Forward the Original Title: Vitalik Fired the First Shot of “Reform”, Where Will the Ethereum Foundation Go?

A broken ship from the old world cannot sail to the new world. Heading into the unknown sometimes just requires a little more courage.

On January 18, Ethereum founder Vitalik posted that “large-scale changes are being made to the leadership structure of the Ethereum Foundation (hereinafter referred to as EF).”

As soon as the news came out, it stirred up a thousand waves: some people thought that it had finally “returned from its lost ways”; some said that “EF should have been rectified long ago, a group of leaders who were just eating nothing”; others thought that “because of the rapid development of Solana’s ecology, the sense of ecological crisis in Ethereum has never been stronger, and he is anxious.”

To be sure, Vitalik isn’t the only one worried.

On the evening of January 22, Konstantin Lomashuk, the founder behind Ethereum’s key infrastructure project Lido, initially retweeted a post about a “second foundation” but later clarified that it was just an ordinary tweet and not related to creating a second EF. Back in September, in response to Ethereum’s sluggish development, we proposed some possible solutions in the article “Ethereum is ‘sick’—can these three remedies help?”. Looking back, our predictions seem to have been spot on.

But a more important question emerged: How can Ethereum reclaim its former glory? Will EF’s reform be the dawn of its revival? With such questions, Odaily Planet Daily will conduct a systematic analysis of the subsequent possibilities of EF changes and the subsequent trends of the Ethereum ecosystem in this article for readers’ reference.

Pride and Prejudice: The Light and Dark Side of the Ethereum Foundation

On January 18, Ethereum’s spiritual leader and co-founder, Vitalik Buterin, stated that a large-scale structural overhaul of the Ethereum Foundation (EF) leadership had been ongoing for nearly a year. In other words, throughout 2024, the EF leadership, led by Vitalik, had already begun a process of “self-revolution.” However, the interim conclusion we can draw so far is that this self-revolution has yielded minimal results.

Signals from the Reform: Focus on the Ecosystem, Avoiding Politics and Ideological Shifts

In view of this, Vitalik also mentioned that the main goals of this change are:

• Increase the technical expertise of EF leadership;
• Improve two-way communication and connections between EF leadership and new and existing players in the ecosystem, our role is to support users (individuals and institutions), application developers, wallets, L2;
• Introducing new blood to improve execution capabilities and speed;
• More actively support application developers to ensure that important values ​​and inalienable rights (especially privacy, open source, censorship resistance) are realistic and available to users, including at the application layer;
• Continued increased use of decentralization and privacy technology and the Ethereum chain, including for payments and money management.

Furthermore, he emphasized that the goals of EF change do not include:

• Implement a certain ideological/atmosphere change (it is worth mentioning that what he mentioned here is: from the feminine wef soyboy mentality to the bronze age mentality, Odaily Planet Daily Note: that is, from a soft and feminine perspective to a male perspective that is overly focused on practical interests and success);
• Actively lobbying regulators and powerful politicians (especially in the United States, where the focus is more on the big powers) and risking damaging Ethereum’s status as a global neutral platform;
• Become an arena for vested interests;
• Become a highly centralized organization and even become the “protagonist” of Ethereum.

Finally, he stated: “These are not things EF does, and this will not change. Those with different visions are welcome to start their own organizations.”

Carefully analyzing his words, Vitalik’s stance appears clear: he remains committed to a technology-driven approach, upholding decentralization, and firmly pursuing Ethereum’s Layer 2 development strategy. However, the specific steps for implementing these reforms remain vague. It is evident that Vitalik’s reforms at EF are still largely superficial, and the results, unsurprisingly, have been underwhelming.

