Will Ethereum’s zkEVM Upgrade Spark a Big Rally?

Bulls are back in full force, as evident by the green cryptocurrency market. As the $2.3 trillion market cap Bitcoin (BTC -2.43%) hits a new all-time high (ATH) at nearly $123,000, altcoins are also starting to rejoice with the global cryptocurrency market cap now at $3.74 trillion, close to hitting a new peak of about $4 trillion, which was recorded in December 2024.

More importantly, even Ethereum (ETH -4.9%) has finally begun to show signs of life.

This month, the ETH price has finally surpassed the $3,000 level, although it remains 39% below its peak of $4,880 from approximately four years ago. Notably, ETH tends to experience a strong run-up during the last phase of a bull market, once Bitcoin has hit its peak for the cycle and then takes a breather. For instance, during the 2021 bull run, the ETH price jumped 10 times within just six months.

With a market cap of $359 billion, ETH is the second-largest cryptocurrency, trading at $3,050, down 11.4% in the past year.

ETHBTC ratio, meanwhile, is also making an attempt at breaking out as it currently stands at 0.02550. The ratio topped at 0.1540 back in June 2017, and since then it has been down only. While ETH did make a new ATH in USD, it hasn’t really managed to outperform Bitcoin, with Dec. 2021 top coming in at 0.0888.

In April this year, the ETHBTC ratio hit a low of around 0.01777, a level last seen in Jan. 2020. With BTC capturing the attention of institutions and even governments, who are deploying unprecedented amounts of capital in the largest crypto asset, Ethereum is expected to struggle against Bitcoin, though it may still make a new ATH in USD.

Traders are now betting heavily on Ether showing strength with open interest (OI) reaching nearly $44 billion on July 15, up from $29.5 bln less than a month ago on June 22, according to data from CoinGlass.

The Renewed Interest in Ethereum

After making a red start of the year with a negative 45.41% performance in Q1, ETH price has finally started to make some recovery with a 36.48% and 22.5% uptrend posted in Q2 and Q3 of 2025.

Even institutions have begun to show renewed optimism about Ether as prices rebound. For instance, Ethereum Spot ETF has recorded seven consecutive days of inflows totaling a whopping $1.3 billion, as per Farside. 

On July 10, Ether ETFs actually had their record inflow at over $383 million. With that, the total cumulative inflow has now surpassed $5.56 billion, and the total assets held by ETF issuers are at $13.77 billion.

While these numbers are rather small compared to Bitcoin’s over $4 bln in inflows in 8 consecutive days of positive flows, which brings its total inflows to $52.66 bln and total assets to $153.3 bln, for Ether, it’s still a big deal as it has been struggling to capture institutional interest and that’s finally changing.

In addition to record inflows into ETFs, Ethereum has also begun to see traction among companies as a treasury asset. 

In a move that mirrors the BTC play adopted by Michael Saylor’s Strategy and a growing number of other firms, this trend has now led to Ethereum treasury companies buying over 545,000 ETH (worth at least $1.6 billion) in the past month.

This week, BitMine Immersion Technologies also announced accumulating a total of 163,142 ETH. Its Chairman, Fundstrat’s Tom Lee, compared ETH’s adoption as a treasury asset to Strategy’s Bitcoin accumulation and that Wall Street will become bullish on Ether the same way as it did for BTC.

Asset manager CoinShares has also reported rising interest in Ethereum funds, which had their 12th straight week of capital inflow. The $990 million inflow last week was its fourth-largest one.

So far this year, Ethereum products have recorded over $4 billion, nearly 30% of which came in just the last two weeks.

“People are preferring Ethereum over Bitcoin. Although the number is lower [for Ethereum] than Bitcoin, proportionally, it’s much more significant.”

– CoinShares Head of Research James Butterfill told media publication Decrypt

Ethereum’s Upgrade-Driven Growth Story

To understand Ethereum, we have to look into the history of the cryptocurrency, which was founded in 2015 to address Bitcoin’s weaknesses. Although its white paper was published by Vitalik Buterin two years prior, it was not until 2015 that the cryptocurrency was established. In the paper, he detailed smart contracts that enable the development of decentralized applications (dApps). 

