A Jian: Why I Started to Worry About the Future of Ethereum

This article is sourced from the Orange Book, with the original title: "Concerns about Ethereum | Prophet Weekly #130," authored by A Jian.

If I say that we are currently in the most recognized and affirmed period since the inception of Ethereum, I believe no one would disagree. You might also remember how much skepticism and disdain Ethereum faced in 2018 and 2019. ------ Much of this skepticism and disdain was, of course, unreasonable. For instance, many people at that time believed that Ethereum was merely an ICO platform, and once that demand was gone, the chain would be finished.

What I find interesting is that over the course of more than two years, the trend of mocking Ethereum has shifted to one of promoting Ethereum. Time really does change people, doesn't it? (Or should I say that prices change people?)

Even more interesting is that in both atmospheres, I have been in the minority. Three years ago, I believed that Utility Tokens were on the wrong path, and the most promising scenario for blockchain was what we now call "DeFi" ------ or rather, the automation of financial activities; technologies like Ethereum would not be without prospects. (MakerDAO launched Sai at the end of 2017, Compound appeared in mid-2018, and Uniswap v1 was also launched at the end of 2018. It sounds grand, but starting out was not easy.)

Today, I belong to those who are quite reserved about Ethereum's future ------ to put it bluntly, my appreciation has long been surpassed by my criticism. To clarify this point, we must start with the meaning of the term "Ethereum."

The term "Ethereum" is associated with several things:

1. It signifies a paradigm of blockchain, which can be briefly summarized as "global state, on-chain computation, rich statefulness," and "multi-resource pricing"; its manifestations include the account model, contracts that can become part of the on-chain state, and the abstract measurement unit Gas;

2. It signifies the primary implementation of this paradigm in today's world, the Ethereum blockchain, which also represents the economic value of this chain, ETH;

3. It signifies the power and community that can adjust the details of this implementation; they determine the direction of this underlying layer and its ability to survive and develop; this refers to Ethereum's governance procedures and participants; unfortunately, this program has shown signs of becoming closed, with the Ethereum Foundation being its main participant.

The most prominent feature of the Ethereum paradigm is its universality; you can write any code on Ethereum, and there is no hard limit on the number of codes executed, only a Gas Limit as a restriction. This is also the source of the much-discussed "composability." The current flourishing and evolving DeFi applications rely heavily on this important foundation of composability.

However, its downside is that it requires full nodes to retain a complete blockchain state locally; otherwise, they cannot participate in block validation. And this blockchain state is only increasing. Over time, this will lead to an imbalance in the nominal overhead of on-chain operations and increase the operational burden on full nodes. (The recently discussed "statelessness" and "state expiration" are efforts to address this issue. The currently favored direction is "state expiration," but from what I know, the proposed solutions are far from elegant and effective.)

This means that even if it is just to solve this long-term survival issue, the Ethereum blockchain needs a set of governance procedures; not to mention that these governance participants may also wish to add some features or change some attributes.

This compels one to evaluate the prospects of the Ethereum blockchain based on the performance of these governance participants.

Regrettably, if we were to grade the Ethereum Foundation based on its performance over the past two years, I think they would receive a rather embarrassing score. In 2018, Ethereum reduced the block reward, and the reason given by the EIP authors was that "Ethereum is overpaying miners compared to Bitcoin" (I have never understood what kind of reasoning this is). At the end of 2019, the "Istanbul" fork passed EIP-1884, which increased the Gas consumption of several state access opcodes, breaking the usability of some contracts, yet this EIP was still passed. This included both unavoidable elements and a utilitarian consideration that the impact was not as large as imagined; thus, those projects that suffered silently had to redeploy their contracts (of course, these projects cannot claim complete innocence, as no one promised that Gas consumption would remain unchanged) (this year, the "Berlin" fork activated EIP-2930, allowing those broken contracts to be used in a special way; I find this point not amusing either).

EIP-1559 is the same. No matter how many issues opponents point out, it does not shake the Ethereum Foundation's determination to push it through. They seem to believe that only issues with no technical mitigation are real problems; in other words, they are willing to pay any price. (Interested parties can read Tim Beiko's "Why 1559" to see how poor the economic literacy of today's Ethereum fork coordinators is.)

