Original Title: What happened to Ethereum?
Original Author: @paramonoww
Translated by: Peggy, BlockBeats
Editor's Note: Recently, Vitalik Buterin published a lengthy article pointing out that as Ethereum's L1 scalability significantly improves and L2's evolution towards "Stage 2" lags long-term, the past notion of viewing L2 as "Ethereum-branded sharding" has become difficult to sustain. He emphasized that L1 is accelerating its return to the scalability axis and no longer needs L2 as a "crutch" for performance expansion.
This rewriting of L2's positioning has sparked widespread discussion in the community. Beyond price, this article shifts the focus back to Ethereum itself: from the exit of the "ultrasound money" narrative, the repeated oscillation of the Rollup route, to the lack of financial incentives and the loss of core talent, the issues do not stem from external competition but rather from unclear direction and structural internal friction.
As Vitalik reflects on existing routes and the Ethereum Foundation promotes internal reforms, Ethereum stands at a critical turning point. Whether it can return from ideology to clear goals and execution efficiency will determine if it regains vitality or continues to exhaust the market's patience.
In this context, Vitalik suggests that L2 repositions its value, turning towards differentiated directions such as privacy enhancement, deep optimization for specific applications, extreme scalability, non-financial scenarios, ultra-low latency architecture, or built-in oracles; if it continues to handle ETH-related assets, it should at least reach Stage 1 and strengthen interoperability with the Ethereum mainnet as much as possible.
The following is the original text:
This article is mainly inspired by a recent tweet from Vitalik about changes and the current market state. In the context of a declining market, it is difficult to blame any one person, and I have no intention of making such accusations.
I write this article from the perspective of someone who has collaborated with many Ethereum teams, representing a venture capital fund that has invested in multiple protocols built on Ethereum, and has long been a staunch supporter and advocate of Ethereum and its EVM ecosystem.
Unfortunately, I can hardly say the same today. Because I feel that Ethereum is losing its direction (and I am not the only one who feels this way).
I do not want to discuss the price trends of ETH, but I cannot ignore the fact that as the second-largest cryptocurrency by market capitalization, ETH's performance is filled with uncertainty. Regardless of how the global market moves, ETH's behavior resembles that of a stablecoin that is "unpegging."
This article aims to discuss: what has happened to Ethereum over the past few years, and why more and more people are losing confidence, or have completely lost confidence. Ethereum is not losing to Solana or any other project; Ethereum is losing to itself.
Rollup Centralization Roadmap
When Ethereum proposed the "Rollup-centric roadmap," almost everyone felt excited. The vision it depicted was: Rollup (and Validium) would be responsible for scaling, with end-user transactions primarily occurring on Rollup, while Ethereum would exist as a verification layer—meaning it would prioritize being the L1 for Rollup rather than directly serving users.
Compared to developing an entirely new L1, the development speed and cost of Rollup are much lower, making the future of "thousands of Rollups coexisting" seem both realistic and optimistic.
What could possibly go wrong?
It turns out that anything could go wrong, and almost everything did: meaningless debates, placing ideology above real needs, long-term internal friction within the community, identity crises, and hesitation and procrastination in abandoning the vision of Rollup centralization.
Every possible issue has arisen. Most people in the community once viewed Max Resnick as an incompetent and "evil" figure, only to later realize that he was right on almost all key issues.
During his time at Consensys, Max repeatedly pointed out the changes Ethereum needed to make to move forward, but he was met with almost only criticism, with very little genuine support.
The most absurd moment was when the entire industry began to seriously discuss questions like: does a certain L2 count as part of Ethereum, such as:
View A: "Base is an extension of Ethereum, and we contribute greatly to the Ethereum ecosystem."
View B: "Base is not an extension of Ethereum; it is an independent system."
What on earth are we discussing?
How does this discussion help Ethereum and its ecosystem move towards a better future? Why are we so seriously debating "what is Ethereum" and "what is not Ethereum"? Don't we have more important issues to solve?
If we assert that: because Rollup uses ETH as gas, they are an extension of Ethereum—that sounds reasonable; if we assert that: Rollup is not an extension of Ethereum, but rather applications built on Ethereum that benefit from it—that also seems reasonable.
Right? Actually, not at all.
This so-called "ideological discussion" is not a discussion at all, but rather two self-indulgent circles trying to prove that they are correct. We do not need PvP; we need PvE. The problem is not that "we are opposed to each other," but that "we face problems and the future together."
Unfortunately, many people prefer the psychological thrill rather than even slightly considering: perhaps their views are not entirely correct.
Technical Ideology Prioritizing User Needs
Based Rollup, Booster Rollup, Native Rollup, Gigagas Rollup, Keystore Rollup.