Much like Bitcoin, the Ethereum network is run by thousands of computers worldwide. The users participate in the network as “nodes,” making the network decentralized.

In the case of Ethereum, there’s also an Ethereum Virtual Machine (EVM), which is a decentralized computation engine that manages the state of the blockchain and executes smart contracts on the network.

Unlike Bitcoin, which is a store of value much like gold, Ethereum is a programmable blockchain that aims to overtake the current internet infrastructure. Its native cryptocurrency, ETH, is a utility token that has an infinite supply.

Bitcoin, which has a limited supply, prioritizes being secure, stable, and censorship-resistant and has only gone through a few carefully vetted upgrades like SegWit in 2017 to improve scalability and Taproot in 2021 to improve privacy and efficiency. Its predictability and immutability are what make Bitcoin so valuable.

In contrast, the Ethereum blockchain constantly undergoes technical upgrades to support active development. It is designed as a programmable smart contract platform and frequently evolves to improve its scalability, security, and functionality.

For instance, in 2022, it had the Merge that moved it from Proof of Work (PoW) to Proof of Stake (PoS) blockchain. In 2024, the Dencun Upgrade reduced transaction fees. Upcoming upgrades, such as Surge, Scourge, Verge, and Purge, are already outlined as part of its long-term roadmap.

This is because, while Bitcoin is aiming to be digital gold with a focus on stability, Ethereum’s goal is to be the global decentralized computing platform, whose focus is on innovation, which requires constant experimentation and improvement.

Ethereum Foundation to Fuel ETH’s Next Chapter

Now this month, the Ethereum Foundation (EF) has announced its ambitious plan to enhance the scalability, decentralization, and security of the Ethereum network through a zkEVM upgrade. EF is a non-profit organization that supports Ethereum and related technologies. 

The Foundation has an ETH stash that it sells to fund its operations and goals. It has faced heavy criticism from the community for its constant ETH selling and lack of participation in the ecosystem.

Josh Stark, a contributor to the EF, clarified earlier this year that the foundation uses the blockchain to sell tokens, pay out grants, and sell tickets at events. This wasn’t received well by the community, though.

Ethereum co-founder Buterin noted at the time that the Foundation is exploring staking its massive ETH holdings now that the regulatory risk surrounding it has decreased. He also said the foundation had been looking into minimizing the concern around being forced to “take a position on any future contentious hard fork” due to staking.

Recently, the Foundation sold 10,000 ETH at an average price of $2,572.37 to Nasdaq-listed gaming company SharpLink (SBET). This OTC deal marked the first such direct sales of ether by EF to a publicly traded company.

The $25.7 million transaction was settled on-chain through EF’s multisig, with all the proceeds to be used to support its core activities. 

SharpLink Chairman and Ethereum co-founder Joseph Lubin called this move a “commitment to Ethereum’s long-term mission” as it adopts Ether as its primary treasury reserve asset. The company plans to stake and restake the ETH it has acquired to remove the supply from circulation and strengthen the health of its ecosystem.

This is “the start of something bigger,” added Lubin, “a model for how mission-driven organizations can work to advance our ecosystem’s shared goals of decentralization, economic empowerment, and protocol-native finance.”

The Key to Ethereum’s Next Big Leap

Now, the EF is working on the integration of the native L1 zkEVM by this year-end, which could be the biggest catalyst for Ethereum. 

This technological advancement is part of the broader efforts to revolutionize its ecosystem by addressing the challenges the Ethereum network has been facing for a long time. EF’s commitment to the upgrade, meanwhile, emphasizes the Foundation’s dedication to making sure that Ethereum continues to lead the blockchain world.

Throughout this bull run, it has been facing stiff competition from the Solana blockchain, which boasts 65,000 transactions per second (TPS) and the average transaction fee of $0.003 compared to Ethereum’s 15 to 30 TPS and $0.5949 average fee.

