In the past few weeks, we have shown data on the growth of dark trading and the increasing fragmentation of lit exchanges. Today, there are 16 equity exchanges, over 30 ATS venues, and more than a hundred brokers in the U.S. — and they’re all competing to provide trading services.
That sounds like a lot of fragmentation in the market, which at some point might result in more costs than benefits to investors.
Today, we’re going to use the same test the U.S. Department of Justice (DOJ) uses for mergers. That test shows that the U.S. stock market is, already, highly competitive.
The DOJ uses HHI as a measure of competition
The DOJ uses the Herfindahl-Hirschman Index (HHI) when considering the antitrust implications of mergers and acquisitions. The HHI, based on the work of economists Albert Hirschman and Orris Herfindahl, uses the market share of all the firms in an industry to measure how concentrated it is.
In simple terms, the HHI index is created using the weights of each company in an industry. To do this:
Each company’s market share is squared (this makes larger companies count much more).
Then, the scores are all summed up.
We show some examples of how the math of HHI works in Chart 1 below. The more concentrated “Industry A” scores 3400, while the more competitive “Industry C” scores 900.
Chart 1: Competitiveness changes based on the number of firms and their market shares
In the DOJ’s view, an HHI score above 1800 is uncompetitive, from 1000 to 1800 is moderately competitive, while an industry scoring below 1000 is highly competitive.
Although, to be fair to the DOJ, they actually use two scenarios when testing mergers. Since they are concerned if a merger could “substantially lessen competition” or “tend to create a monopoly,” the department also looks at whether the merged firm’s market share is over 30% and, if so, the merger increases the HHI by 100 points or more.
HHI says U.S. trading is a highly competitive industry
We can also apply the HHI math to U.S. equity markets.
We show all the different participants over recent years as colors in the chart below.
We then make some conservative assumptions:
Adding all exchanges in the same group together.
Using a generous value for “Other Brokers,” which are aggregated in FINRA data.
Based on that, the industry has an HHI score of 874 in Q4 (chart below, black line). We also calculated the HHI for Q4 using recent firm-level data, which isn’t available historically, and got a score of 900. So, by either method, that makes the U.S. equity market not only highly fragmented, but also highly competitive.
In fact, for the last two years, the HHI has been in the Highly Competitive range or right on the threshold. In addition, no exchange group has a market share close to 30% (bars). So, the U.S. equity markets also look most like “Industry C” above.
Chart 2: The equity market is highly competitive and only getting more competitive over time
U.S. market is only getting even more competitive
Since 2020, three new exchanges have been established, and there are five more exchanges planning to start operations this year or early next year, along with four more ATSs. That pushes the total number of venues well over 50.
In reality, U.S. market economics actually support new venues over existing ones. So, it should be no surprise that the HHI score has been falling (chart above, black line). We estimate the industry’s HHI score was around 1350 at the start of 2019, right in the middle of the Moderately Competitive zone. Now it’s well into the Highly Competitive zone and heading lower.
In short, the U.S. market has been getting more competitive.
Balancing competition with fragmentation
So, while regulators sometimes question whether the market for trading services is competitive, the hard data shows it’s not just competitive, but highly competitive.
At some point, though, the question for regulators will become how to balance competition with fragmentation. Fragmentation adds to fixed costs for hardware, broker connections, exchange programmers and management. For investors, opportunity and search costs are higher. And not all venues care about capital formation for the newest growth companies.
That matters when you consider that the SEC’s mission includes maintaining “efficient markets,” too.
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Devcon has always been a living reflection of Ethereum’s growth, challenges, and community ambitions. It showcases the most pressing topics, the newest innovations, and the people building the future of decentralized technology. As Ethereum grows, so too does Devcon.
Two years ago, right before Devcon VI in Bogotรก, the Merge took Ethereum’s consensus from proof of work to proof of stake. Devcon VI focused not only on the achievement of this milestone, but also on the next innovations: early Layer-2 development, the introduction of Account Abstraction (AA), and the rise of zero knowledge proofs (ZKPs) as an expansion of Ethereum.
Fast forward to today, Devcon SEA celebrated the ecosystem’s readiness to take on the next big challenges. The content demonstrated how far Ethereum has come, how Ethereum’s L1 and L2s have advanced, how UX is improving, and how second-generation cryptographic primitives are enabling new types of applications. The tone has shifted from addressing foundational challenges to leveraging Ethereum for real-world impact.
In this blog post, we’ll explore how Ethereum has grown since Devcon VI, what the key outcomes of Devcon SEA are, which challenges remain, and how you can contribute so that we can celebrate the next chapter of Ethereum when we meet for Devcon again.
Looking back to Devcon VI: How far we have come
Setting the stage, let’s reflect on where we were just two years ago: Devcon VI was held in Bogotรก, Colombia, in October 2022. It brought the Ethereum community together to address key technical and governance challenges. At the time, the Merge had just happened, and the event reflected the celebration of this transformative milestone and focused on rising innovative technologies.
