It's not just that the price is weak; Ethereum is losing to itself, struggling to maintain its value and facing internal challenges that threaten its stability and future growth.

Ethereum feels like a decrepit wealthy old lady who refuses any innovation, yet distributes her money to the descendants parasitizing on her.

Author: Pavel Paramonov

Translation: Deep Tide TechFlow

Deep Tide Guide: Ethereum is currently in a profound identity crisis. Veteran crypto researcher Pavel Paramonov issues a deafening wake-up call: why is this once-market dominant gradually losing people’s trust? From the accusations of “drawing pictures” with the Rollup roadmap, to endless ideological debates within the community, to the loss of core talent and lack of incentives, Ethereum seems to be trapped in a “doing the right thing for the sake of doing the right thing” pit.

This article directly addresses Ethereum’s growth dilemma under its sense of technological superiority, analyzing why even a great leader like Vitalik cannot hide the ecosystem’s fatigue.

In this fiercely competitive market, will Ethereum be reborn from the ashes, or become like the author describes—a “wealthy old lady” refusing innovation?

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The inspiration for this article mainly comes from Vitalik’s recent sharing about the current state and changes in the market. Although the entire market is currently declining, it’s hard to blame any one person, and I’m not here to point fingers.

My role here is that of a die-hard fan of everything Ethereum and EVM-related, having collaborated with multiple Ethereum teams, invested in several protocols built on Ethereum through venture funds, and generally supporting Ethereum.

But unfortunately, I can no longer say the same, because I feel Ethereum no longer knows where it’s headed (many share this sentiment).

I don’t want to discuss ETH’s price trends, but I cannot ignore a fact: the second-largest cryptocurrency in the world is performing extremely unstably. Regardless of the global market trend, ETH’s performance is more like a de-anchored stablecoin.

This essay is about what has happened to Ethereum over the past few years, and why many are losing hope or have already become completely desperate. Ethereum isn’t losing to Solana or other competitors; it’s losing to itself.

Rollup-Centric Roadmap

When Ethereum introduced the “rollup-centric” roadmap, almost everyone was excited. The promise was that Rollups (and Validiums) would solve scalability issues, with end users conducting transactions on Rollups, while Ethereum would serve as the validation layer. In other words, Ethereum would focus on becoming the L1 for Rollups, not directly serving users.

Developing Rollups is much faster and cheaper than developing L1s, so the future of “thousands of Rollups” seemed very feasible and optimistic.

So, where did things go wrong?

It turned out, everything went wrong. Endless debates, prioritizing ideology over practical needs, internal community conflicts, an identity crisis, and giving up on the “rollup-centric” vision too late.

Anything that could go wrong, did go wrong. Most of the community once saw Max Resnick as an utterly incompetent villain, only to find that nearly everything he said was correct.

During his time at Consensys, Max made numerous statements about what Ethereum needed to improve, but he faced only criticism and almost no support.

The peak of stupidity was the entire industry starting to debate whether a certain L2 is actually “Ethereum,” for example:

• View A: “Base is an extension of Ethereum; we’ve made huge contributions to the Ethereum ecosystem.”
• View B: “Base is not an extension of Ethereum; it’s independent.”

What the hell are we even discussing?

How can such a debate bring a better future for Ethereum and its ecosystem? Why are people arguing endlessly over “what is Ethereum and what isn’t”? Don’t we have more important issues to solve?

If we accept Rollups as an extension of Ethereum because they use ETH as gas, then we’re on the right track. If we see Rollups as not an extension but benefiting from Ethereum’s applications, we’re also on the right track.

Right? Completely wrong.

This ideological discussion isn’t really a discussion; it’s a confrontation between two “circlejerks” trying to prove who’s right. We don’t need infighting (PvP), we need outward output (PvE). We must understand that this isn’t about fighting each other, but about facing problems and future challenges together.

Unfortunately, many prefer to indulge in mental self-satisfaction rather than consider that their views might be wrong.

Technological Superiority Beyond User Needs

Based Rollups, Booster Rollups, Native Rollups, GigaGas Rollups, Keystore Rollups.

• Which is better, what will the future look like, how will they connect?
• “This type is the future,” “No, that type is the future.”
• “There’s no reason not to develop based Rollups.”
• “Native Rollups will take over the ecosystem because they align with Ethereum (Ethereum-aligned).”