This isn’t all, though. Security is another big issue for Ethereum, which has been the subject of several major security incidents with losses running into millions of dollars. 

A recent report by blockchain security firm SlowMist revealed that the Ethereum ecosystem is the most affected one in the first half of 2025. There were a total of 121 incidents recorded during this period, and out of them, Ethereum-related projects suffered around $38.6 million in losses.

DeFi platforms continue to be the most targeted ones, accounting for about 76% of all attacks and recording roughly $470 million in losses.

When it comes to the attack vectors, account compromises and smart contract bugs were the primary suspects with 42 and 35 cases, respectively.

The report also reported emerging risks related to the Ethereum EIP-7702 wallet delegation feature, introduced as part of the Pectra upgrade earlier this year, that allows users to authorize smart contracts to act on their behalf without swapping their wallet address. According to SlowMist:

“Even if the contract itself has no backdoors, if you are tricked by a phishing site into granting authorization, attackers can exploit the contract’s full operational capabilities to drain your assets in bulk.” 

Potential private key leaks and replay attacks across multiple chains are other risks associated with EIP-7702. The upgrade, the firm noted, brings “new risk boundaries.”

So, embedding ZKPs across its entire architecture, starting with zkEVM, is expected to have a great impact on the Ethereum ecosystem as it will improve network throughput and security. At the same time, it will foster client diversity.

Understanding Zero-knowledge proofs (ZKPs) 

zkEVM, or Zero-Knowledge Ethereum Virtual Machine, uses zero-knowledge proofs (ZKPs) to allow validators, which are entities responsible for securing the Ethereum network, to verify transactions without having to execute them directly. 

ZK-proofs originated back in 1985 to mark a breakthrough in cryptography, and today they are fundamental components of many blockchains, enhancing privacy and security. 

This cryptographic method basically allows a prover to validate a claim without revealing the information about the claim itself. This way, the confidential data can be verified without having to disclose it. As such, it gives users more confidence when interacting with the blockchain as their private information is likely to be protected. 

For every interaction, ZKPs involve a minimum of two parties. A prover is one who provides a mathematical proof to convince the verifier that a statement is valid. The verifier is the one who analyzes the evidence and then accepts or rejects it. 

Now, there are two main types of ZKPs. In interactive ZKPs, the prover and verifier go through multiple rounds of communication, making it inefficient for large-scale applications.

In non-interactive ZKPs, only one round of communication is involved. This one doesn’t require both parties to be online at the same time, either. Zero-Knowledge Succinct Non-Interactive Arguments of Knowledge (zk-SNARKs) and Zero-Knowledge Scalable Transparent Arguments of Knowledge (zk-STARKs) are the types of ZKPs used in non-interactive ZKPs.

In the blockchain ecosystem, zero-knowledge proofs can be valuable for secure identity verification, voting systems, DEXs, private cryptocurrencies, non-custodial smart contracts, and more.

ZKPs are not without challenges, though. Most importantly, they are technologically complex, requiring deep knowledge of the concept. They can also be resource-intensive and face scalability and interoperability problems, limited mobility, and compliance challenges.

Inside Ethereum’s zkEVM Rollout Plan for 2025

The Ethereum Foundation has laid down a one-year plan to integrate ZKPs into the main chain, which will replace traditional block execution. While it will start as an optional Layer 1 zkEVM client software, it has the potential to later become mandatory for all.

Ultimately, the idea is to use ZK proofs at all levels of the technology stack, from the consensus layer to on-chain privacy. In regard to that, the protocol will be upgraded to be simpler and more zk-friendly. But that’ll come later, the first step in this journey is a Layer 1 zkEVM.

In the official EF blog titled “Shipping an L1 zkEVM #1: Realtime Proving,” protocol engineer Sophia Gold explained that instead of having every validator re-execute transaction blocks to verify them, the system will allow validators to verify blocks just by checking ZK-proofs.

