Ethereum appears like a frail, aged heiress who rejects all innovation whereas doling out cash to the descendants parasitically clinging to her.
Creator: Pavel Paramonov
Compiled by: TechFlow
TechFlow Editorial Observe: Ethereum is present process a profound id disaster. Veteran crypto researcher Pavel Paramonov points a piercing problem on this piece: Why is this former market chief regularly losing its enchantment? From the a lot-criticized “rollup-centric” roadmap—accused of overpromising—to infinite ideological debates inside the neighborhood, and from core expertise attrition to an absence of significant incentives, Ethereum seems trapped in a cycle of “being right for correctness’ sake.” This text confronts Ethereum’s development stagnation beneath its veneer of technical superiority, dissecting why even a visionary chief like Vitalik can’t masks the ecosystem’s fatigue. On this fiercely aggressive panorama, will Ethereum rise from the ashes—or, as the creator suggests, devolve right into a stagnant “previous wealthy auntie” resistant to innovation?
Full Textual content Beneath:
This essay was impressed primarily by Vitalik’s current reflections on the present market state and its evolution. Whereas the complete market is at the moment declining, it’s tough to blame any single particular person—and I’m definitely not right here to assign blame.
My function right here is that of somebody who has collaborated with a number of Ethereum groups, represented enterprise capital funds investing in quite a few protocols constructed on Ethereum, and, total, been a die-arduous fan of Ethereum and every little thing EVM-associated.
Sadly, I can now not say the similar. I really feel Ethereum has misplaced its sense of path (a sentiment shared by many).
I received’t dwell on ETH’s price trajectory—however I can’t ignore the indisputable fact that the world’s second-largest cryptocurrency behaves with excessive volatility. No matter broader market situations, ETH’s efficiency more and more resembles that of a de-pegging stablecoin.
This essay explores what has occurred to Ethereum over the previous few years—and why many are losing hope, or have already given up completely. Ethereum isn’t losing to Solana or different opponents; Ethereum is losing to itself.
The Rollup-Centric Roadmap
When Ethereum launched its “rollup-centric” roadmap, almost everybody was excited. The promise was clear: rollups (and validiums) would remedy scalability, finish-person transactions would occur on rollups, and Ethereum would function the verification layer—in different phrases, it might give attention to being the L1 for rollups moderately than straight serving customers.
Constructing rollups is considerably sooner and cheaper than constructing an L1, so the imaginative and prescient of “1000’s of rollups” appeared each possible and optimistic.
So the place did issues go flawed?
It seems, every little thing went flawed: infinite debates, prioritizing ideology over sensible wants, infighting inside the neighborhood, id crises, and abandoning the “rollup-centric” imaginative and prescient far too late.
Each doable failure level failed. A lot of the neighborhood as soon as considered Max Resnick as completely incompetent and malicious—only to later uncover he was virtually completely proper.
Whereas at Consensys, Max made quite a few public statements about what Ethereum wanted to do to progress—however confronted close to-common criticism and nearly no help.
The height of absurdity arrived when the complete trade started debating whether or not a given L2 “counts as Ethereum”—for instance:
- View A: “Base is an extension of Ethereum—we’re making large contributions to the Ethereum ecosystem.”
- View B: “Base is not an extension of Ethereum—it’s unbiased.”
What on earth are we even discussing?
How does this sort of dialogue foster a greater future for Ethereum and its ecosystem? Why do individuals battle endlessly over “what counts as Ethereum and what doesn’t”? Don’t we now have extra pressing issues to remedy?
If we outline rollups as Ethereum extensions as a result of they use ETH for gasoline, we’re on the proper monitor. If as a substitute we outline them as purposes benefiting from Ethereum—not extensions—we’re additionally on the proper monitor.
Proper? Completely not.
This ideological debate isn’t actually a debate in any respect—it’s a contest between two “circlejerks,” every making an attempt to show they’re proper. We don’t want PvP (participant versus participant); we want PvE (participant versus surroundings). We should acknowledge this isn’t a battle amongst ourselves—it’s our shared confrontation with actual issues and our collective future.
Sadly, many would moderately take pleasure in mental self-gratification than take into account their very own views is perhaps flawed.
Technical Superiority Past Consumer Wants
Based mostly rollups, booster rollups, native rollups, GigaGas rollups, keystore rollups.
- Which is higher? What’s the future? How will they interconnect?
- “This sort is the future.” “No—the different sort is the future.”
- “There’s no motive not to construct based mostly rollups.”
- “Native rollups will dominate the ecosystem as a result of they’re Ethereum-aligned.”
All these discussions… but Arbitrum and Base proceed sweeping the market.
