Has Ethereum lost its way?

Author: Ganesh Swami Source: coindesk Translation: Shan Ouba, Golden Finance

Is it possible that Ethereum will lose its focus and end up accomplishing nothing by trying to be everything to everyone? Ethereum needs to refocus on its original ambition - to become the world's computer, said Ganesh Swami, co-founder of Covalent.

Since its launch in 2015 under the code name "Frontier", Ethereum has come a long way, evolving from a grand idea to the foundation of thousands of decentralized applications today. However, as blockchains like Bitcoin and Solana compete for Ethereum's developer and user base, the Ethereum ecosystem has begun to look shaky, lacking a clear direction, and gradually deviating from its original goals.Even the value of Ethereum seems a bit lackluster. Ethereum's token price has so far failed to break through the all-time high of $4,700 set in 2021.

This begs the question: Has Ethereum lost its way? If so, how can we get it back on track?

As Confucius said, “He who tries two things at once loses both.” In chasing Solana’s faster execution speeds while trying to compete with Bitcoin’s concept of “hard money,”Ethereum has gradually forgotten its original purpose of being the “world’s computer.” Ethereum team leader Péter Szilágyi said, “Ethereum has lost its way.” Even its status as an “ultrasonic currency” has been questioned, as Ethereum’s inflation rate reached 0.74%, which is related to reduced transaction activity and a lower ETH burn rate. Although some have advocated that ETH should maintain its deflationary nature, we must remember that “ultrasonic currency” was never Ethereum’s goal.

Ethereum’s Infrastructure Progress

Ethereum is more than just money, and it has never pursued the highest TPS (transactions per second) or the lowest gas fees; its mission has always been to build a truly decentralized future. Vitalik Buterin and his co-founders created Ethereum to be the “world’s computer” - a global network of thousands of computers on which anyone can build decentralized applications at any time. However, in the pursuit of accessibility and interoperability, the ecosystem was distracted by various emerging trends and lost focus.

With the price falling below $2,500, many people believe that the reason for Ethereum’s poor performance is related to the applications built on its network. Many dApps (decentralized applications) developed on Ethereum today often only gain short-term hype, but due to clunky user interfaces and underdeveloped platforms, these applications have limited usage and slow user growth. In addition, these applications often only attract the same user groups scattered across different L2 (Layer 2) networks. Without useful applications, Ethereum will not be able to achieve its goal of becoming the world’s computer.

Ethereum’s primary goal should be to build strong infrastructure, not applications. The fact that decentralized computing and secondary and tertiary networks that support Ethereum are actively being developed shows that Ethereum’s infrastructure is making progress. Even enterprises are now beginning to prefer permissionless networks like Ethereum over private enterprise networks because it has become cheaper to develop on permissionless chains.

But even with these developments, Ethereum is still improving slowly and is currently in the middle of its expansion roadmap, a relatively quiet period where Merkle Trees, zkSTARKS, account abstraction, and integration of different L2 technologies are gradually being implemented.

There needs to be less short-term thinking. Like Bitcoin, Ethereum will eventually come out of its current trough of seemingly little activity. Ethereum is having its “lightning moment” and it needs to abandon the “ultrasonic currency” narrative and stop trying to catch up with Solana. Ethereum has a clear path to correction for those who have been following its progress. For example, we still haven't seen how people can utilize "Blobs" other than as storage space for aggregate fraud proof challenge windows.

Future Outlook

After the Dencun upgrade in March 2024, Pectra will be the next major upgrade for Ethereum, expected to be launched at the end of 2024. And on Ethereum's long-term roadmap is "The Purge" upgrade. This upgrade will help Ethereum keep up with the pace of other blockchains and handle the influx of activity that will follow after the chain achieves wider adoption. The Purge upgrade will simplify the protocol by cleaning up old historical data, thereby eliminating technical debt and reducing the cost of participating in the network.

While removing historical states brings many benefits, it also puts the Ethereum chain at risk of being monopolized by centralized entities, turning Ethereum into a data-centralized chain. Ethereum may therefore be more like a billboard, reducing the trustless property. This problem has hindered the next phase of development of the "global computer" because downstream activities such as multi-agent AI systems and decentralized computing cannot scale in the absence of data. This problem needs to be solved by a solution: decentralized long-term data availability.

Currently, Ethereum is indeed stuck in the middle stage of its expansion roadmap. However, Ethereum can get back on track by turning its focus to infrastructure. This is the key to allowing the network to truly fulfill its role as the "global computer". As Ethereum completes its roadmap and achieves decentralized computing in the next few years, the global computer will run smoothly relying on a strong global infrastructure.