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Recently, there have been many controversial voices in the industry around the development and current situation of Ethereum, and the focus of doubts is mainly on the following aspects:
Question 1:Ethereum Foundation accounts are frequently transferred ETH, and its financial planning is not transparent, and the assets held may be difficult to maintain subsequent operational development.
Related events:
1. On August 24, 2024, the Ethereum Foundation deposited 35,000 ETH into Kraken, and ETH’s market value fell by 13% in the following 6 days.
2. At 16:10 on September 5, 2024, according to the monitoring of @ai_9684xtpa, the Ethereum Foundation once again transferred 100 ETHs. The address has transferred a total of 2,616 ETHs on the chain in the past 8 months.
3. At 14:07 on September 6, 2024, according to Lookonchain’s monitoring, the Ethereum Foundation transferred 1,000 ETH to the multi-sign address starting with 0xbC9a 15 minutes ago. According to the previous transaction model, this multi-sign wallet account orThe ETH will be transferred to the wallet address starting at 0xd779 and converted into asset DAI.
Response and Discussion:
Ethereum Foundation Justin Drake held on the Raddit platform on September 5, 2024The 12th Open Q&A Event (hereinafter referred to as AMA) issued a personal opinion: The Ethereum Foundation’s financial report will be released soon, and it is estimated that the Ethereum Foundation will hold about 10 years of capital reserves as a whole, and the capital reserves will change significantly due to fluctuations in Ethereum prices.
Based on the current asset market capitalization price, the Ethereum Foundation spends approximately $100 million a year.The Ethereum wallets that the Ethereum Foundation mainly uses now hold assets worth approximately US$650 million.At the same time, the Ethereum Foundation also has monetary reserves that can cover operational needs in the next few years.
Ethereum founder Vitalik Buterin said on the 12th AMA:Currently, the Ethereum Foundation’s budget strategy is to spend 15% of the remaining funds each year, which means the Ethereum Foundation can continue to operate, but over time, its influence in the ecosystem will become smaller.
According to media reports,AyaMiyaguchi, executive director of the Ethereum Foundation, once posted on social media:The Ethereum Foundation has an annual budget of approximately US$100 million, mainly composed of grants and wages, and some recipients can only accept payments in fiat currency.Since 2024, the Ethereum Foundation has been told not to conduct any funding activities for complex regulatory reasons and is currently unable to share plans in advance.The Ethereum Foundation’s ETH transfer transaction is not a sales transaction.
Question 2:The Ethereum Roadmap planning is over-focused on Layer2 solutions (mainly Rollups), ignoring the focus on the development and improvement of Ethereum main network Layer 1.RoadmapNeed to modify.
Response and Discussion:
Ethereum researcher Dankrad Feist said in his personal opinion on the 12th AMA:Many believe that a Rollups-centric roadmap will weaken Ethereum’s fee income and MEV, and eventually Rollups may become parasites.I don’t think this is correct.
Today the highest value transactions will still happen on Ethereum mainnet Layer1, and Rollups will expand the entire ecosystem by providing users with a lot of trading space.This relationship is symbiotic:Ethereum provides cheap data availability for Rollups, which makes Ethereum Layer1 a natural hub for high-value transactions.
In the process of advancing the Rollup-centric Ethereum roadmap, I believe that expanding Layer1’s execution capabilities should also be a goal.It doesn’t necessarily conflict with the roadmap, this is manifested in:
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Data availability is almost infinitely scalable—the ultimate limitation of inability to scale essentially comes from users’ interest in Ethereum, i.e. how many people are willing to run the full node seriously and record all data.
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Execution capability will inevitably be objectively limited, but the ultimate restricted bottleneck is the single-threaded limit. At present, state access is a direct limitation to extending the execution capability of Ethereum Layer1.
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Through zkEVM and parallelization technology, the scaling capability of Ethereum Layer1 can be increased by 10 times to 1000 times.Rollups will provide the remaining scaling capabilities to meet Ethereum’s needs to have a “world-class scale”.
