Has Ethereum Lost Its Way?

Despite the emergence of rival blockchains such as Bitcoin and Solana vying for Ethereum’s developer and user community, there seems to be a lack of clear direction within the Ethereum ecosystem, causing it to stray from its original purpose. Its value also hasn’t shown significant growth, as its token price has yet to surpass its all-time high of $4700, which was reached in 2021.

This raises the question, has Ethereum lost its way? If so, how do we get it back on track?

In the wisdom of Confucius, “A man who tries to catch two rabbits will end up with none.” This sentiment applies to Ethereum, as it seems to be divided between pursuing faster transaction speeds (like Solana) and promoting itself as an ‘ultra-sound money’ alternative to Bitcoin’s hard currency. However, this dual focus has caused Ethereum to stray from its initial vision of becoming the World Computer.

Ethereum serves a purpose beyond being a digital currency; it’s never been solely about achieving the highest transactions per second (TPS) rate or minimizing gas fees. Instead, its primary goal has always been to construct a genuinely decentralized future. The visionary minds behind Ethereum, like Vitalik Buterin and others, set out to develop Ethereum into a World Computer – a vast network of thousands of computers that enable anyone, anywhere, to create decentralized applications. However, the ecosystem has been diverted by recent trends, potentially losing sight of its original objectives.

It’s been suggested that the reason Ethereum hasn’t performed as well, with its price dipping below $2500, might be linked to the apps being developed on its network. Many of today’s decentralized applications (dApps) on Ethereum generate temporary excitement, but their clunky user interfaces and underdeveloped platforms result in limited use and slow growth among users. Moreover, these applications tend to attract the same group of users who are isolated within different Layer 2 solutions. Without functional applications, Ethereum’s ambition of becoming the global computer remains unfulfilled.

The main focus of Ethereum lies in building a strong underlying framework, rather than specific applications. Currently, there’s active development of decentralized computing systems and other networks that complement Ethereum, demonstrating the progress being made in its infrastructure. Interestingly, many enterprises are now choosing permissionless networks such as Ethereum over private corporate networks because it has become more cost-effective to develop on these open platforms.

Despite these advancements, Ethereum’s progress is relatively slow, with the network currently in a transitional phase on its scaling roadmap. This stage, while less dynamic, marks the emergence of significant developments such as Merkle Trees, zkSTARKS, account abstraction, and technologies that integrate various L2 solutions (Layer 2).

There’s a need for more long-term vision when it comes to Ethereum. Similar to how Bitcoin recovered from its periods of low activity, Ethereum is experiencing a breakthrough – what we might call its “Lightning moment.” However, instead of focusing on the “ultra-sound money” narrative and trying to compete with Solana, Ethereum should explore its unique potential. For instance, the practical applications of Blobs beyond serving as rollup fraud-proof challenge windows are yet to be fully realized by those who are paying attention.

After the Dencun update in March, Pectra is the upcoming significant Ethereum upgrade expected at the end of 2024. Following Pectra, Ethereum’s roadmap includes The Purge. This upgrade will contribute to Ethereum maintaining parity with other networks and managing the surge of activity following wider adoption. The Purge aims to streamline the protocol by removing old data, thereby reducing technical debt and network participation costs.

Moving away from Ethereum’s historical state may bring advantages, but it exposes the network to the risk of data being monopolized by centralized entities, turning Ethereum into a platform that primarily broadcasts information rather than one with trustless properties. This issue impedes the progress of Ethereum as the ‘World Computer,’ because subsequent activities like multi-agent AI systems and decentralized computation can’t grow if there’s no data to rely on. A potential resolution to this challenge is through the implementation of a solution that ensures long-term, decentralized data accessibility.

Indeed, at this moment, Ethereum finds itself in a transitional phase regarding its scaling strategy. Yet, by prioritizing and strengthening its underlying infrastructure, Ethereum can regain momentum and fulfill its destiny as the World Computer. As Ethereum progresses along the roadmap and eventually decentralizes computation over time, the World Computer will operate seamlessly, underpinned by a powerful global network of robust infrastructure.

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