Ethereum Foundation AMA Summary: How to view the ETH price decline and how to deal with it

Author: Jason Chen, Source: Author Twitter @jason_chen998

On the evening of September 5, 2024, the 12th Ethereum Foundation held an AMA on Twitter Space. As usual, I will sort out and interpret some key points for you.

1. In addition to Layer2, does Ethereum have plans to further expand Layer1?

Both Justin and Vitalik answered this question, and the answer is yes, which means that Ethereum does not rely entirely on Layer2 to expand, and is also looking for ways to expand itself. The expansion methods mentioned in the answer mainly include pre-compilation executed by the virtual machine, using ZK to increase the speed of proof, and using Verkle to reduce the burden on nodes. And Dankrad said that the expansion of Layer1 and Layer2 are parallel and do not conflict.

2. What is the theoretical basis for ETH's next appreciation? Do you think the appreciation of ETH is important?

This question should be the most concerned by everyone, after all, the price of ETH is too low. Justin directly answered "ETH is money" and stated that the appreciation of ETH is very important to the success of Ethereum. He believes that the value of ETH is supported by three points, namely, the economic bandwidth that carries trillions of dollars of decentralized stablecoins, the economic security that provides unquestionable security, and the economic vitality that attracts the attention of all major economic participants.

3. Because the strategy of Layer2 makes the gas of a large number of apps very low, ETH has almost no appreciation in any usage scenarios. How to solve it?

This issue is also an important reason why everyone thinks that the price of ETH is falling. Dankrad said that he does not think that Layer2 will take away Ethereum's fees and MEV, and eventually parasitize on Ethereum to suck blood. He believes that high-value transaction scenarios will continue to exist on the main network. Layer2 only provides sufficient expansion space for the main network to accommodate a larger number of transactions. The main network should provide Layer2 with cheaper data availability to allow more Layer2 to survive. Justin's point of view is not to focus on the amount of a single transaction, but to find ways to make the pie bigger and look at the overall transaction amount. For example, the most successful goal of Ethereum is to achieve 10 million transactions per second. Even if the price of each transaction is very low, it can provide a billion US dollars in revenue a day. Therefore, the main problem at present is that the demand at the application layer is insufficient and the transaction volume cannot be increased, rather than the problem that the amount of each transaction is too small.

4. As governments around the world put pressure on reviewing transactions, what measures is Ethereum taking to ensure the neutrality of the network?

The Ethereum Foundation believes that credible neutrality is the foundation of Ethereum. First of all, it is necessary to ensure that the validator set is decentralized. Secondly, there are indeed many entity (enterprises, governments, etc.) validators, so the Ethereum Foundation has also tried to make improvements at the consensus layer, such as allowing decentralized validators to force transactions to be packaged into blocks.

5. How much money does the Ethereum Foundation have in reserve? What if the money is spent?

First of all, the Ethereum Foundation spends 100 million US dollars every year, and currently has 650 million US dollars, most of which is ETH, so the Ethereum Foundation also has a strong motivation to find a way to make ETH rise, otherwise its own money will not be enough to spend. In addition, it was mentioned in the AMA that the Ethereum Foundation currently has more than 300 people. To be honest, I think this structure is still too bloated. I don’t know how many people are paid, and how many people are only doing research and discussion. These are non-productive work.

6. If Bitcoin implements OP_Cat and develops a powerful Layer2 ecosystem, what unique value can Ethereum provide?

This question was answered by Vitalik himself. He said there are four main points. First, Ethereum has a larger data availability DA space to support the development of Layer2, and because POS has a stronger decentralization ability, it seems that many people hold different opinions on this point. Everyone thinks that POW is the safest, and POS is not safe, but Vitalik believes that POS is safer than POW. As for the community, culture, and values ​​of Ethereum, how should I put it? I feel that Vitalik's answer is still not very meaningful. I wonder if Vitalik himself has not thought it through.

Most of the other content is some specific technical discussions. To be honest, I am still relatively disappointed after watching this AMA. Regarding the issues that everyone is most concerned about, such as the lack of innovation in the application layer and the diversion of Ethereum's value by Layer2, I did not see some clear and inspiring answers, and proposed practical measures. Vitalik, wake up and stop being in love.