Author: Pavel Paramonov
Translated by Jiahuan, ChainCatcher
This article was mainly inspired by Vitalik's recent tweets about change and the current state of the market. Although the entire market is declining, it's difficult to blame any one specific person, and I'm not here to point fingers either.
I write these words as someone who has collaborated with many Ethereum teams, represented a venture capital fund in investing in multiple protocols built on Ethereum, and is, overall, a huge fan of Ethereum and EVM-related things.
Unfortunately, I can no longer say the same, as I feel Ethereum doesn't know where it is headed (and many others share this sentiment).
I don't want to discuss the price trends of ETH, but I can't ignore the fact that, as the second-largest cryptocurrency globally, its performance remains remarkably unstable. No matter what direction the global markets take, ETH's behavior is more like that of a de-pegged stablecoin.
This article aims to explore what has happened to Ethereum in recent years, and why many people are losing hope—or have already lost hope. Ethereum is not losing to Solana or anything else; Ethereum is losing to itself.
Rollup-Centric Roadmap
When Ethereum introduced its rollup-centric roadmap, almost everyone was excited. The promise was that rollups (and validiums) would enable scaling, so that users' transactions would take place on rollups. Meanwhile, Ethereum would serve as a verification layer, focusing first on being an L1 for rollups rather than an L1 for users.
Developing a Rollup is much faster and cheaper than developing an L1, so the future of thousands of Rollups looks very likely and optimistic. What could possibly go wrong?
It turned out that everything could go wrong. Endless debates, prioritizing ideology over practical needs, constant infighting within the community, identity crises, and clinging too long to a rollup-centric vision.
Everything that could possibly go wrong has gone wrong. Most members of the community once viewed Max Resnick as an absolutely incompetent villain, only to later discover that he was right about almost everything. During his time at ConsenSys, Max made numerous statements about what Ethereum needed to do in order to move forward, but faced criticism and received little support.
The peak of foolishness is when the entire industry starts discussing whether a certain L2 is actually Ethereum. For example:
Viewpoint A: "Base is an extension of Ethereum, and we have made significant contributions to the Ethereum ecosystem."
Viewpoint B: "Base is not an extension of Ethereum; it is an independent entity."
What exactly are we even discussing? How can such a conversation contribute to a better future for Ethereum and its ecosystem? Why do people take it so seriously to argue about what is or isn't Ethereum? Aren't the problems we need to solve far more important?
If we consider Rollups an extension of Ethereum because they use ETH for gas fees, we are on the right track. If we consider Rollups not an extension of Ethereum but rather applications that benefit from Ethereum, we are also on the right track.
Is that right? Absolutely not.
This kind of ideological discussion is not actually a discussion, but rather a confrontation between two self-referential circles, each trying to prove that they are right. We don't need PvP (player versus player); we need PvE (player versus environment). We need to understand that this is not about us fighting each other, but about uniting to confront the problems and the future. Unfortunately, many people prefer the mental stimulation of conflict and are even unwilling to consider that their views might be wrong.
Technological ideology prevails over user needs.
Based rollups, booster rollups, native rollups, gigagas rollups, keystore rollups.
- Which one is better, what will the future be like, and how will they be connected?
- "This type is the future," "No, that type is the future."
- "There is no reason not to develop based rollups."
- "Native rollups will take over the ecosystem because they have Ethereum orthodoxy."
All these discussions... in the end, it was just Arbitrum and Base that continued to dominate.
Technical advantages can bring many benefits to participants, but only if you're not comparing apples to pears or oranges to tangerines. They are too similar for users to care. Outside of the bubble, no one really cares. Worrying about having one more or one fewer precompiled feature won't help you win this war.
"Oh, actually, we have Ethereum orthodoxy, we have advantages, we are very close to Ethereum and reflect its core values, users will choose us."
What are your core values? And what kind of users would choose your product?
