The neutrality of the Ethereum Foundation is no longer, is dissolution the only possibility?

Original Title: “Should the Ethereum Foundation dissolve?”

Author: Brunny.eth

Translated by: Alex Liu, Foresight News

This week, two Ethereum Foundation researchers (Justin Drake and Dankrad Feist) disclosed that they have become advisors to the EigenLayer Foundation.

This action undermines the credible neutrality of the Ethereum Foundation. Below, I will argue that a commitment from the Ethereum Foundation (EF) to dissolve in the coming years may be the only way forward.

Background

The Ethereum Foundation has a set of clear principles:

• “We try to reduce our power and resist the natural tendency of organizations to grow and accumulate power.”

• “Whenever possible, we will remove ourselves from the equation so that Ethereum can thrive with broad community support, not just EF.”

• “We will not try to control or force the natural processes of the ecosystem, but we will do our best to help the community maintain its values and, in doing so, help Ethereum maintain its soul.”

If your first reaction to the title of this blog post is “dissolving the Ethereum Foundation is a ridiculous idea,” I have a few questions for you:

• Does today’s Ethereum Foundation adhere to these clear principles?

• Does today’s Ethereum Foundation truly possess credible neutrality?

• Can we reduce our dependence on and influence from the Ethereum Foundation, whether this year, next year, or in the next decade?

If the answer is no, then why not?

If we want Ethereum to be the world’s computer, or a global settlement layer, or any description of your favorite Ethereum 100-year vision, we need to start shedding the power and influence that EF maintains in the ecosystem and allow the ecosystem to drive Ethereum’s development in the next century.

Intellectual honesty is one of my core values.

Credible neutrality is a core value of Ethereum.

In this case, both of these values have been violated.

Let me quote some of the disclosures from these two researchers (I have bolded the key points):

“The advisor position comes with a significant amount of EIGEN token incentives, which could easily exceed the total value of all my other assets (primarily ETH). We are discussing millions of dollars in tokens, vesting over three years. I commit to reinvesting all advisor income into valuable projects within the Ethereum ecosystem.” ------ Justin Drake

“I do receive a significant amount of tokens from this position. I don’t think they will change or influence my stance on how the core protocol should be developed, but I think the community should know this so they can hold me accountable. I believe that if operated by people of high integrity, EigenLayer will bring significant benefits to Ethereum. I trust the current leaders intend to do this, and I plan to hold them accountable.” ------ Dankrad Feist

In these two disclosures, the researchers describe the substantial economic incentives they have received. I respect that they have made this economic incentive explicit, although I wonder if they would have made such disclosures if it weren't for Cobie’s initial tweet and the ongoing opposition from the “social layer.”

However, in these two disclosures, these researchers, who are clearly well-versed in game theory and economic incentives (based on their work), claim they are capable of avoiding their positions being influenced.

Economic incentives are arguably the most significant force driving this industry and all human behavior.

How absurd is the idea that these two specific researchers are somehow immune to these extremely powerful incentives?

I do believe that deep down, Dankrad and Justin think of themselves as stronger than economic incentives. I don’t know them personally, but various reports suggest they are very good people. I am not implying that I suspect they are greedy or malicious individuals. Perhaps they are the most powerful and disciplined people in the world.

But what I don’t understand is how they can believe that the credible neutrality of Ethereum itself will not be compromised by these advisory roles.

I sympathize with the idea that advisor shares could work if they were disclosed immediately (rather than after public opposition) and publicly stated for the purpose, while the benefits are partially allocated to organizations that make Ethereum more robust… However, this is not how this has all evolved. Instead, this has shown a significant corruption of the core values of the ecosystem.

Credible Neutrality

This brings to mind the concept of the Ethereum Foundation and credible neutrality.

Vitalik has previously mentioned credible neutrality as a guiding principle (I have bolded the key points):

When establishing mechanisms that determine high-stakes outcomes, the credible neutrality of these mechanisms is crucial. Essentially, a mechanism is considered credible and neutral if, just by observing its design, it is easy to see that the mechanism does not discriminate against any specific individuals… In other words, a mechanism should not be designed to favor specific individuals or outcomes; equally important, a mechanism must be able to persuade a large and diverse crowd that it is at least fundamentally striving to be fair.

This is where these two EF researchers have failed. Despite their pursuit of the opposite outcome, it is easy to see that their relationship with Eigenlayer has compromised their ability to maintain credible neutrality (more importantly, the ability of the Ethereum Foundation to maintain credible neutrality).

Some examples indicating that credible neutrality has been compromised include:

• March 2023 (according to Justin’s own timeline, Eigenlayer began reaching out to Justin about the advisory position) - Justin implicitly proposed EigenLayer as a potential based rollups solution.

• July 2023 - The Bankless “Restaking Alignment” podcast featured both Dankrad and Justin, “debating restaking.”

• December 2023 - Justin Drake’s talk at the Restaking Summit (sponsored by Eigenlayer! Posted on YouTube by EigenLayer!) promised to “detail certain incentive distortions brought about by restaking.”

• April 2024 - Sequencing and Preconfirmation Calls, EF (represented by Justin) funded various groups to research L2 pre-confirmation… where restaking was a soft requirement.

They are not low-level employees of the Ethereum Foundation. For better or worse, they are employees who speak on behalf of EF in public discourse and have significant influence over protocol decisions. Don’t just take my word for it ------ look at the assessment of their influence by the head of the Geth team (the most widely adopted Ethereum client) here.

Of course, the significance of EigenLayer throughout this event cannot be overlooked. EigenLayer is not just an application on Ethereum ------ it has the potential to significantly impact everything from protocol economics to the integrity of PoS consensus itself (as Justin described in the above “Restaking Alignment” podcast, seemingly before he received advisor shares from Eigenlayer).

Call to Action

I love Ethereum. Ethereum is the only reason I remain in this industry. I write this article hoping to play a small part in the infrastructure of human progress over the next century.

EF has done incredible work, from funding PSE to Devcon to Summer of Protocols and countless other projects. Some of my favorite people in the crypto space work at EF, and it’s hard to give EF’s work over the past decade the praise it deserves. I am sincerely grateful to those who have worked for Ethereum over the past decade and made it great, especially Dankrad and Justin, who have made significant contributions to making Ethereum great.

But now it is time to follow EF’s long-term thinking, subtraction, and value management guiding philosophy.

I want to clearly and specifically propose my call to action. In my view, a positive outcome would be:

• The Ethereum Foundation commits to a multi-year timeline to freeze the protocol and dissolve the foundation, or

• If EF continues to exist, EF will draft a constitution that outlines certain principles the organization must adhere to and cannot violate. Allowing its key decision-makers to acquire significant advisor shares is equivalent to Supreme Court justices holding substantial equity in the companies they rule on.

I am not sure how EF will handle its funds (burn them?), or how All Core Devs will continue to operate (Protocol Guild?), or any of the answers to the 100 open questions regarding the exact mechanisms required to dissolve EF. Hopefully, this is the beginning of a 5 or 10-year timeline and ongoing discussions, rather than an immediate call for dissolution.

But to me, it is evident that the only way to “help Ethereum maintain its soul” and “resist the natural tendency of organizations to grow and accumulate power” is to dissolve the Ethereum Foundation and allow credible neutrality to thrive once again.