Ethereum Faces Modexp Inefficiency and $135M ETF Outflows, Risking Lower Support Levels

• Vitalik Buterin highlights modexp precompile as a barrier to Ethereum’s ZK-proof advancements, delaying key scaling features.

• Institutions contributed to net outflows of $135.7 million from ETH ETFs, with BlackRock accounting for $81.7 million.

• ETH price has dropped below key support levels, trading near $3,480, with indicators like RSI and OBV signaling weakening momentum and declining volume.

Ethereum modexp inefficiency and ETF outflows create dual pressures on ETH price. Discover the technical impacts and institutional shifts in this analysis—stay informed on crypto market dynamics today.

What is the modexp inefficiency affecting Ethereum?

Ethereum modexp inefficiency refers to limitations in the network’s modexp precompile, a built-in function for modular exponentiation that is crucial for cryptographic operations, particularly in zero-knowledge proofs essential for scaling solutions. Ethereum co-founder Vitalik Buterin recently acknowledged on the social media platform X that this precompile is hindering the efficiency of ZK-proofs, a technology poised to enable Ethereum’s next major scaling upgrade. This issue arises because the modexp implementation does not perform optimally, leading to higher computational costs and slower processing times for proofs that rely on it.

How do these technical challenges influence Ethereum’s development?

The modexp inefficiency has sparked discussions within the Ethereum community about resource allocation in development efforts. Developers and users emphasize that addressing this core issue should take precedence over minor optimizations in less critical areas. For instance, one community member noted in responses to Buterin’s post that the opportunity cost of focusing on obscure opcodes is substantial when compared to enhancing foundational scalability layers. If unresolved, this bottleneck could delay the rollout of advanced features like faster ZK-rollups, which are designed to increase transaction throughput without compromising security.

Ethereum’s roadmap, as outlined by the Ethereum Foundation, prioritizes improvements in proof systems to handle growing demands from decentralized applications. Historical data from Ethereum’s upgrades, such as the Dencun hard fork earlier in 2025, demonstrate how resolving similar inefficiencies has previously boosted network performance by up to 10 times in certain metrics. Expert analyses from blockchain researchers, including those affiliated with the Ethereum Foundation, underscore that efficient ZK-proofs are vital for maintaining Ethereum’s competitiveness against layer-2 solutions and rival blockchains. Without timely fixes, the network risks prolonged congestion during peak usage, potentially eroding user confidence and adoption rates. Community feedback, gathered from forums and social channels, consistently highlights the need for targeted engineering resources to mitigate these precompile shortcomings, ensuring that Ethereum’s proof verification remains both secure and cost-effective.

To illustrate the broader implications, consider Ethereum’s on-chain activity: Daily active addresses have hovered around 400,000 in recent weeks, according to data from Dune Analytics, yet gas fees for ZK-related transactions remain elevated due to these inefficiencies. Addressing modexp would not only streamline operations but also support the integration of privacy-focused protocols, a growing segment in the decentralized finance ecosystem. As Ethereum evolves, such technical refinements are essential for sustaining its position as the leading smart contract platform.

Frequently Asked Questions

What caused the recent $135.7 million outflows from Ethereum ETFs?

The outflows from Ethereum ETFs, totaling $135.7 million in a single day, were driven by institutional investors reducing their exposure amid market volatility and technical concerns. BlackRock’s iShares Ethereum Trust saw $81.7 million in net redemptions, reflecting a broader trend where large allocators reassess positions following ETH’s price correction. This marks one of the largest single-day withdrawals since the ETFs launched in 2024, based on reports from financial tracking platforms like Farside Investors.

Will Ethereum’s price continue to decline due to modexp issues and ETF flows?

Ethereum’s price movements are influenced by multiple factors, including technical developments like the modexp inefficiency and capital flows from ETFs. Currently trading near $3,480 after a two-day sell-off, ETH has broken below short-term support levels. If institutional demand does not rebound, further downside toward $3,300 to $3,350 could occur, though historical patterns show recoveries following similar corrections when network upgrades progress.

Key Takeaways

• Modexp precompile bottleneck: Vitalik Buterin’s acknowledgment reveals how this inefficiency slows ZK-proof processing, potentially delaying Ethereum’s scaling roadmap and impacting long-term network performance.
• Institutional outflows intensify pressure: With $135.7 million in ETH ETF redemptions, including $81.7 million from BlackRock, reduced capital inflows exacerbate the recent price drop and signal waning short-term investor confidence.
• Monitor momentum indicators: ETH’s RSI indicates weak but not oversold conditions, while declining OBV points to ongoing volume outflows—watch for demand signals to assess potential retests of lower support levels.

Conclusion

Ethereum’s modexp inefficiency and the accompanying ETF outflows of $135.7 million highlight intertwined technical and market challenges that could shape ETH’s trajectory in the coming weeks. As the community rallies to address these precompile limitations, institutional sentiment remains a key variable in price stabilization. Looking ahead, progress on ZK-proof enhancements and renewed investor interest may pave the way for Ethereum’s resilience, underscoring the importance of ongoing innovation in the cryptocurrency landscape—investors should track development updates closely for informed decision-making.

Is Ethereum facing both technical stress and institutional risk?

Modexp inefficiency and $135.7M ETF outflows mean Ethereum is getting hit from both sides.

Ethereum [ETH] is facing a double hit this week, and the timing could not be worse. Co-founder Vitalik Buterin admitted in a post on X that the current modexp precompile is hurting ZK-proof efficiency. He added that it’s slowing down a feature that is meant to drive ETH’s next big scaling upgrade.

Source: X

At the same time, institutions are quietly walking out the door – ETH ETFs saw $135.7M in net outflows, with BlackRock alone unloading $81.7M. If both the tech layer and the capital layer turn against ETH in the same week, is the floor about to give way?

A problem that is impossible to ignore

The community response was simple – This is a waste of engineering time, and fixing modexp matters more than squeezing tiny efficiency gains elsewhere.

As one user put it,

“Makes sense. The opportunity cost of optimizing obscure opcodes is huge compared to improving core scalability layers.”

This matters because if ZK-proving stays slow, ETH scaling stalls.

And, that risk is suddenly front and center.

To make matters worse…

Yesterday alone, ETH ETFs saw $135.7 million in outflows, with BlackRock dumping $81.7 million on its own. That’s institutional capital actively reducing exposure.

Source: X

And, the scale matters here – This is one of ETH’s sharpest single-day outflow clusters since launch. If big allocators continue to pull liquidity at this pace, Ethereum will struggle to find a floor.

This turns the modexp debate into a capital flight problem.

ETH breaks below key structure

At press time, Ethereum’s price was trading near $3,480 after a heavy two-day sell-off candle cluster that erased most of last week’s bounce.

The RSI suggested that momentum has been weak, but not yet fully oversold. The OBV continued to slide lower too. So, volume has been flowing out, not in.

Source: TradingView

Structurally, this means ETH has failed to defend its short-term support.

Unless demand returns quickly, there’s a clear risk of a deeper fall (potentially toward the $3.3K-$3.35K pocket), before any real upside attempt could form.

Could ETH retest lower levels if this continues?

If demand doesn’t return fast, $3.3K-$3.35K will become a realistic downside target.