Vitalik Buterin calls for a halt to frequent changes to Ethereum, warning that BlackRock's high ETH holdings pose a threat.

At the Devconnect conference in Buenos Aires in November 2025, Ethereum co-founder Vitalik Buterin publicly stated that the Ethereum base layer should shift towards “ossification,” which means reducing the frequent changes to the core rules of the protocol to enhance network stability and security. This statement comes at a time when institutions are accelerating their allocation of Ethereum, with data showing that publicly listed companies hold a total of over $3.6 billion in Ethereum, among which BitMine Immersion Technologies ranks first with 1.71 million ETH (approximately $5.27 billion).

Buterin also warned that institutions like BlackRock holding too much Ethereum could pose two major threats: dispersing the core community and leading to erroneous technical decisions. Analysts believe that the stability of the underlying layer, along with the upcoming Fusaka upgrade and the migration to post-quantum cryptography, will determine whether Ethereum can balance innovation with institutional demand.

The Technical and Philosophical Foundations of Ethereum Ossification Trends

Vitalik Buterin's speech at the Devconnect conference marks an important shift in Ethereum's development philosophy. In front of over 500 attendees, he clearly stated that “over time, increasing ossification is good for Ethereum,” and emphasized that the “rate of unexpected changes at the protocol layer has significantly decreased.” The concept of ossification refers to the state where the fundamental rules of the blockchain cease to change, which is especially crucial for today's Ethereum - the network safeguards hundreds of billions of dollars in assets and processes trillions of dollars in transactions every year, and any changes at the protocol level could trigger systemic risks.

This stabilization trend stands in stark contrast to the early formation of Ethereum. Since the mainnet launch in 2015, Ethereum has undergone several significant upgrades: the DAO fork in 2016, Constantinople in 2019, the London upgrade in 2021 (which introduced EIP-1559), and the merge in 2022 (transitioning to proof of stake), each bringing fundamental changes in performance, economic models, or consensus mechanisms. However, Buterin now believes that foundational layer innovation should give way to upper-level construction, with the core protocol remaining stable while new features are realized through Rollup, application chains, and middleware.

In terms of technical architecture, Buterin proposed decoupling the Ethereum Virtual Machine (EVM) from the consensus layer. The EVM maintains flexibility to support developer innovation, while the consensus layer is solidified to ensure network security. This separation design not only maintains underlying stability but also leaves space for experimentation at the application layer. Meanwhile, the ossification helps to narrow the attack surface—reducing core code changes means reducing the introduction of potential vulnerabilities. For Ethereum, which has established a large ecosystem, this conservatism is actually a manifestation of progress.

Institutional Position Data and Balance Sheet Configuration

The discussion on the stabilization of the Ethereum base layer forms an interesting correspondence with the significant increase in institutional holdings. According to publicly disclosed data, the total amount of Ethereum held by listed companies and investment funds has surpassed 36 million pieces, valued at over 3.6 billion USD. BitMine Immersion Technologies leads with 1.713899 million ETH, SharpLink Gaming holds 797704 pieces, and The Ether Machine controls 345362 pieces. Even the Ethereum Foundation maintains a reserve of 244481 pieces.

Among the listed entities, Coinbase holds 137,334 coins, Bit Digital owns 120,306 coins, and 180 Life Sciences reports 82,186 coins. Below are also companies like Fundamental Global (47,331 coins), Ether Capital (46,274 coins), and BTCS (70,028 coins) that make up an increasingly expanding base of institutional holders. These entities are establishing large-scale long-term positions, coinciding with Ethereum starting discussions on locking in core design.

Institutions prefer stable and predictable environments. Large investors holding hundreds of thousands of ETH do not want to face fundamental rule changes every few years. Long-term holding and staking rewards have allowed Ethereum to exhibit characteristics of income-generating assets, while L2 scaling now handles most daily activities, alleviating pressure on the main chain. Ossification supports this transition by reducing protocol surprises, shrinking the attack surface, and creating a more stable environment for staking and settlement.