As for ETH2.0, there is even less to say. How many rounds of changes have there been regarding the design of "sharding"? (I can start; at least two rounds of changes have been made in terms of quantity; there has been at least one fundamental design change from "execution sharding" to "data sharding.") Not to mention how insincere some people have been in the debate between PoW and PoS.

With unstable underlying designs, unstable monetary policies, occasional contract breaches, and frequently proposed grandiose plans that undermine trust ------ this is the report card of the Ethereum Foundation over the past three years. I imagine some people enjoy this feeling of being pampered; no matter what mistakes they make, there are always people telling them not to worry and to focus on their studies.

The fundamental reason is that the Ethereum Foundation has never considered itself a maintainer or repairer of this paradigm, nor do they feel that their power should have any limits. On the contrary, they are quite self-persuading, believing that "blockchain is the automation of social consensus," implying that as long as social consensus changes, the protocol can change; as for who knows what this elusive "social consensus" is, some people's eyes can see things that we cannot. Sounds familiar?

Over the past few years, I have seen no signs indicating that they believe their power should be limited or that they agree that certain actions should not be taken even if many support them. Not at all. On the contrary, I only see them arbitrarily exercising this power, disregarding other participants in the Ethereum blockchain. Can you imagine that in the implementation of the Ethereum blockchain, aside from things that are technically impossible, is there anything that the Ethereum Foundation wants to implement but cannot? My conclusion is no. Only things they do not dare to think of or are not interested in are things they cannot achieve. Is there any rationale to discuss? No.

Ethereum prides itself on "off-chain governance," meaning it does not have a clear governance structure and procedures. However, upon closer examination, you will find that it is not the same as Bitcoin's "off-chain governance." Bitcoin's off-chain governance is indeed very loose, but Ethereum's governance lies in the middle of the "structured - unstructured" spectrum ------ on one hand, its participants do not gain governance qualifications through explicit recognition and support, and what can be implemented does not rely on such explicit support; on the other hand, it is a governance with a roadmap, and there is an unavoidable factor among the participants. That is, it has already been decided organizationally.

Contrary to what many people think, this issue cannot be improved by changing the way governance participants engage because "where the boundaries of power lie" and "how power is organized" are two related but not mutually determining questions; this is the distinction between Isaiah Berlin's so-called "negative freedom" (to what extent am I ruled) and "positive freedom" (who can rule me).

However, how should I put it ------ the past two or three years, which have accumulated current praise for Ethereum, happen to be the years when the vision of Ethereum's governance participants has made little progress (if I may say so). Many outstanding projects and works are based on the Ethereum paradigm itself, with little relation to the actions of the Ethereum Foundation. I have also hinted at this observation to others over the past two years.

For the same reason, I still have a certain fondness and confidence in Ethereum as a technological paradigm, and this paradigm will undoubtedly keep the Ethereum blockchain and ETH attractive and even lead to greater success. But I no longer feel that the key roles in Ethereum's current governance process are trustworthy individuals. I hold a very pessimistic view of the potential damage they may cause.

I believe many people, like me, initially regarded Ethereum as the spiritual successor and promoter of Bitcoin because it generalized the functions of blockchain and made programmable and interactive smart contracts possible. But after a few years, those who held such thoughts must have felt disillusioned, realizing that this system fundamentally betrayed the spirit of Bitcoin and that it cannot be changed.

Trusted third parties are security vulnerabilities; Ethereum is a cautionary tale.

Finally, let me add two stories.

One of my friends once said that they believe Ethereum opened up a space where everyone could reside, something Bitcoin did not achieve. This statement has made me think for a long time, and I have always remembered it.

Another friend, when I asked them what attributes they liked about Ethereum and when they would no longer be optimistic about ETH, said that Ethereum has many pure individuals like Vitalik, and they possess strong creativity; if, after the chaos, ETH does not become more usable, then they would hesitate.

I think this is not just their answer alone.

So it is, so it is. It turns out we have been the naive ones all along, right?