All these discussions… ultimately, Arbitrum and Base continue to dominate the market.

Technological advantages can indeed bring many benefits, but only if you don’t compare apples to pears, or oranges to citrus. They are too similar—so similar that users don’t care about the differences. Outside this bubble, no one pays attention. Adding or removing a precompile won’t help you win.

“Oh, we are actually ‘Ethereum aligned,’ we have advantages, we are very close to Ethereum, embodying its core values, users will choose us.”

May I ask, which values? And which users will choose you?

@0xFacet became the first Stage 2 Rollup, they are practically the “definition of Ethereum consistency.”

But where are they? Their users, developers, technical KOLs, and supporters of Ethereum’s ecosystem and consistency—where are they? Where did they go? How many of you have heard of Facet? How many applications are available on Facet?

I personally have no bias against Facet. I’ve spoken with their founders many times; I respect him, he’s a great person. But where did those who once loudly said we need more “Stage 2 Rollups” go? I don’t know, and you don’t know either.

Economic incentives are far stronger than technical incentives. I was a loyal supporter of Taiko, especially their research on based Rollups. This model has many benefits: stronger censorship resistance, neutrality, no sequencer downtime risk, L1 validators can earn more.

So, where’s the trap?

The trap lies in the financial logic behind this model. You can’t force people to give up their income for the so-called “consistency.”

Arbitrum promised decentralization of sequencers. Scroll promised decentralization of sequencers. Linea, zkSync, and Optimism all promised the same. But where are those sequencers now?

Every Rollup team states in their documentation: “We currently have centralized sequencers, but we are strongly committed to decentralizing them in the future.” Almost none have fulfilled this promise. Metis did, but luckily or unluckily, people don’t care about Metis.

• Do I think they overpromised to gain favor with influential “Ethereum extremists” (ETH Maxis)? Yes.
• Do I think they truly want to decentralize sequencers? Certainly, but it’s meaningless for them.

Coinbase (Base) is legally obliged to maximize profits and create value for the company. The same goes for other teams—why would you kill your own revenue source? That’s illogical.

Only about 5% of Base’s revenue flows to Ethereum. Rollups have never been an extension of Ethereum.

Taiko once experienced a period where it paid more ETH for sequencing than it earned from user transactions. Clearly, companies like Taiko have many expenses beyond paying Ethereum. Only when teams are willing to give up revenue can the “based Rollup” or any “Ethereum-aligned” Rollup vision come true.

I don’t underestimate the importance of decentralization, security, and permissionlessness. But when your only goal is to pursue “ideological correctness” rather than “user-centricity,” all that becomes meaningless.

Predictably, this weakness and the promise of “Ethereum consistency” attracted a bunch of grifters into the space.

The Outcome of the Rollup-Centric Path

Eclipse, Movement, Blast, Gasp (Mangata), Mantra: These protocols were never built for the long-term future. Hiding behind masks of “Ethereum consistency,” making Ethereum better, or introducing SVM into Ethereum, is far too easy.

They all “rugged” in one way or another. All Rollups realize that because users pay fees in ETH, their tokens are almost useless and lack utility. Grifters realize they can generate hype around the “rollup-centric” narrative and profit by selling worthless tokens to retail investors.

Ethereum has never officially recognized Polygon as a true L2, despite its significant role in locking ETH value. If you believe Rollups are a “cultural” extension of Ethereum, why not acknowledge something closely tied to Ethereum’s security and usage?

Polygon was crucial during the 2021 bull market, contributing greatly to ETH’s asset growth, but yes, it’s not an L2 and doesn’t deserve the community’s praise. If Polygon were an L1, its valuation would be much higher.

@ri5hitripathi tweeted: “Ethereum Foundation (EF) ecosystem people accuse Polygon of being a sidechain because they prioritize scalability over the semantic logic of L2 and pleasing the Ethereum community. Look at what we see 7 years later—‘Polygon has always been right.’”

Even Paradigm—arguably the most influential and successful top-tier crypto VC that contributed greatly to Ethereum’s ecosystem and even developed its own L2 (Ithaca)—has shifted to working with Stripe on L1 (Tempo).

I think, when even your most loyal believers are building your competitors, you must have done something wrong.

Ethereum Foundation Has No Clear Direction

While Ethereum is technically decentralized, culturally it is highly centered around Vitalik. The “inner circle culture” of Ethereum is real. As people say, if you want to succeed (however you define that), all you need is to gain the attention of Vitalik’s close circle and the influence of a few top venture firms in the space.