EF’s Most Controversial Issues: Transparency, Workload, and Sell-off Speed

Going back to the root of EF’s current predicament, the author believes that it mainly comes from the following three aspects:

First, there is a lack of information transparency. This is not only reflected in the vagueness of the foundation’s related fund expenditures, but also related to the delay in public announcements, which is in sharp contrast to the agility and efficiency of the Solana ecosystem. In December 2023, EF officially released its Q3 2024 funding report, stating that the foundation had allocated a total of $12,848,780.33 across various domains, including community education, consensus layer development, cryptography and zero-knowledge proofs, developer experience and tools, execution layer, Layer 2 solutions, and protocol growth and support. Among these, community education projects account for the highest proportion, including Blockchain Summer Bootcamp, BlockHack, Building Builders and other activities. In addition, the foundation continues to support the development of consensus layer clients such as Lighthouse, Nimbus, and Grandine, as well as development tools such as Web3.js and OpenZeppelin account abstract contracts. It is worth mentioning that, as far as I know personally, EF’s funding has not been audited by an independent third party. (If you have relevant examples, please feel free to correct me)

At the same time, due to limitations such as region and time, the decision-making power of EF funding is only in the hands of a few people, which should be expected. This also results in the work of some community members who contribute to ecological development not receiving due support. In early January, Evan Van Ness, the founder of Week in Ethereum News (WiE), announced that he would be shutting down the newsletter after a conversation with EF leadership. He wrote: “As a result of my discussion with EF leadership earlier this year, I am announcing the termination of this newsletter. The conversation made it clear that they saw no value in continuing WiE. Throughout 2024, WiE received only minimal funding from EF. Although the financial support was mostly symbolic, EF’s decision to cut even this small amount made it clear that WiE would immediately cease to exist.”

Secondly, lacking proof of work. For EF’s work, effective proof of work cannot be seen by the outside world. For the blockchain world, although the Ethereum ecosystem has shifted to a POS mechanism, at the organizational level, POW is still the most direct and relatively efficient operating mode. In this regard, EF is a well-deserved negative teaching material. “What you did and others knowing what you did” are two completely different things.

In addition, this result also stems from the impact of organizational structure. This is also one of the hotly discussed topics in the encryption field recently, such as crypto KOL@0xAllending pointed out, “One of the important reasons why Solana can stand out in the blockchain network competition is to challenge the market position of ETH with the concept and intensity of corporate management.” In contrast, the Ethereum ecosystem, especially EF, is still stuck in the community organizational form stage with a similar structure of “decentralized community autonomy, senior leaders + mid-level researchers/developers + ordinary community members/holders”, doing Mass under the banner of “World Computer” The dream of adoption (mass adoption) is nothing more than a pipe dream.

Finally, the smashing speed is extremely fast. This is the most criticized point of EF by countless people. It is not that there is no similar phenomenon of selling ecological tokens in other ecosystems, but that EF’s selling is always like a phased peak signal, and often no one mentions “Ethereum faith, firm HODL ETH” at this time. Previously, according to Lookonchain, since EF sold 100 ETH on December 17, Ethereum’s price has fallen by approximately 17%. In 2024 alone, EF has sold 4,466 ETH across 32 transactions, totaling around $12.6 million. Notably, 15 of these transactions occurred at short-term price peaks.

EF was “Top Signal” for quite some time

Previously, Token Terminal data showed that Ethereum Layer 1 network revenue had plummeted by 99% since March 2024. On March 5, the Ethereum Layer 1 network network revenue peaked at more than $35 million; on September 2, daily revenue had dropped to about $200,000, setting an annual daily revenue low. At the time, cryptocurrency analyst Kun warned that if the trend continued, L2 networks could become dominant and potentially abandon Ethereum’s mainnet, especially for consumer applications. Although this revenue eventually returned to pre-Dencun upgrade levels by the end of 2024, the decline in Ethereum mainnet protocol revenue is beginning to show.

Looking deeper into the root causes, arrogance and prejudice seem to be at the forefront.

Reason Behind: Pride is the original sin, prejudice is the shackles

In early December last year, EF researcher Justin Drake stated that Solana’s golden age was coming to an end and would not pose a threat to Ethereum. Despite Solana’s strong momentum, Drake indicated that Ethereum was focused on long-term gains (sounds familiar, doesn’t it?). “Solana is at its peak right now, but I believe this will be the end of Solana’s golden age, as all of Solana’s competitive advantages in latency and throughput will disappear due to fundamental architectural differences that make it unscalable.” Currently, Ethereum developers heavily rely on Layer 2 solutions to provide faster and lower transaction fees. Drake stated: “I believe Ethereum L1 is competing with the Bitcoin ecosystem, while L2 networks are competing with Solana. Therefore, competing with Solana isn’t even within Ethereum L1’s scope - we should be competing in terms of security and health. So if Solana faces any competition, it needs to come from applications and L2 networks.”