@0xFacet Became the first Stage 2 Rollup, which define Ethereum's orthodoxy. Where are they? Where are their users, developers, technical KOLs, and supporters of the Ethereum ecosystem and orthodoxy?
Where are those people? How many of you have heard of Facet? How many applications are available on Facet? Personally, I have no opinion about Facet. I've had multiple conversations with the founder, and I respect him—he's a great person. But where are those people who say we need more second-layer rollups? I don't know, and neither do you.
Economic incentives are far stronger than technological incentives.
I'm a huge fan of Taiko, especially their research on based rollups. There are many benefits: stronger censorship resistance, neutrality, no sequencer downtime risk, and L1 validators earn more money. Where are the pitfalls?
The trap lies in the financial situation behind the model. You can't force people to give up income just for the sake of "orthodoxy."
Arbitrum has promised a decentralized sequencer. Scroll has promised a decentralized sequencer. Linea, zkSync, and Optimism have all promised decentralized sequencers. Where are they? Where are those sequencers?
Each Rollup team's documentation includes a line: "We currently have a centralized sequencer, but we strongly intend to decentralize it in the future." Almost none of them have actually followed through. Metis did, but fortunately or unfortunately, people don't really care about Metis.
Do I think they are intentionally overpromising just to appease influential ETH maximalists? Yes. Do I think they genuinely want to decentralize their sequencer? Also yes, but even if they do, it wouldn't make sense for them.
Coinbase (Base) has a legal obligation to make as much profit as possible to provide value for the company. Other teams do the same, so why would they want to suppress your income source? That makes no sense. Only about 5% of Base's revenue flows to Ethereum. Rollups have never been an extension of Ethereum.
There was a time when Taiko paid more in ordering fees to Ethereum than it earned in revenue from user transaction fees. Moreover, companies like Taiko obviously have many other expenses beyond just paying fees to Ethereum.
Only when teams are willing to forgo revenue can visions like Base rollups or any "Ethereum orthodoxy" rollup become possible. I don't underestimate the importance of decentralization, security, and permissionlessness. But when your sole goal is ideological correctness rather than being user-centric, all of these become meaningless.
Unsurprisingly, this weakness and commitment to Ethereum orthodoxy have brought speculators into the space.
Consequences of a Rollup-Centric Roadmap
Eclipse, Movement, Blast, Gasp (Mangata), Mantra: these protocols were never intended to be built for the long-term future. It's really easy to hide behind masks such as Ethereum orthodoxy, making Ethereum better, bringing SVM into Ethereum, etc.
They have all, to some extent, crashed. All the rollups have realized that their tokens are almost useless because they pay fees in ETH, leaving their own tokens with little to no utility.
Speculators have realized that they can generate a lot of hype around a rollup-centric narrative and profit by selling valueless tokens to retail investors.
Ethereum has never acknowledged Polygon as a true L2, despite its significant role in locking more value into ETH. If you believe that rollups are an "cultural" extension of Ethereum, why not recognize something that is closely tied to Ethereum's security and usage?
Polygon was very significant for Ethereum during the 2021 bull market and made a major contribution to the growth of ETH as an asset. However, yes, it is not an L2 and does not deserve praise from the Ethereum community. If Polygon were an L1, its valuation would be much higher.
Even Paradigm, arguably one of the best venture capital firms in the crypto space and one of the biggest contributors to the Ethereum ecosystem—so much so that they even developed their own L2 (Ithaca)—has now turned to developing an L1 (Tempo) alongside Stripe. I think when your most loyal supporters leave you and join the ranks of your competitors, it means you're definitely having a major problem.
The Ethereum Foundation has no direction.
Although Ethereum is technically decentralized, culturally it is centralized around Vitalik. Ethereum's inner circle is a real thing. As people say, to succeed, all you need to do is gain the attention of those close to Vitalik and a few influential venture capitalists.
I'm not saying you have to agree with everything Vitalik says, but his views essentially define what is good or bad for Ethereum, and you can't really argue against them.
