Ethereum Governance Evolves as Vitalik Buterin's Influence Wanes

As reported by Biji.com, Ethereum's governance landscape has undergone significant changes over the past two years, marked by a surge in institutional adoption and a redefinition of decentralization. With major financial institutions such as BlackRock, Deutsche Bank, and Sony deepening their integration with Ethereum and its Layer 2 (L2) solutions, the network's role as a backbone for tokenizing real-world assets (RWA) and stablecoin settlements has solidified. However, this institutional recognition has sparked a debate: is Ethereum becoming a Wall Street asset or a decentralized public good? Institutional adoption has proven to be a double-edged sword. Over $5 billion in tokenized RWA is currently deployed on the network, representing 53% of the total market share. Stablecoin transaction volume has reached $67 billion, with $35 billion in USDC. These figures highlight Ethereum's dominance in digital dollar settlements and its appeal to institutions seeking scalable, secure tokenized financial infrastructure. Yet, this growth has coincided with a 56.39% decline in the ETH/BTC exchange rate over the past year, raising concerns about structural challenges, including competition from Solana and Tron, which have outpaced Ethereum in monetizing their institutional user base. The adoption of ERC-3643 by the Depository Trust & Clearing Corporation (DTCC) and the U.S. Securities and Exchange Commission's (SEC) involvement with the ERC-3643 Association by July 2025 further indicate Ethereum's shift toward compliance. While these developments reflect institutional confidence, critics argue they may undermine Ethereum's decentralized governance model. As noted by pcaversaccio of Seal 911, the influence of traditional finance (TradFi) could transform compliance from a constraint into a defining feature, altering Ethereum's core identity. Vitalik Buterin, Ethereum's co-founder, has seen his influence in governance shift from that of a visionary architect to a cautious steward. From 2023 to 2025, Buterin has advocated for the concept of 'staleness'—locking Ethereum's underlying layers to prioritize stability over continuous innovation. His support for ZKsync's Atlas upgrade in 2025, which introduced 15,000 TPS processing capacity and near-instant finality, exemplifies this shift. By guiding institutional adoption of zero-knowledge-based L2 solutions, Buterin has positioned Ethereum as a platform that balances scalability and privacy without compromising its foundational integrity. However, this strategy coincides with a decline in Buterin's direct governance influence. By 2025, Ethereum's governance model has become increasingly community-driven, with 62% of adopted Ethereum Improvement Proposals (EIPs) coming from non-core developers. Buterin's advocacy for 'governance minimalism'—limiting protocol decisions to necessary coordination issues—has had a tangible impact. Despite aligning with Ethereum's long-term vision, this shift has raised concerns about centralization. Core developers like Péter Szilágyi have warned that decision-making power remains concentrated among a few entities, undermining the network's decentralization. The term 'Wall Street-ization' aptly captures the tension between Ethereum's institutional growth and its decentralized roots. On one hand, institutions bring capital, infrastructure, and regulatory legitimacy; on the other, their priorities—such as compliance and fee revenue—may overshadow Ethereum's open-access and censorship-resistant ethos. This tension is evident in Ethereum's L2 ecosystem. While ZKsync's success has attracted institutional capital, the fragmented L2 landscape is eroding Ethereum's base layer transaction fee revenue. Similarly, the Ethereum Foundation's $100 billion security plan has drawn criticism for prioritizing institutional needs over community-driven innovation. DeFi pioneers like Andre Cronje have criticized the foundation for undervaluing long-term contributors and lacking transparency. Recent reports indicate that the foundation's priorities have raised concerns about long-term sustainability. However, Ethereum's governance adjustments—such as EIP-7732 (proposer-builder separation) and zkEVM integration—demonstrate its commitment to balancing compliance and decentralization. These upgrades enhance resistance to censorship and privacy while meeting institutional demands without compromising Ethereum's core principles. In conclusion, Ethereum stands at a crossroads. While widespread institutional adoption has driven unprecedented growth in RWA and stablecoin settlements, the network must navigate the risks of centralization and diminished governance power. Vitalik Buterin's declining direct influence reflects a maturing ecosystem where community-driven governance and market forces play increasingly prominent roles. Yet, the 'Wall Street-ization' narrative persists, as institutional influence on Ethereum's development trajectory continues to grow. For investors, the key lies in whether Ethereum can harmonize institutional demands with its decentralized ethos. If the Ethereum network can meet enterprise-grade scalability needs while maintaining security, privacy, and composability, it may avoid becoming a Wall Street asset. The coming months will test whether Ethereum's governance mechanisms can uphold its founding principles in an era of rapid institutional adoption.