Coincidentally, in his tweet responding to the upcoming closure of the Ethereum newsletter, founder Evan Van Ness referred to “Solana” as “Sqlana,” seemingly implying that Solana is a centralized database, which others in the comments also pointed out. Veteran node operator @JustDoingItBig expressed confusion about this: In 2018, Bitcoin believers mocked Ethereum nodes for running a “centralized database”; now, Ethereum supporters are exhibiting the same behavior.

History always rhymes.

As for views on EF, from my personal observation, most Ethereum community members remain supportive, while dissatisfaction mainly comes from ETH traders and retail investors. Among these, community member fishbiscuit (@not_qz)’s perspective might represent a significant portion of “EF loyalists,” who previously responded to community concerns about the foundation, clarifying:

• Social media activity: Similar to the Solana Foundation, EF used to primarily repost content, but has recently begun to post more actively;
• On-chain use: The foundation has pledged 42,000 ETH to support client development, while funding on-chain projects such as EIP-1559 NFT and Beacon Book, and distributing funds through the main network and L2. Events like Devcon also support crypto payments;
• ETH sell-off: Regarding the accusation of the foundation selling ETH, he pointed out that the foundation’s move was to adopt a variety of strategies to balance market pressure, and called on the community to avoid double standards, while emphasizing the regulatory challenges faced by the foundation. Call on the community to view the foundation’s contributions rationally and encourage more constructive discussions.

It has to be said that despite EF’s many problems, the community’s attitude is still extremely tolerant.

To a certain extent, it has once again verified the fact that the butt determines the head. Now that we have boarded the Ethereum ship, we can only work together through thick and thin.

Points of Conflict: Vitalik Under Pressure, Executive Director Aya Under Attack, and the Fragmented Ethereum Community

As time progresses, many conflicts related to the EF transformation have surfaced, with criticism directed at Ethereum founder Vitalik, EF Executive Director Aya, and the severely fragmented Ethereum community.

The Ethereum Spiritual Leader’s Dilemma: Active Change VS Historical Bonds

Since the announcement of EF’s transformation on the 18th, Vitalik has undoubtedly been at the eye of a multi-pressure storm: on one hand, ETH’s poor price performance and the ETH ecosystem’s departure from rapid growth urgently need to change; on the other hand, the EF core team is experiencing growing pains during transition, marked by significant events such as “EF researchers Justin Drake and Dankrad Feist joining Eigenlayer, and core researcher Danny Ryan leaving EF last year,” putting historical “revolutionary bonds” to the test.

Recently, early Ethereum core developer Eric Conner’s announcement of leaving the Ethereum community sparked heated discussions (although, according to one Ethereum community member, this isn’t his first such “farewell”). Different from before, he also stated that as Vitalik Buterin gradually steps back, EF’s lack of transparency and disconnection from the community have grown stronger. He pointed out that EF currently displays an “anti-victory and competition mindset,” causing many community members to question whether to stay (this aligns with the non-goals mentioned in Vitalik’s previous “reform manifesto”).

According to Rootdata website information, EF currently has 11 former employees, including early BD personnel and Danny Ryan, who led the POS transition. Based on a chart from May last year, most former EF members chose to start their own projects, though most remain within the EVM ecosystem.

May 2024 EF Member Information

Table of Former EF Employees

Meanwhile, current EF staff includes Executive Director Aya, protocol support leads including Tim Beiko, and numerous researchers including Justin Drake. However, organizational management issues have become apparent: Recently, Ethereum Foundation researcher Alex Stokes announced that he and barnabe.eth would jointly lead EF’s research department. It wasn’t until then that many people first learned that EF’s research department includes five teams: applied research, consensus development, cryptography, protocol security, and RIG. This is similar to when people only learned how rigid EF’s personnel mobility was when Tim Beiko posted new department hire information on his X platform account.

Current EF Staff: 16 people

The complex organizational management has brought widespread questioning and debate, with many directing criticism at EF Executive Director Aya.