Buterin's Warning on Institutional Capture and Response Strategies

At the Funding the Commons side event, Buterin's conversation with Tor Project co-founder Roger Dingledine revealed the specific risks of institutional overreach. When asked how to avoid the “capture” by giants like BlackRock, Buterin pointed to two major threats: first, the dispersion of the core community; when institutions gain too much influence, they alienate the groups that truly care about decentralization; second, leading to erroneous technical decisions, such as shortening block times to meet high-frequency trading demands, thus undermining decentralization.

Nine Wall Street firms currently hold over $18 billion in Ethereum through ETFs, with another $18 billion on the balance sheets of public companies. Analysts predict that institutions may hold more than 10% of the total supply of Ethereum in the short term. Buterin believes that this success contains dangers, especially when the direction of technological optimization shifts from community needs to institutional needs. He cites the example that a 150-millisecond block time is very attractive for high-frequency trading but makes running nodes outside of New York City impractical.

In response, Buterin emphasized that Ethereum should focus on “things that will otherwise face supply shortages: global, permissionless, and censorship-resistant protocols.” Wall Street does not need Ethereum for fast-moving or efficient settlement of transactions—it already has corresponding systems. What Wall Street cannot build (and where Ethereum's value lies) is a truly global system accessible to anyone without permission. Maintaining this requires “a strong core community focused on these things,” rather than an optimized community for institutional adoption.

Key Points of Conflict Between Institutional Holdings of Ethereum and Community Values

• Institutional Holdings: ETF providers hold $18 billion, publicly listed companies hold $18 billion, accounting for nearly 10% of the supply.
• Technical Conflict: Short block time optimizes institutional demand but undermines geographic decentralization.
• Community Risk: Core developers may leave for more decentralized platforms.
• Value Proposition: The advantage of Ethereum lies in its global accessibility rather than settlement efficiency.
• Balance Strategy: The base layer remains stable, while innovation moves to L2 and the application layer.

This tension is not new in the history of Ethereum. The ICO frenzy of 2017, the DeFi summer of 2021, and the Memecoin wave of 2023 have all tested Ethereum's value proposition. However, the scale of institutional funds brings a qualitative difference—when BlackRock holds a significant proportion of Ethereum, its voting power could influence the direction of protocol upgrades. On the other hand, institutional participation also brings benefits such as liquidity, compliance, and connectivity to traditional finance.

Quantum Computing Threat and Fusaka Upgrade Preparation

Despite advocating for ossification, Buterin acknowledges that Ethereum still needs a significant upgrade to address the threat of quantum computing. He warns that the elliptic curve cryptography currently relied upon by Ethereum could be broken by quantum computers within four years, which means the network must switch to quantum-resistant cryptography before 2028. This transition requires extensive coordination among validators, developers, institutions, and users, marking the first significant test of the ossification principle.

The Fusaka upgrade, which is set to go live on December 3, is a key first step in this transition. While the main content includes efficiency improvements such as EOF (EVM Object Format) and Verkle trees, its true significance lies in proving that Ethereum can execute necessary security upgrades while maintaining stability at the base layer. Millions of Ethereum are now on corporate balance sheets, and large holders need to be assured that Ethereum can withstand survival threats, even as its base layer becomes more fixed.

From a technical perspective, transitioning to post-quantum cryptography involves multiple challenges. Most candidate algorithms (such as lattice-based schemes) require larger signatures and higher computational demands, which may impact network performance and hardware requirements. Transition strategies may include dual-chain parallelism or gradual migration to ensure backward compatibility. The success of this upgrade will validate Buterin's vision – ossification does not mean stagnation, but rather more selective transformation.

Innovative Allocation in the Layer 2 Ecosystem

The core of the ossification strategy lies in redistributing innovation into the hierarchical structure of Ethereum. The base layer remains stable as a settlement and consensus anchor, while Rollups, application chains, and middleware become experimental breeding grounds. This division of labor makes sense both technically and in governance—L2 can iterate faster, the cost of failure is lower, and different solutions can compete to meet diverse needs.

