Comprehensive assessments of functional diversity are needed to understand ecosystem alterations under global changes. The ‘Fun-eDNA’ approach characterises functional diversity by assigning traits to taxonomic units obtained through environmental DNA (eDNA) sampling. By simultaneously analysing an unprecedented number of taxa over broad spatial scales, the approach provides a whole-ecosystem perspective of functional diversity. Fun-eDNA is increasingly used to tackle multiple questions, but aligning eDNA with traits poses several conceptual and technical challenges. Enhancing trait databases, improving the annotation of eDNA-based taxonomic inventories, interdisciplinary collaboration, and conceptual harmonisation of traits are key steps to achieve a comprehensive assessment of diverse taxa. Overcoming these challenges can unlock the full potential of eDNA in leveraging measures of ecosystem functions from multi-taxa assessments.