To defend his “longtime comrade,” the typically emotionally stable Vitalik had to step forward to “play the role of dictator” - on January 21, he posted in response to community concerns, stating “I am the one who decides on the new EF leadership team. One of the goals of the ongoing reform is to provide EF with a ‘proper board,’ but before that, it’s just me. If community members put pressure on EF leadership, they’re creating an environment that’s harmful to top talent.”

The Middle Way of EF Executive Director Aya: Opposing Speculation, Embracing the “Zen” Path

While many may not know much about EF Executive Director Aya, she has been a key figure in accompanying Ethereum’s ecosystem development.

In the article “Where Does the Road Lead? A Brief Analysis of 3 Abstract Issues Facing the Ethereum Ecosystem,” we previously provided a brief introduction about her. In a 2019 interview, she stated: “When dealing with a blockchain full of infinite possibilities (like Ethereum today), the path forward may not just include one, two, or three voices, but many voices. Our (EF’s) job is to coordinate, not to make actual decisions. Decisions can be made by our members, who can certainly be part of the decision-making process, but not necessarily all of it.”

In a June 2023 interview with Wired magazine, Aya reiterated: “Regarding the cryptocurrency speculation wave, if I’m the only one saying ‘no,’ it doesn’t mean much, so I try to spread the same mindset among others, as if I were a Zen practitioner. Once this mindset takes root, people can be motivated without money, punishment, rules, or laws. This is because we’re thinking about how to protect Ethereum’s culture after we and EF are gone. If this mindset becomes the ‘Zen’ way, that would be great.”

In this regard, Aya’s views strongly align with Vitalik’s, which has drawn intense criticism from the current market. Countless people have used this to attack Aya, calling for her early resignation, with some suggesting that Danny Ryan should take over as EF Executive Director, forcing Ryan to clarify: “EF Executive Director Aya has contributed significantly to Ethereum’s development, please don’t casually defame her” and reaffirm: “With or without me, EF continues to develop and improve. I believe the Ethereum community will be one that develops in a respectful and rational manner.”

According to LinkedIn information, Aya graduated from Seattle University’s School of Business in the United States, previously worked at the cryptocurrency exchange Kraken managing Japanese operations, and joined EF as Executive Director in 2018, where she continues to serve.

The Fragmented Ethereum Community: Consensus, Liquidity, and Attention

The third major contradiction facing the Ethereum community is “fragmentation” —

First, there is the fragmentation of consensus on Ethereum’s value, role, mission, vision, short, medium and long-term goals;

Secondly, due to the fragmentation of capital liquidity in the Ethereum ecosystem caused by the L2 route, ETH lost price support;

Finally, there is the critical issue of fragmented attention in the cryptocurrency industry, with the focus gradually shifting from the heavily invested ETH to Solana, where hotspots are concentrated and wealth effects are more apparent.

In this regard, Solana ecosystem leaders undoubtedly have a clearer approach. Previously, Solana co-founder Anatoly Yakovenko stated: “Solana is a ‘pure blockchain.‘ No DA layer, no L2, no L3, no interference. Just a fast and inexpensive blockchain.”, “Multiple L2s make no sense; if a single L2 can handle parallel execution, it can use up all blob space and run every use case.”, “Only 6 core smart contracts are needed, and any optionality for developers that adds business risk is negative.” Furthermore, in a debate with EF researchers, he stated: “Ethereum’s biggest challenge lies in the uncertainty of long-term DA value and the uncertainty of ETH’s ‘ultrasound money’ vision.” This view was also endorsed by Uniswap founder Arthur Hayes.

Of course, to find a way out of these difficulties, Ethereum needs more detailed solutions.

Three-Dimensional Solution to “Ethereum’s Dilemma”: Mindset, Communication, and Positioning

Based on the above information, the author believes that EF’s solution to the “Ethereum dilemma” includes the following three aspects:

Let Go of Prejudices and Obsessions

First, the EF leadership, led by Vitalik, needs to correct their mindset: stop obsessing over the long-term “world computer” goal and instead focus on short and medium-term practical matters.

Progress in this area includes the Ethereum Foundation’s announcement of a new X account, the establishment of Etherealize, an institutional marketing department promoting ETH to Wall Street (which has received support from Vitalik and EF), and EF’s decision to use 50,000 ETH (approximately $150 million) through a 3/5 multisig wallet to participate in Ethereum’s DeFi ecosystem.

