Bankless: Ethereum may head towards the ultimate transformation of "nested dolls"

Original Title: Ethereum's Endgame Transformation
Original Author: Bankless Guest Author Viktor Bunin
Original Compilation: Sharon, BlockBeats

While the excitement from the Bitcoin inscription wave and the surge of Solana's tokens has not yet faded, the performance of Ethereum and its ecosystem has been less than satisfactory. In an article published by Bankless on December 22, guest author Viktor Bunin discusses and predicts the future of Ethereum and L2.

He believes that, on one hand, the number of users on the Ethereum blockchain will decrease, and the relationship between Ethereum, the Ethereum ecosystem, and end users may become like a nesting doll, making the Ethereum ecosystem no longer have a single overarching narrative; on the other hand, the entire Rollup ecosystem will uphold Ethereum's most important social principles—decentralization, trusted neutrality, and permissionless access and innovation—while the Ethereum blockchain will become a solid foundation that is taken for granted and supported. BlockBeats compiles the original text as follows:

Recently, the Twitter feeds of the Bitcoin and Solana communities have been filled with excitement, driven by fundamental improvements, rising fees, and the hype surrounding digital tokens. However, the Ethereum community, as the focal point of cryptocurrency adoption and innovation, sometimes appears relatively calm. This makes me wonder, is it just that the numbers on Ethereum aren't rising?

I believe there is a deeper reason: the Ethereum blockchain is transitioning from B2C (execution) to B2B (settlement). This is a known technical outcome of Ethereum's endgame, but what does it mean for the social layer and community of Ethereum? I haven't seen much written on this topic, so I will attempt to unravel it here.

In the long run, will the number of users on the Ethereum blockchain increase or decrease from today? I believe it will decrease. L2 has already consumed up to 20% of Ethereum's Gas, and I expect this proportion to continue rising in the coming years, even as advancements like EIP-4844 and Full Danksharding significantly reduce the costs of Rollups settling on Ethereum. A decrease in end users on the Ethereum blockchain means relatively fewer people will become part of the Ethereum community.

Conversely, people's identities will become like nesting dolls, primarily related to the user-facing components they interact with, such as networks like Base, Arbitrum One, or Polygon zkEVM. You can see this today on Twitter—the communities of the aforementioned L2s are rapidly growing, but they mainly focus on their respective chains rather than the broader Ethereum.

This reality makes it more difficult for people, especially critics, to understand Ethereum, as it is no longer a single chain and community but an ecosystem composed of chains and communities. Ironically, this has also made it hard for people to understand the Cosmos community over the years.

This change also means that, by definition, the Ethereum ecosystem no longer has a single overarching narrative. The diversity of communities and viewpoints is itself a narrative, which contrasts with what we typically see in the cryptocurrency ecosystem (e.g., Ethereum's transition to PoS, Solana's launch of Firedancer, Bitcoin's usage transition to the Lightning Network).

It is certain that the Ethereum blockchain itself has realized a vision through core developers and EIPs, as described in Vitalik's updated roadmap, but it is just one of many narratives within the Ethereum narrative, including Optimistic Rollups, zk-Rollups, shared sequencers, privacy Rollups, data availability, identity, NFTs, use-case-specific Rollups (e.g., gaming), and so on.

This trend of community diffusion will not only accelerate on Ethereum but will also occur on every general-purpose smart contract chain. After all, the cryptocurrency ecosystem is planning to attract 8 billion people. As scale breaks intimacy, it is reasonable to assume that over time, there will not be just one Ethereum community or one Solana community.

So, what should we do now? What does it mean for the Ethereum community to successfully complete this transition?

Here, I seek three indicators.

First, the most important social principles of Ethereum are upheld throughout the Rollup ecosystem. These principles are decentralization, trusted neutrality, and permissionless access and innovation. If end users are censored or assets are seized by the aggregated ecosystem, then the Ethereum blockchain's trusted neutrality does not matter to the end users.

Second, from the user's perspective, they should enjoy the same level of security when using Rollups as they do when transacting on the Ethereum mainnet. Tactically, this means that Rollups should inherit Ethereum's security; even if the Rollup's sequencer is untrusted, they should not have the opportunity to steal users' funds.

Finally, I believe it is most important for Ethereum that the Rollup ecosystem should use ETH as its primary currency. Beyond tactical considerations (Rollups need ETH to settle with Ethereum, users already own and like ETH, and ETH has excellent monetary properties, etc.), the deeper reason in cryptocurrency is to create the best form of currency in the world.

The Ethereum community cannot forget this goal. It is time to create a currency controlled by no one but used by everyone. And we have a great opportunity to achieve this. This does not mean that every Rollup must perfectly execute these pillars. Some may require KYC thresholds, while others may use their own tokens as gas, etc. But these indicators provide us with a sense of direction—whether the Rollup ecosystem is advancing the abstract concept of "Ethereum."

So, what does this mean for the Ethereum community?

This means that over time, you will hear less and less about the Ethereum blockchain itself and more about the sub-communities within it. The Ethereum blockchain will become a solid foundation that is taken for granted and supported, and we will assume its existence and support through the trials and tribulations of cryptocurrency growth in the coming decades.

This dynamic will reflect the situation in web2, where the initial focus was on the internet, but now we focus on online communities while taking the internet itself for granted. In many ways, the endgame of the Ethereum community is that everyone is part of the Ethereum community, while no one primarily identifies themselves as a member of the Ethereum community.

Of course, the concept of L1 gradually fading into the background is not new. Solana's founder, Anatoly Yakovenko, has long advocated for a greater focus on things built on top of the blockchain rather than on the blockchain itself.

As Solana continues to grow and gain adoption, I will be curious to see how the Solana community evolves over time. Its monolithic design may make the community tighter, so its community diffusion may differ from what we see today on Ethereum. Meanwhile, all eyes are on the Ethereum community as it undergoes this fascinating transition towards greater diversity.