I would say both.

A subset of the EU needs to go federal, with the remainder staying in a toned down version of the EU.

The EU will end up being a soviet style bureaucracy working actively against sovereign countries. The EU will break up eventually. Such organizations have never survived long in the history of mankind.

Can you elaborate on this? State federations are nothing new. US and Germany come to mind as particular successes of this.

It has worked for the US and China so far ...

I hope not for this future, we don't need a bigger leviathan which is disconnected from local population.

I'm afraid EU is a necessary evil. Local population delegated some powers to nation states, otherwise the would cease to exist. How are you gonna stand up to China, India or US in the future?

I think you misunderstood OP's comment

The definition of federal: "Of or constituting a form of government in which power is distributed between a central authority and a number of constituent territorial units"

OP is suggesting a more decentralized EU, not a "bigger leviathan"

You mean like the US government?

Do you think the national governments are more connected to the local population? I'm sure the Polish and Hungarian population think that

"Boo EU bad" has become a meme already. Yawn

The European Parliament, because of its pure-proportional electoral system, is arguably more connected with the population than most national governments.

The UK is the extreme example of this: for a decade, their EP contingent has had a massive number of euroskeptic politicians who never managed to win more than a single seat in the British Parliament. Brexit proved that Strasbourg was actually more representative than Westminster.