Furthermore, recent news shows that Vitalik has finally stopped insisting on “maintaining the neutrality and transcendent status of the Ethereum mainnet ecosystem” and unilaterally supporting L2 networks, instead directly stating “encouraging Layer 2s to support ETH by contributing a portion of fees, which can be achieved through partial fee burning, permanent staking with yields donated to Ethereum ecosystem public goods, or other solutions.” For more information, see the article “Under Public Pressure, Vitalik Posts Message to L2s: Come Back to Support ETH.”

Regarding this “power reduction,” once action begins, the “ghost chain” issues in the EVM system should be further resolved.

Listen to the Community, Communicate Regularly

Second, EF can no longer bury its head in the sand like an ostrich, ignoring the external environment and community opinions. It’s worth noting that while neither EF nor Vitalik officially holds the title of “emperor,” they are indeed de facto leaders. Therefore, “embrace wise counsel, distance flatterers” is sound advice - don’t be swayed by the flattery and pandering of those seeking Grants incentives.

Less academic discussion, more regular AMAs with representative figures at the organizational level - if they’re technical staff, focus on technical discussions; if they’re marketing staff, discuss marketing; if they’re just collecting paychecks and making arbitrary decisions, show them the door.

Most importantly, don’t become self-limiting due to information bubbles.

Store of Value OR Payment Method? That is the Question

Finally, there is the positioning of ETH and the Ethereum network. At present, the fragmentation problem caused by dozens of L2 networks and the excessive power of ETH’s past vested interest groups (that is, too much profit taking) have made it increasingly difficult to realize the value storage function of ETH. It is difficult for the market to accept the narrative of “digital silver” alone.

Payment methods are relatively more in line with market demand. In this regard, the Coinbase Wallet consumer chain in the Base ecosystem may be one of the subsequent ecological focuses of Ethereum. Although Vitalik insists on ensuring the neutrality and decentralization of the Ethereum ecosystem, it is difficult to advance cooperation with the United States in the short term, but in the medium and long term, this is still an unavoidable problem.

Furthermore, as Marc Zeller, founder of the Aave contributing team Aave Chan Initiative (ACI), previously mentioned, “to solve the Ethereum Foundation’s problems, it needs to: convert EF’s remaining ETH into market-tested LST combinations, cut 95% of current subsidies, especially initiatives like ‘running nodes in Wakanda,’ avoid selling ETH but instead use LST through Sky/Aave to lend stablecoins, while reducing operating costs” - this has some reference value.

Of course, the initiative to “lay off 80% of non-developers and current leaders” and “hand over the official account to several extremely active ETH Maxi operators” is slightly one-sided.

Lastly, the ultrasound.money community, once created by the Ethereum ecosystem, previously united many ETH Maxis but ultimately faded into obscurity. This is regrettable, but perhaps with EF’s transformation, related communities will also find opportunities for transformation.

Conclusion: “Don’t Rest on Past Laurels, Create New Achievements”

Perhaps in the early development of the Ethereum ecosystem, EF’s laissez-faire leadership style led to its rapid development, but after experiencing several bull and bear cycles, if we aspire to “mass adoption,” we need new solutions rather than indulging in the past glory of “Ethereum being the first crypto ecosystem,” becoming self-contained and refusing to progress.

TRUMP tokens have brought millions of people into the cryptocurrency world, and people coming for wealth creation effects is understandable. After all, compared to the Web2 world of surrendering privacy and data, the attention effect and wealth creation boom are the “Trojan horse” that the crypto world can offer to the traditional financial world. Only when the future arrives where crypto economy further connects with the global financial system will we see the crypto flower’s shadow across the universe.

By eliminating wrong answers, we can have more courage and strength to face new questions raised by the crypto world.

On this point, countless people are walking with me, so I am full of confidence, and I hope you are too.

Disclaimer:

1. This article is reproduced from [Odaily]. Forward the Original Title: Vitalik Fired the First Shot of “Reform”, Where Will the Ethereum Foundation Go? The copyright belongs to the original author [@wenser 2010]. If you have any objection to the reprint, please contact Gate Learn team and the team will handle it as soon as possible according to relevant procedures.
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