I’m not saying you must agree with everything Vitalik says, but his views largely define what is good or bad for Ethereum, and you can’t really compete with that.

Initially, the narrative was “Ultrasound Money.” With EIP-1559 and The Merge, ETH’s economic model became deflationary, and it was supposed to become a better store of value than Bitcoin. But by 2024, ETH’s annual inflation rate turned positive.

So, the “Ultrasound Money” vision only lasted three years? That’s not enough to become a store of value. This narrative has already shattered, and it never truly materialized because ETH’s original purpose wasn’t to store value—that’s Bitcoin’s mission. You can’t compete with it in that regard.

Then Ethereum fell into a dilemma: is its token a commodity (since supply dynamics and staking mechanisms don’t fully fit), or more like a tech stock (since revenue isn’t enough to support valuations like tech companies)?

And some even argue ETH isn’t a currency at all. What’s going on? We need to pick a direction.

Ethereum can’t have it both ways—you either have a globally recognized defining direction, or you fall behind.

Financial Inspiration

I still can’t imagine that a chief engineer like Péter Szilágyi, who has contributed so much to Ethereum, earns only around $100,000 a year. The person who helped grow Ethereum’s market cap from nearly zero to $450 billion from the very beginning, earning just a tiny fraction of that—only 0.000001% of the market cap.

As the most influential and successful protocol in crypto history (after Bitcoin), it surprisingly offers no incentives or equity. Hiding behind the doctrines of decentralization, open source, and permissionless development is easy: “We’re here not to make money, but to push progress.”

But you must incentivize your most loyal fighters, or they will leave or take private jobs outside.

• Péter left, Danny Ryan left, Dankrad Feist went straight to Tempo.
• Justin Drake and Dankrad accepted advisory roles at EigenLayer in 2024 and received token allocations, which led to community resentment.

These poor souls at the Ethereum Foundation (EF), earning meager salaries compared to FAANG or AI labs, are attacked just for wanting to earn some money and help a protocol aimed at making Ethereum better.

Are you crazy? Sometimes I think that if you’re an honest, diligent person in Ethereum, you’re not allowed to make money—you’re only expected to work like a slave for that little “recognition” from Ethereum.

EF keeps selling ETH to fund operations, initiatives, and research. But maybe, you should pay your researchers enough first?

Zero Tolerance for Adaptability

“Day One. Ethereum will win. The most decentralized and longest-running blockchain.”

We hear this every day, just like we hear Ethereum’s excuses every day:

• “Yes, Ethereum is expensive and slow. But we have Rollups, so use Rollups—Rollups are Ethereum!”
• “Yes, ETH’s price lags behind everything. But Ethereum has the largest developer ecosystem, we have a solid foundation, demand will come.”
• “Ethereum is the most decentralized blockchain! Solana is trash; they lack client diversity.”
• “Ethereum runs 100%! Solana is trash; it’s been down several times.”
• “Ethereum’s network activity is lower than Solana’s. Oh, that’s because Solana’s activity is spam and memecoin gamblers. We are a moral chain!”

For years, the same excuses, the same answers, the same responses. Except for Ethereum and Rollups, everything else is garbage. If Ethereum underperforms on any metric, we say it’s still “Day One,” we know what we’re doing, and there’s no better place than Ethereum.

Everyone is tired of the community’s repeated excuses.

Ethereum feels like a stumbling, aging wealthy lady who refuses any innovation but distributes her money to her parasitic descendants.

Is it too late to mend the sheep?

Just hours before I finished this essay, Vitalik tweeted that the “rollup-centric” roadmap is a failure, and they need to find a different path and expand the L1.

You know what, I’m glad people are realizing their mistakes. It takes courage to speak out loud. But I think it might already be too late. Ethereum has once again found a long-term path, but progress remains slow.

Recently, EF has undergone some changes: new leadership, transparency in the treasury, restructuring R&D, etc. EF has started recruiting young talent for developer relations and marketing, like Abbas Khan, Binji, Lou3e, and others.

But change must be fast. Ethereum must sprint to prove everyone wrong.

Let’s wait and see. After these reforms and EF’s changes, can we see Ethereum once again become an exciting project, rather than just a symbol of blind hope and disappointment?