The current L2 ecosystem has already shown the effectiveness of this model. Arbitrum and Optimism are experimenting with governance tokens and decentralized sequencers; zkSync and StarkNet are advancing zero-knowledge proof technology; Base and Polygon zkEVM are exploring optimizations for specific applications. At the same time, projects like Celestia and EigenLayer provide modular components, further lowering the barriers to innovation. This flourishing situation is exactly what the ossified base layer hopes to promote.

For developers, ossification reduces long-term maintenance costs. Building on a frequently changing base layer is like constructing a fortress on quicksand - each hard fork may disrupt existing applications. A stable EVM and consensus rules mean that smart contracts can be expected to run for years, which is especially important for DeFi and real-world asset projects that require legal enforceability. At the same time, ossification does not prevent necessary improvements; it merely raises the threshold for changes, ensuring that only upgrades that have been thoroughly tested and widely agreed upon will be implemented.

Market Impact and Investor Strategy Adjustment

The transition of Ethereum to ossification has profound implications for investors. A reduction in protocol surprises means more predictable staking yields, more stable network fees, and a lower technical risk premium. These characteristics are particularly attractive to institutional investors, who often view technical risk as a major barrier to cryptocurrency investment. At the same time, ossification may make Ethereum more like a “digital bond,” its value derived from cash flows (transaction fees) and network effects, rather than a continuous technological revolution.

In portfolio construction, staked Ethereum may play different roles. Its relatively low volatility (compared to other altcoins) and yield-generating characteristics make it a core holding in a crypto-native portfolio. For traditional investors, holding Ethereum through ETFs provides a different risk exposure than tech stocks, benefiting from Web3 growth without relying on the success of a single project. However, staking may also reduce Ethereum's “optionality”—the potential for value leaps through breakthrough upgrades.

From a risk perspective, ossification is not without cost. Being overly conservative may cause Ethereum to lag in the long-term technological competition. For instance, if new virtual machines like monad or fuel significantly outperform the EVM, Ethereum's rigidity may become a burden. However, Buterin's vision is to absorb these innovations through L2 rather than changing the base layer. Investors should monitor the ratio of L2 activity to mainnet activity, as well as the security of cross-chain bridges; these indicators will reflect whether the ossification strategy is effective.

When Vitalik Buterin advocated “stop changing” in Buenos Aires, he revealed a technical paradox: sometimes true progress lies in knowing when to stop. Ethereum has transitioned from the startup phase of “move fast and break things” to the infrastructure phase of “stable foundations support everything.” This maturation process is both a responsibility for hundreds of billions in value and a commitment to billions of users. In a time when quantum threats loom and institutional funds are eyeing closely, ossification is not retreat but strategic focus—just like load-bearing walls in ancient buildings, the most enduring structures are often those parts that have been tested and remain unchanged.

FAQ

What is Ethereum ossification?

Ossification of the Ethereum base protocol rules stops frequent changes to enhance stability, security, and predictability, while shifting innovation to Layer 2 and the application layer.

What risks do institutions face by holding too much Ethereum?

This may lead to core developers leaving, technical decisions leaning towards institutional needs (such as shortening block times), and undermining core values such as geographical decentralization and censorship resistance.

What are the main contents of the Fusaka upgrade?

Including efficiency improvements such as EVM Object Format (EOF), Verkle Trees, etc., in preparation for future migration to quantum-resistant cryptography, scheduled for activation on December 3, 2024.

How will ordinary users experience the ossified Ethereum?

Mainnet transactions are more stable and reliable, with most innovative features provided through L2 networks such as Arbitrum and Optimism, potentially allowing for a smoother user experience and lower costs.

Will ossification make Ethereum lose its competitiveness?

If the L2 ecosystem remains active and cross-chain interoperability is efficient, Ethereum can maintain its competitiveness through layered innovations; otherwise, it may face challenges from more flexible competing public chains.