Which one is better? Which one is the future? How should they connect?
"This one is the future." "No, that one is the future." "There is no reason not to develop Based Rollup." "Native Rollup aligns more with Ethereum; they will replace the entire ecosystem."
All these debates… the end result is that Arbitrum and Base continue to win.
Technical superiority can indeed bring advantages, but the premise is not to overly distinguish between apples and pears, or oranges and oranges. These solutions are similar enough that users do not care. Outside the bubble, no one cares about these trivial details. Having one more precompile or one less precompile does not determine the outcome.
"Oh, we are the ones truly aligned with Ethereum; we are closer to Ethereum, reflecting its core values, and users will definitely choose us."
I want to ask: what exactly are those values? And which group of users will choose you because of them?
@0xFacet became the first Stage 2 Rollup, a model of "Ethereum alignment."
But where is it now? Where are its users? Where are the developers? Where are the technical KOLs? Where are those supporters who once shouted about Ethereum's ecosystem and alignment narrative? How many people have heard of Facet? How many applications are on Facet?
I personally have no prejudice against Facet. I have communicated with its founder multiple times and have great respect for him; he is a wonderful person. But where have those who once shouted "we need more Stage 2 Rollups" gone? I don't know, and you don't know either.
Financial incentives are far stronger than technical incentives. I was a loyal supporter of Taiko, especially appreciating their research around Based Rollup: stronger censorship resistance, neutrality, no risk of sequencer downtime, and L1 validators can earn more money.
So where is the problem?
The problem lies in the economic calculations behind this model not adding up. You cannot force others to give up their income for the sake of so-called "alignment."
Arbitrum promised decentralized sequencers; Scroll promised it; Linea, zkSync, and Optimism all promised it. Where are they now? Where are those sequencers?
Almost every Rollup's documentation contains a statement: "We currently use centralized sequencers, but we have a strong desire to decentralize in the future." Yet very few have actually fulfilled their promises. Metis has done it, but whether by luck or misfortune, almost no one cares about Metis.
Do I think they overcommitted to please influential ETH purists? Yes.
Do I think they genuinely want to decentralize sequencers? Yes. But this is not economically reasonable.
Coinbase (Base) is legally obligated to generate as much profit as possible for the company, and the same goes for other teams. Why would they voluntarily cut off their income sources? It makes no sense.
About 5% of Base's revenue flows to Ethereum. Rollup has never been an extension of Ethereum.
Taiko once had days when it paid more in fees to Ethereum for sequencing than it collected from user transactions. And companies like Taiko, besides paying Ethereum, have many other operational costs.
The so-called vision of Based Rollup or "Ethereum-aligned" Rollup can only exist if the teams are willing to give up their own income.
I am not denying the importance of decentralization, security, and permissionlessness. But if your only goal is to be "ideologically correct" rather than user-centered, then all of this is meaningless.
It is precisely because of this vulnerability and the promise of "Ethereum alignment" that a large number of speculators and fraudsters have entered this field.
Consequences of the Rollup Centralization Roadmap
Eclipse, Movement, Blast, Gasp (Mangata), Mantra: these protocols were never designed for the long-term future from the start. They can easily don the guise of "Ethereum alignment," "making Ethereum better," or "bringing SVM to Ethereum."
The result, without exception, is that they all "ran away" in different forms. All Rollups eventually realized that their tokens were almost useless because fees were paid in ETH, and their tokens had little practical utility. Speculators also realized that as long as they created enough hype around the Rollup centralization narrative, they could sell almost worthless tokens at high prices to retail investors.
Ethereum has never truly acknowledged Polygon as an L2, even though it has played a significant role in locking and carrying value for ETH. If you believe Rollup is a "cultural extension" of Ethereum, then why not acknowledge a project that is highly bound to Ethereum in terms of security and usage?
Polygon was crucial to Ethereum in the 2021 bull market, making a significant contribution to the growth of ETH as an asset. But because it "does not count as L2," it does not deserve recognition from the Ethereum community. If Polygon were an L1, its valuation would likely be much higher.
Rishi reviewed the long-standing controversy within the Ethereum ecosystem regarding Polygon: in its early days, Polygon was criticized by parts of the Ethereum community for being a "sidechain," which was seen as not being a sufficiently "orthodox" L2. However, Polygon chose to prioritize solving scalability issues rather than catering to L2 semantics or community ideology. Looking back seven years later, Rishi believes it has been proven that "Polygon was right from the start": the pragmatically scalability-first approach has stood the test of time.
