Long analysis: What went wrong with Ethereum?

Author: fangjun, Developer DAO Source: @fjun99

Ethereum seems to be still actively building, and the new upgrade plan includes many innovations (but nothing as exciting as Blink), and Ethereum also has many powerful Layer 2s. However, it is true that Ethereum's Gas is already at 1 Gwei. What exactly is wrong with Ethereum?

What's wrong with Ethereum?

Ethereum is fine overall, it is the most powerful smart contract platform, the most decentralized, and the most prosperous ecosystem, whether it is EVM applications or second-layer chains. There is no problem with the technical route, and the roadmap updated by Vitalik on the last day of 2023 is still valid, guiding the development of Ethereum in the next three to five years.

Vitalik has also published a lot of articles this year, each of which is critical.

Is Ethereum’s problem a lack of Memes?

I don’t think so. Solana’s current round of celebrity Meme fever makes it a bit like Las Vegas. Ethereum has always been like Wall Street, and turning Wall Street’s buildings into Las Vegas is not a reasonable choice. At most, we can build an Atlantic City somewhere close.

What is the problem with Ethereum?

First of all, technical problems have been solved, but what are these technical problems for?

For example, in Vitalik's discussion today, the final settlement speed is of course important.

Ethereum is now too much like the famous Xerox Research Institute PARC, where Jobs "stole" a lot of things. The vision should have been to create a usable product, like Apple and Microsoft.

The problem with Ethereum is, as Twitter user Emmanuel Awosika has been saying recently, lack of marketing. In my opinion, it's not lack of marketing, it's lack of basic vision and positioning. There are no answers to these questions: Vision: What is Ethereum? What product does Ethereum offer? What is Ethereum's next product? Ethereum is now like Bell Labs. Do you know what it's called now? —Nokia Bell Labs.

Will the rise of ETH and the passage of ETF solve the problems of Ethereum?

No. Ethereum had a major "speculation" in the last round, which was the passage of a large number of NFTs. Does it look a bit ridiculous now? Why did so many of them emerge at once? Of course, there were also excellent non-NFTs at that time, such as Vault 4626 and AA 4337.

Source: https://github.com/ethereum/EIPs/tree/master/EIPS

Ethereum L2 is currently in a very unhealthy state. We can certainly say that a hundred flowers bloom, but let's look at it from another perspective. Twitter user Jewish Zhao (@zchrhrhr) made a particularly good analogy (of course, only Chinese people can understand it): "V God is Web3 Han Xiandi" That is Cao Cao who used the emperor to control the princes, and was also known as the "Xiao Min Emperor" in history"

Some people say that Ethereum Gas is low because all transactions are run on L2, L2 The transaction volume is very large. This actually means that my great Eastern Han Dynasty is still there. Okay, let’s not make an analogy anymore. Even if L2 is right. But at present, as an ecosystem, isn’t Ethereum’s problem “fragmentation”? The high degree of asset fragmentation was already very serious when there were not many L2s in the last round.

Isn't the high fragmentation of assets the core problem of Ethereum as an ecosystem? But can this problem be solved by Polygon AggLayer, OP Superchain, cross-chain bridges/various interoperability services? Obviously it can't be solved, but this problem seems to have never been carefully considered by the Ethereum Foundation. Of course, Vitalik did discuss it.

I saw a particularly funny one a few days ago. The founder of a ZK Rollup said, don't be sad Blast, come to us to do tasks and help us rush TVL. The subtext is, this time I will definitely not say that you are "electronic beggars". But don't you think this is funny? Ethereum L2's TVL is all such a bubble, what's the use? Look at the current usage of ZK Sync cross-chain bridge.

Following Twitter user @thecryptoskanda, this is a great post, especially the distinction he made between "mass adoption" and "mass admission". My opinion is what was said in this thread before, that Ethereum's dream is Wall Street, New York, and it can build an Atlantic City next to it, but it is not realistic to directly transform the Wall Street building.

In Ethereum's narrative, what is still attractive now is what Rubin said: Global Settlement Layer This is also why its Gas was worrying when it was 1 Gwei. If settlement disappears, can it still be a global settlement layer?

If Ethereum is the global settlement layer, then what is Bitcoin Chain? BTC's narrative is simpler. Before, there was payment, etc. Now, it is value storage. In the upcoming report "Modular Blockchain", I will use an analogy to say that the power of Ethereum L2 and BTC L2 is different, one is gasoline and the other is electricity. The power of Ethereum L2 is application, and the power of BTC L2 is the asset BTC.

Just now we discussed: "We are not saying that Ethereum is dead, we are saying that Ethereum should work hard:)" From the perspective of infrastructure infra, no chain currently has the complete architecture of Ethereum.

What is the narrative of Solana? Mert just made an interesting point: A global, uncensorable broadcast, you broadcast information from one part of the world, and it will be spread to other places as quickly as possible This seems to be a repetition of Web2.0, but it makes a lot of sense. The spread of Web3.0 will be credible. (No permission required will be another feature)

NathanInteresting point of view: "Ethereum is an open source technology community, and EVM L2 is a consumer product, just like Android and various mobile phone brands based on Android." It is an interesting angle. But I don't agree that Ethereum is just a technology community. Ethereum itself is a product, and the second layer is just a distributor. ——Distributor of block space.

Is the Ethereum roadmap centered on Rollup still valid? In October 2020, Vatalik published a document confirming this roadmap, and it has been developed based on this roadmap so far. I think this roadmap is still valid, but there are several problems to be solved: 1. The liquidity fragmentation problem discussed above 2. Does Rollup have to be durable? Altlayer's temporary Rollup is good. I agree with these two problems: 1) Lack of large-scale applications - there are no new applications in this round 2) Unreasonable capital structure - VCs are betting heavily on infrastructure.  

The problem with Ethereum’s ecosystem is that, although it has built a lot of infrastructure, there is almost no preparation for the application cycle. According to the basic/application rotation cycle, the application cycle will come back soon. How does Ethereum deal with it?

Recently, Ethereum’s USDT transfers have been lower than Tron. Tron is controversial, but it does a great job in the transfer scenario. I remember that in the Messari annual report at the end of last year, Messari CEO praised Tron's stablecoin transfer. It is not a dream for Tron to earn 1 billion in annual protocol revenue.