The roadmap outlined suggests allowing validators to use stateless proof verification from multiple zkVMs to verify execution. This means several independent checkers to verify multiple proofs, which puts an additional layer of security on the network. This, Gold noted, is the “fastest and safest way to ship an L1 zkEVM,” and in less than a year.

The team has also set strict technical standards, requiring proof to meet these “real-time” benchmarks. This includes 10-second latency for 99% of blocks and proof size being less than 300 KiB to prevent new network bottlenecks. 128-bit security, starting with a 100-bit minimum at launch, will meanwhile make sure the proof’s cryptographic strength can safeguard the network’s security.

There’s also a limit on prover hardware cost, which is $100,000, so that individuals can also participate in proof generation. In line with this “home proving”, the prover shouldn’t consume more than 10 kW, which will further ensure network decentralization.

Initially, though, a limited number of validators will be able to run the new clients, but following audits, verifications, bug bounties, and security demonstrations, as confidence grows and reliability improves, the proof checking could become the default. She added:

“We expect adoption will slowly increase.” 

And once the majority of stake is confident running ZK clients, the gas limit can be increased to have validators running reasonable hardware to verify proofs instead of re-executing blocks. When all validators are onboard, the same proofs can then power native zk-rollups.

Gold has actually urged the teams to meet latency goals by the upcoming Devconnect Argentina in November. She called it a “race to real-time.” The successful implementation of zkEVM will make Ethereum the biggest ZK application.

Latest Ethereum (ETH) News and Developments

Laying the Institutional Groundwork for ETH’s Next Major Rally

The zkEVM integration will occur in a phased approach. The initial phase will focus on real-time Ethereum proof verification, enhancing the speed, scalability, and privacy of the network. By making it faster, cheaper, and private, the network is expected to become more attractive to both individual and institutional users.

The market is reacting positively to the zkEVM integration, with many viewing it as a big step forward for both the Ethereum network’s usage and its native asset, ETH’s price. 

ARK Invest CEO Cathie Wood is one of those who support this progress. A Bitcoin maximalist, Wood believes BTC could be worth as much as $1.5 million by the end of this decade, driven by corporate adoption.

Last week, she took to X (formerly Twitter) to publicly endorse the Foundation’s move to advance Ethereum. She said:

“The Ethereum Foundation does seem to be proposing the right moves for scalability and privacy to maintain its lead in the institutional world.” 

Her support for Ethereum’s technical advancements is a testament to the blockchain’s value among traditional finance (TradFi) institutions. This also shows growing interest and confidence in Ethereum’s potential to continue to lead the future of crypto and be the decentralized foundation of finance.

“This upgrade represents the cultural shift Ethereum has been promising. Along with expanding blobspace (cheaper DA), Ethereum is paving the way for scalable and privacy-preserving L1 infra. Execution still remains the challenge, but the vision is becoming clearer,”

– Raye Hadi, who’s a research associate at Ark

Ark’s Director of Research, Lorenzo Valiente, meanwhile, pointed out Ethereum’s supply crunch in a separate post, stating how, since the Merger happened, which was over a thousand days ago, only 373K ETH net has been issued. Meanwhile, in less than ten days, Ethereum Spot ETFs have pulled in over 380K ETH.

What this means is that three years of new ETH supply have been “eaten up” by institutions in less than two weeks. He added, “Supply shock coming for BTC and ETH.”

Institutional investors are already showing interest in Ethereum, which is dominating the decentralized finance (DeFi) innovation as well as the tokenization trend. Tokenization is among the leading crypto trends, which is projected to be worth trillions of dollars in the coming years, driven by support from TradFi giants like BlackRock, Franklin Templeton, JPMorgan, and others.

This institutional backing is critical for ETH’s growth in the long term as it provides a solid foundation for sustained demand.

After disappointing throughout this bull rally, Ethereum is finally beginning to liven up, and many believe the asset is currently underpriced. With the network preparing for a strategic transformation with zk-EVM implementation and a potential staking ETF approval in line, ETH could soon lead the crypto narrative once again, with a price to follow through and finally have its momentum to reach new highs.