Technical benefits do confer advantages—however only for those who’re evaluating apples to apples, not apples to pears or oranges to tangerines. They’re too comparable for customers to care about the distinction. Outdoors this bubble, no person cares. One further precompile or one fewer precompile—you received’t win on that.
“Oh, we’re truly ‘Ethereum-aligned,’ so we now have a bonus—we’re deeply related to Ethereum and embody its core values, so customers will select us.”
I ask: Which values? And which customers?
@0xFacet turned the first Stage 2 rollup—they usually’re virtually the textbook definition of “Ethereum-alignment.”
So the place are they? The place are their customers, builders, technical KOLs, and supporters of Ethereum’s ecosystem and alignment? The place did these individuals go? What number of of you have got even heard of Side? What number of usable apps exist on Side?
I maintain no private bias in opposition to Side. I’ve spoken with its founder many instances—I respect him deeply. He’s an excellent particular person. However the place have all these individuals gone who used to loudly insist we would have liked extra “Stage 2 rollups”? I don’t know—and neither do you.
Financial incentives vastly outweigh technical incentives. I used to be as soon as a faithful fan of Taiko—particularly its analysis on based mostly rollups. This mannequin provides many advantages: stronger censorship resistance, neutrality, no sequencer downtime threat, and better earnings for L1 validators.
So the place’s the catch?
The catch lies in the monetary logic underpinning the mannequin. You possibly can’t pressure individuals to sacrifice revenue for the sake of “alignment.”
Arbitrum promised sequencer decentralization. Scroll promised it. So did Linea, zkSync, and Optimism. But the place are these decentralized sequencers?
Each rollup crew’s documentation comprises this line: “We at the moment function a centralized sequencer, however we strongly intend to decentralize it in the future.” Virtually none have delivered. Metis did—however fortuitously or sadly, no person cares about Metis.
- Do I believe they overpromised to curry favor with influential “ETH Maximalists”? Sure.
- Do I believe they genuinely need sequencer decentralization? Sure—nevertheless it makes no strategic sense for them.
Coinbase (Base) has a authorized obligation to maximize revenue and create worth for the firm. Different groups face comparable pressures. Why would you intentionally kill your personal income stream? It makes zero logical sense.
Only about 5% of Base’s income flows again to Ethereum. Rollups have been by no means Ethereum extensions.
Taiko as soon as paid Ethereum extra for sequencing than it collected from person transaction charges. Clearly, Taiko and others face quite a few extra prices past paying Ethereum. Only groups keen to forgo income can notice the imaginative and prescient of based mostly rollups—or any “Ethereum-aligned” rollup.
I’m not downplaying the significance of decentralization, safety, or permissionlessness. However when your sole goal is ideological correctness—not person-centricity—every little thing turns into meaningless.
Unsurprisingly, this weak point—and the promise of “Ethereum-alignment”—has attracted grifters into the area.
Penalties of the Rollup-Centric Strategy
Eclipse, Motion, Blast, Gasp (Mangata), Mantra: None of those protocols have been constructed for lengthy-time period viability. Hiding behind masks like “Ethereum-alignment,” “making Ethereum higher,” or “bringing SVM to Ethereum” has confirmed far too simple.
All of them “rug-pulled” in a method or one other. All rollups realized their tokens have been almost ineffective—missing utility—as a result of customers pay charges in ETH. Grifters realized they might generate large hype round the “rollup-centric” narrative, then revenue by dumping nugatory tokens onto retail buyers.
Ethereum has by no means acknowledged Polygon as a real L2—though Polygon performed a vital function in locking up ETH worth. When you consider rollups are “cultural” extensions of Ethereum, why not acknowledge one thing tightly built-in with Ethereum’s safety and utilization?
Polygon was very important to Ethereum throughout the 2021 bull run, massively contributing to ETH’s development as an asset. But sure—it’s not an L2, and it doesn’t deserve recognition from the Ethereum neighborhood. Had Polygon been an L1, its valuation could be considerably greater.
@ri5hitripathi tweeted: Ethereum Basis (EF) ecosystem insiders labeled Polygon a sidechain as a result of it prioritized scalability over L2 semantics and appeasing the Ethereum neighborhood. Seven years later, we see “Polygon was proper all alongside.”
Even Paradigm—arguably the high crypto VC most dedicated to Ethereum’s ecosystem, having even developed its personal L2 (Ithaca)—has pivoted to co-growing an L1 (Tempo) with Stripe.
I consider when even your most loyal believers defect to construct your opponents, you’ve clearly executed one thing flawed.
The Ethereum Basis Has No Course
Although technically decentralized, Ethereum is culturally extremely centralized round Vitalik. An “internal-circle tradition” genuinely exists—as extensively noticed, success (nevertheless outlined) hinges largely on gaining consideration from Vitalik’s internal circle and endorsement from a handful of extremely influential VCs.
