless advances of quantum computing and the enticing allure of Wall Street capital, Ethereum can actually build new competitive advantages through quantum-resistant upgrades, balancing community governance, and combining hardware and software solutions. This battle between technology and human nature will determine whether Ethereum ultimately becomes a backend for Wall Street's fintech or a public infrastructure for digital civilization.