Devcon VI introduced major themes for the first time, and terms that many hadn’t been familiar with back then:
Zero Knowledge Proofs were introduced to much of the Ethereum ecosystem. They were just becoming practical and people started to understand their capabilities. There was no mention yet of other cryptographic primitives like Fully Homomorphic Encryption (FHE) or Multi-Party Computation (MPC).
Account Abstraction was new and just announced. Most people hadn’t heard of EIP-4337, which hadn’t been implemented at that time.
The Layer 2 ecosystem was in its early stages with only a few prominent L2s like Arbitrum and Optimism, and the L2-centric roadmap was kicked off.
Staking infrastructure was nascent and there were still uncertainties, with staking withdrawals not yet enabled.
Censorship resistance, while an old topic, was on everyone’s mind with discussions around OFAC compliance and Tornado Cash sanctions
Devcon SEA: Ethereum’s infrastructure is ready, now it’s time for impact
Devcon SEA was held in Bangkok, Thailand, in November of 2024. Attendance doubled compared to Devcon VI (12,500 vs 6,000 attendees), demonstrating Ethereum’s growth and community strength. One major goal of Devcon SEA was to bring the entire Ethereum ecosystem together in one place, foster collaboration, and cross-pollination, and realign the community to improve Ethereum for real use cases and impact on the world.
Since Devcon VI, the continued use of PoS plus other upgrades like Shanghai and Shapella have reduced energy use, gas fees, and improved UX. The L2 landscape has expanded, with total value locked in Ethereum L2 networks surpassing 51.5billion,a20516.6 billion in November 2023. Ethereum’s integration of ZKPs has advanced, and we now see more real-world use cases, with DeFi and stablecoins maturing, and gaming, digital identity, quadratic funding, and prediction markets emerging.
But over the past two years, the Ethereum community has also debated its direction and priorities. While Layer 2s are key for scaling, the rise of new L2s introduced diverse subcultures, sparking discussions about how to maintain unity. Many called for a return to Ethereum’s cypherpunk roots, focusing on privacy, decentralization, and credible neutrality – values that some felt were overshadowed by viewing Ethereum as a product rather than a protocol. There was a shared urgency to realign on a unified purpose.
Devcon SEA aimed to address these debates by inviting the best in the ecosystem to share their insights on the most relevant topics. Over 300 hours of content from ecosystem experts, 17 Community Hubs organized by the community, 70 Impact Spaces, and thousands of conversations in between sessions were held in the long hallways.
Devcon SEA sparked conversations about the most pressing challenges for Ethereum, controversies as well as achievements, and some big announcements were made too. Justin Drake outlined his vision of a Beam Chain, and the Argot Collective, which is a new organization embodying many of our shared values of Ethereum, introduced itself.
Read on to discover the major outcomes of Devcon SEA, and which talks you should watch to get up to speed if you want to contribute to the remaining challenges within the respective topics.
Ethereum has scaled and Layer 2s are net positive for Ethereum
Proto-danksharding, EIP-4844, blobs, and the roll-up centric roadmap – The scaling solutions highlighted at Devcon SEA showed how far Ethereum has come. Layer 2s, which are scaling Ethereum, see real adoption. Daily user activity has exploded in size, and the total value locked is growing steadily. We have low fees, and you can send 1, 100, or 1 million dollars for less than a cent. All L2s are and will be secured by the Ethereum L1 Mainnet, which is durable and secure with over 1 million validators and has never gone down since its launch in 2015.
There’s still much to do to realize the rollup-centric roadmap, reduce fragmentation, and increase security. Watch the below talks to figure out how to contribute to solving these challenges for Ethereum’s next chapter:
Ethereum is cypherpunk
Devcon SEA reminded us why we are here, and why we are building a decentralized future, focusing on values like credible neutrality, privacy, censorship resistance, open access, and a cooperative mindset. Devcon SEA had a full programming track dedicated to this philosophy, and the Hacktivism Hub, organized by the community.
Talks to watch to keep up with the cypherpunk manifesto:
Apart from cypherpunk values, philosophy and ethos played a big role at Devcon SEA. With Aya Miyaguchi, the executive director of the Ethereum Foundation, expanding on the philosophy of subtraction with her talk “Redefining boundaries in the infinite garden,” explaining how the Ethereum Foundation works, and a full programming day dedicated to d/acc (defensive acceleration), the philosophy first introduced by Vitalik Buterin, focusing on Ethereum as a defensive technology, accompanied by talks about biodefense, decentralized AI, neurotech, and public epistemics.
UX is getting ready for mass adoption
ERC 4337, ERC 7683, EIP 7702, ERC 3668 are just a few examples of how Ethereum is becoming ready for users. Gas fees are low, UX is improving, and Devcon SEA made us excited for Ethereum feeling like one chain again. The community organized the Account Abstraction and Adoption Hubs and many talks were focused on making Ethereum approachable to mainstream audiences.