I’m not saying you have to agree with every little thing Vitalik says—however his views basically outline what’s “good” or “dangerous” for Ethereum, and also you merely can’t oppose them.
Initially, the narrative was “Ultrasound Cash.” Via EIP-1559 and The Merge, ETH’s financial mannequin turned deflationary—positioning it as superior to Bitcoin for worth storage. But by 2024, ETH’s annualized inflation price turned optimistic.
So the “Ultrasound Cash” imaginative and prescient lasted simply three years? That’s unsustainable as a price retailer. The narrative has collapsed—and it by no means actually held water, since ETH was by no means designed for worth storage; that’s Bitcoin’s mission, and ETH can’t compete there.
Then Ethereum obtained caught in limbo: Is its token a commodity (however provide dynamics and staking make that imperfect)? Or extra like a tech inventory (but inadequate income undermines such valuations)?
Some even argue ETH isn’t cash in any respect. What’s occurring? We’d like to choose a path.
Ethereum can’t have it each methods—you both set up a globally acknowledged, coherent id, otherwise you fall behind.
Monetary Inspiration
I nonetheless can’t fathom how Péter Szilágyi, a lead engineer who contributed so profoundly to Ethereum, earned only ~$100,000 yearly. This particular person, current from day one, helped develop Ethereum’s market cap from close to zero to $450 billion—receiving compensation equal to simply 0.000001% of that worth.
As the most influential and profitable protocol in crypto historical past (after Bitcoin), it provided no fairness or significant incentives. Hiding behind decentralization, open-supply beliefs, and permissionless ethos is simple: “We’re right here to advance progress—not to get wealthy.”
However you have to incentivize your most loyal contributors—or they’ll go away, or take freelance gigs elsewhere.
- Péter left. Danny Ryan left. Dankrad Feist went straight to Tempo.
- Justin Drake and Dankrad accepted advisory roles at EigenLayer in 2024—with token allocations—and have been subsequently vilified by the neighborhood.
These underpaid EF workers—incomes far lower than FAANG engineers or AI lab researchers—have been attacked merely for wanting to earn cash whereas serving to an unbiased protocol designed to enhance Ethereum.
Are you insane? Generally I really feel that for those who’re an trustworthy, hardworking particular person inside Ethereum, you’re not allowed to earn cash—you’re only anticipated to slave away for Ethereum’s meager “recognition.”
EF repeatedly sells ETH to fund operations, initiatives, and analysis. However maybe you need to begin by paying researchers adequately?
Zero Tolerance for Adaptability
“Day One. Ethereum will win. Probably the most decentralized and longest-operating blockchain.”
We hear these phrases every day—simply as usually as we hear Ethereum’s excuses:
- “Sure, Ethereum is costly and sluggish—however we now have rollups! Simply use rollups; rollups *are* Ethereum!”
- “Sure, ETH lags in price—however Ethereum has the largest developer ecosystem, a stable basis, and demand will come.”
- “Ethereum is the most decentralized blockchain! Solana is rubbish—they lack shopper range.”
- “Ethereum runs 100% uptime! Solana is rubbish—it’s crashed a number of instances.”
- “Ethereum’s community exercise is decrease than Solana’s. Oh—that’s simply spam and memecoin gamblers on Solana. We’re the moral chain!”
The identical excuses, solutions, and responses—12 months after 12 months. The whole lot besides Ethereum and rollups is trash. If Ethereum underperforms on any metric, we declare it’s nonetheless “Day One,” assert we all know what we’re doing, and demand there’s nowhere higher than Ethereum.
Everybody is sick of listening to the neighborhood recycle the similar excuses.
Ethereum appears like a stumbling, growing older wealthy auntie—refusing all innovation whereas doling out cash to parasitic descendants.
Can the Harm Be Undone?
Simply hours earlier than ending this essay, Vitalik tweeted that the “rollup-centric” roadmap had failed—and that Ethereum wants to discover different paths, together with scaling the L1.
You already know what? I’m genuinely glad to see individuals acknowledge their errors publicly—it takes braveness. However I worry it might already be too late. Ethereum has once more recognized an extended-time period path ahead—however progress stays painfully sluggish.
Latest modifications at EF embrace new management, treasury transparency, and R&D division restructuring. EF has begun hiring younger expertise from DevRel and advertising—Abbas Khan, Binji, Lou3e, and others.
However change should speed up. Ethereum should dash to show everybody flawed.
We’ll wait and see. After these reforms and EF’s organizational shifts—can Ethereum as soon as once more grow to be thrilling, moderately than merely synonymous with blind delusion and disappointment?