First, it is a highly deflationary currency. With EIP-1559 and the Merge, ETH's economic model became deflationary, making it a better store of value than Bitcoin. However, in 2024, ETH's annual inflation rate turned positive.
So the vision of "ultrasound money" only lasted 3 years? That means it couldn't serve as a store of value. This narrative is dead, and it was never true to begin with, because ETH was never designed to be a store of value. That's Bitcoin's purpose, and you can't compete with it.
Then Ethereum cannot determine whether its token is a commodity (not applicable, due to dynamic supply changes and staking mechanisms) or more like a tech stock (not applicable, as there is insufficient revenue to value Ethereum like a tech company).
Others argue that ETH is not money at all. What's going on? We need to take sides. Ethereum cannot be multiple things at once—you either have a globally aligned direction or you fall behind.
More on Economic Incentives...
I still can't imagine a lead engineer like Péter Szilágyi, who contributed to Ethereum, earning only about $100,000 per year. This person, who was there from the beginning and helped Ethereum grow from almost nothing to a $450 billion market cap, only received 0.0001% of that market cap.
The most influential and successful protocols in the history of cryptography (second only to Bitcoin) have provided no incentives or equity. This is easily justified by hiding behind the decentralized, open-source, and permissionless spirit: "We're not here to make money; we're here to move forward."
But you must motivate even your most loyal soldiers, or else they will leave or take private jobs. Péter left, Danny Ryan left, and Dankrad Feist went directly to Tempo.
Justin Drake and Dankrad accepted advisory positions at EigenLayer in 2024 and received token allocations as a result, which led the community to begin hating them over the matter.
Poor souls working at EF with meager salaries (compared to FAANG companies and AI research labs), yet they are hated for earning money and helping an independent protocol that isn't Ethereum, but wants to make Ethereum better.
Are you guys stupid? Sometimes I feel like if you work honestly and hard on Ethereum, you're not even allowed to make money, you're just expected to be a slave in order to get "recognition" from Ethereum. The Ethereum Foundation frequently sells ETH to fund various operations, initiatives, and research. But maybe you should pay your researchers first?
Refusing to adapt and change
Day one. Ethereum will win. The most decentralized blockchain with the highest uptime.
We hear this every day, just like the excuses we hear every day from Ethereum.
Yes, Ethereum is expensive and slow. But we have rollups. With rollups, rollups are Ethereum! Yes, ETH's price lags behind everything. But Ethereum has the largest developer ecosystem, and we have a solid foundation; the demand will follow.
Ethereum is the blockchain with the highest level of decentralization! Solana is terrible; they lack client diversity. Ethereum has 100% uptime! Solana is terrible; it has experienced multiple outages.
Ethereum's network activity is lower than Solana's. Well, that's because Solana's activity comes from spam and meme coin gamblers. We are an ethical chain!
Same excuses, same responses, the same reactions over the past few years. Everything other than Ethereum and Rollups is garbage. If Ethereum performs poorly on any metric, we say it's Day 1, we know what we're doing, and there's no better place than Ethereum.
Everyone is tired of the community's repeated excuses. Ethereum feels like a wealthy old lady who refuses any innovation even when struggling, yet keeps giving money to the parasitic kids and grandchildren clinging to her.
Late Reform
Just a few hours ago, as I was about to finish this article, Vitalik tweeted that the rollup-centric roadmap is a failure and that they need to explore different paths and scale L1.
You know, I'm glad when people realize their mistakes; it takes courage to voice this loudly. But I think it might be too late. Ethereum has once again found the path it needs to take in the long run, but progress is still slow.
EF has recently undergone some changes: new leadership, treasury transparency, R&D restructuring, and many other things. EF has started to recruit young talents in developer relations and marketing, such as Abbas Khan, Binji, Lou3e, and others.
But the change needs to happen quickly. Ethereum must sprint to prove that everyone is wrong.
Let's see, after these reforms and changes in EF, whether we can see Ethereum become an exciting project rather than one of blind delusion and disappointment.