Social recovery is just the start. Watch the below talks to learn how you can contribute to improving Ethereum’s UX, especially if you’re developing a rollup or a wallet, to get on speed with recent developments in UX and Account Abstraction:
The time for real-world applications is now
Ethereum is for users, and the app ecosystem has never been stronger than today, though still, we are just tapping into Ethereum’s possibilities for real-world applications. Ethereum is made for many things, and it’s a multi-purpose platform.
Ethereum is home to its most mature use cases: DeFi and stablecoins. DeFi is financial services and tools built on Ethereum that everyone in the world has access to and that give people greater control over their money. Ethereum has hundreds of teams working on DeFi protocols. Stablecoins, too, give every human the freedom to transact and send value anywhere in the world.
Ethereum is also where new use cases happen and new things are being invented, it is “where ideas enter production” (Josh Stark). We have decentralized social platforms, on-chain games, digital identity with ENS, Anon Adhaar, and zk passport, real-world infrastructure, quadratic funding with Gitcoin and clr.fund, and prediction markets like Polymarket.
If you were wondering what are the apps that are currently being built on Ethereum, or if you need inspiration to build more dapps, here are some talks to watch:
Economics of Ethereum and ETH
The discussions at Devcon SEA reaffirmed the non-speculative value of Ethereum and ETH in the digital economy, with its sound economic principles, robust incentives and alignment with long-term goals for decentralized ecosystems.
Talks to watch:
Second-generation cryptography enables new types of applications
Devcon SEA featured thousands of cryptographic plushy frogs, distributed by the 0xPARC team around the Frogcrypto Hub. Attendees collected frogs, and every time they scanned the QR code, they received a provable object data (POD). Each Devcon ticket was a POD inside of Zupass, an application that enables users to securely store and manage Proof-Carrying Data (PCD). These cryptographic principles have been theoretical for many years and are finally becoming possible, and combined with Ethereum, we are now able to build applications that were never possible before. While at Devcon VI only ZKPs were on everyone’s lips, as of very recent a new generation of cryptographic primitives like FHE and MPC are being used to create decentralized, privacy-preserving computation and interoperability, unlocking innovative and complex use cases for Ethereum-based consumer applications.
We are only now realizing how much is possible with second-generation cryptographic primitives and possibilities are extending our imagination. We need more people building and combining ZKPs, second-gen crypto and Ethereum. If you want to do that, watch:
Ethereum is frontier tech
Devcon SEA was also a platform for interdisciplinary collaboration, where Ethereum was discussed alongside other frontier technologies and in the context of the future of our society.
These sessions highlighted Ethereum’s ability to inspire and integrate with broader technological and societal challenges:
The Ethereum community is strong and global
The Ethereum community is not only growing, it is expanding globally: At Devcon SEA, we welcomed 12,500 attendees with 60% experiencing their first-ever Devcon. Participants represented 135 countries, making this the most global and diverse Devcon to date.
The Ethereum community is not only diverse in nationalities and ethnicities – the interests, identities, and focus areas are manifold with developers, protocol researchers, stakers, degens, regens, activists, artists, educators, and many more being part of the Ethereum community.
Devcon SEA featured 17 Community Hubs, from the DeSci Hub, Global Majority Hub, and Onchain Creators Hub, to the Governance Geeks Hub, these were manifestations of the diversity and ways to get involved in the Ethereum community. The Community Gardeners Hub focused on Ethereum community builders from all around the world. In 2024, 73 local Ethereum events in 44 countries were organized around the globe. Our community is decentralized and global, as Ethereum itself.
Now is your chance to shape the future of Ethereum ahead to Devcon 8
Devcon SEA was not just a snapshot of where Ethereum stands today, it offers a vision of where it could go tomorrow. Devcon SEA showed how Ethereum is bringing ideas into action, and every participant carries the lessons learned at Devcon to continue spreading the word and advancing Ethereum’s mission. And who knows, the next person to impact the future of Ethereum may have first learned about it at Devcon SEA.
Devcon SEA photos and resources
Find photos from Devcon SEA here.
You can search and watch all talks in the Devcon Passport app.
DEVAi is available to answer all Devcon-related questions, and will soon have access to all talk transcripts. You can already get summaries of all talks in the Passport app.
Want to share more insights about Devcon talks? Go to the Devcon Collab Portal.
What’s next?
Tl;dr:
Devconnect 2025
Devcon 2026
Devconnect is the other, completely different event that the Ethereum Foundation organizes. While Devcon is the large event that brings everyone together in one venue, Devconnect is more decentralized. Devconnect comprises many different events, focused on different Ethereum topics, organized by experts in those fields. Devconnect is the time to go deep into the topic you’re most familiar with or want to become an expert in, and join day-long events focused on that domain.
Where will Devconnect 2025 and Devcon 8 take place? You will need to wait just a little bit longer to find that out, and in the meantime, you can create your proposal for Devcon, Devconnect, or other Ethereum events to take place in your city.
Until next time, xoxo
Deva the Devcon Unicorn & the Devcon team
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