Rishi reviewed the long-standing controversy within the Ethereum ecosystem regarding Polygon: in its early days, Polygon was criticized by parts of the Ethereum community for being a "sidechain," which was seen as not being a sufficiently "orthodox" L2. However, Polygon chose to prioritize solving scalability issues rather than catering to L2 semantics or community ideology.
Looking back seven years later, Rishi believes it has been proven that "Polygon was right from the start": the pragmatically scalability-first approach has stood the test of time.
First is the narrative of "ultrasound money": after EIP-1559 and The Merge, ETH's economic model was shaped into a deflationary asset, claiming to become a better store of value than Bitcoin. But by 2024, ETH's annual inflation rate has turned positive again.
In other words, did the vision of "ultrasound money" only last for three years? In this way, it cannot become a store of value. This narrative is dead—and more importantly, it was never valid to begin with. Because ETH was never designed for "store of value"; that is Bitcoin's mission, and you cannot compete with it on that dimension.
Next, Ethereum cannot decide what its token actually is:
Is it a commodity? No, because the supply is dynamically changing, and there is a staking mechanism;
Is it more like a tech stock? Also not valid—because Ethereum does not have enough revenue to be valued like a tech company.
Some people simply believe that ETH is not "money" at all. So what is happening now? We must take sides.
Ethereum cannot simultaneously be everything—either you have a globally clear and unified direction, or you will fall behind.
Financial Incentives… Once Again
I still cannot understand how a chief engineer like Péter Szilágyi only makes about $100,000 a year. He has been involved since the project's earliest days, helping Ethereum grow from almost zero to a market cap of $450 billion, yet he has only received a return equivalent to 0.0001% of that market cap.
In the most influential and successful protocol in crypto history after Bitcoin, there are neither incentives nor equity. People easily defend this with the idea of "decentralization, open source, permissionless": "We are not here to make money; we are here to drive progress."
But the problem is, even the most loyal soldiers must be incentivized; otherwise, they will either leave or secretly take on other projects. Péter left, Danny Ryan left, and Dankrad Feist went directly to Tempo.
In 2024, Justin Drake and Dankrad took on advisory roles at EigenLayer and received token allocations, resulting in the community immediately attacking them.
Those in the Ethereum Foundation earning "pitiful salaries" (compared to FAANG companies and AI research labs) are simply trying to make some money while helping an "independent protocol that is not Ethereum itself but hopes to make Ethereum better," and they face collective animosity.
Isn't that absurd? Sometimes I really feel that if you are an honest and hardworking person in Ethereum, you seem not to be allowed to make money; you can only work hard for a lifetime for "recognition" from the Ethereum community.
The Ethereum Foundation has been selling ETH to fund various operations, projects, and research. But perhaps, they should first pay the researchers' salaries?
Zero Tolerance for Adaptability
"Day one. Ethereum will definitely win. It is the most decentralized and highest uptime blockchain."
We hear this rhetoric every day, just like we hear Ethereum defending itself every day.
Yes, Ethereum is both expensive and slow. But we have Rollup; just use Rollup, Rollup is Ethereum!
Yes, ETH's price has underperformed everything. But Ethereum has the largest developer ecosystem and a strong foundation; demand will eventually catch up.
Ethereum is the most decentralized blockchain! Solana is terrible; it lacks client diversity.
Ethereum is 100% online! Solana is terrible; it has gone down several times.
Ethereum's network activity is not as good as Solana's? That's because Solana is filled with garbage transactions and meme gamblers; we are the "moral chain"!
Over the years, it has always been the same excuses, the same answers, the same self-comfort. Everything besides Ethereum and Rollup is garbage; if Ethereum performs poorly on any metric, we say "it's still Day 1," we know what we are doing, and there is no better place than Ethereum.
Everyone is tired of the community repeating these excuses over and over again.
Ethereum is increasingly like an elderly and wealthy grandmother who can hardly walk but refuses any innovation, simply handing out money to her children and grandchildren, allowing them to parasitize her.
Reform
Just a few hours before I finished this article, Vitalik tweeted to acknowledge that the Rollup-centric roadmap has failed and that a new path needs to be sought, turning to expand L1.
You know what? I am actually happy when people can realize their mistakes. Publicly admitting mistakes takes courage. But I worry that it may be a bit late. Ethereum has once again found a long-term direction it must take, but overall progress remains slow.
The Ethereum Foundation has indeed undergone some changes recently: new leadership, treasury transparency, restructuring of research and development, etc. At the same time, the foundation has begun to bring in some young new faces from developer relations and market direction, such as Abbas Khan, Binji, Lou3e, and others.
But the change must be fast enough. Ethereum must sprint to prove to everyone that they were wrong.
Let us wait and see: after these reforms and changes, can Ethereum once again become an exciting entity rather than one that is left with blind faith and disappointment.
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