The Ethereum Foundation’s long-term sustainability plan is to use SNARK to expand the EVM execution capabilities of Layer1, the Ethereum mainnet.In addition to significantly improving the vertical scaling advantages brought by Layer1 EVM Gas limitations, there is an opportunity to use EVM – in – EVM precompilation for arbitrary horizontal scaling to verify EVM execution within EVM at low cost.
This precompilation will allow developers to programmatically launch new Layer1 EVM instances, thus unlocking a supercharged version of executing shards, where the number of shards is unlimited and a single shard is a programmable Rollup, i.e., “native”Rollup ”.
△ Ethereum’s 2024 roadmap consists of the following 6 parts:
The Merge, The Surge, The Scourge, The Verge, The Purge and The Splurge
Question 3:The ecosystem is developing well, but the market value of ETH has not increased significantly.
Response and Discussion:
Anders Elowsson of the Ethereum Foundation stated in his 12th AMA:In the long run, Ethereum’s promotion of sustainable economic activity is directly related to the market value appreciation of ETH.If a sustainable economic activity system is designed, the price growth of ETH is designed.Vice versa, when designing ETH value-added, it is necessary to ensure that Ethereum facilitates sustainable economic activity.
In the short term, focusing only on “price growth” without considering its source may lead to a long-term reduction in value.I personally think that the current roadmap is actually a “price growth roadmap”.If Ethereum succeeds, but ETH does not have price growth, I would be surprised or even a little disappointed, but this may be an opportunity to buy ETH, because the market will eventually realize this theory of price growth.
Justin Drake of the Ethereum Foundation said on the 12th AMA: I personally think that the price growth of ETH can be attributed to liquidity and premium.The key indicator for liquidity is total expenses, not the fees per transaction.The key indicator for premium is the use ratio of ETH as a pledged asset.In the future, Ethereum’s successful goal is to achieve 10 million transactions per second, which can still bring in billions of dollars in daily revenue even if the fee per transaction is less than 1 cent.
Question 4:Optimistic Rollups are actually cheaper than ZK Rollups, which is logically a superior technology.
Response and Discussion:
George Kadianakis said on the 12th AMA:The Ethereum Foundation is currently studying different zero-knowledge (ZK) projects at multiple stages.
Justin Drake of the Ethereum Foundation said on the 12th AMA:I’m very excited about introducing SNARK to the Layer1 EVM.We have made tremendous progress over the past few months.According to the latest data from Uma (from Succinct), it is currently proven that all Layer1 EVM blocks cost about $1 million per year, and future optimizations will further reduce this cost.
It is estimated that the proof cost of all Layer1 EVM blocks may be only $100,000 per year by this period of 2025, thanks to optimizations at all levels of the SNARK ASIC and stack.The Ethereum Foundation is also accelerating formal verification of zkEVM, a project led by Alex Hicks with a budget of $20 million.
For beacon chains, our recent benchmarks accelerate the timeline of hash-based signature aggregation with SNARKs.This is the key to achieving quantum security after beacon chain.
Max Resnick, an Ethereum researcher at the Special Mechanism Group (SMG), said in an interview with the Bankless podcast:ZK is the only technology that can truly make breakthroughs in bandwidth limitations, and Optimistic Rollups cannot do it…
What should I do next?I think we should start optimizing the features needed for ZK Rollups.
If you want to continue to follow the Rollups route, you need to turn immediately to make the cost of verifying ZK proofs on chains lower, rather than continuing to lower the data costs, because the data on chains is almost free now.
Also, I think the fees on Ethereum Layer1 have reached a balanced level, but if you want to launch an app, the key consideration is:What happens when an application achieves explosive growth?
If I were an app developer and developed a killer app that could achieve a 100-fold growth, which could bring a large number of users, I would not choose to publish it on Ethereum at this stage – because in the best case,I succeeded, and it would block the chain and the fees would become too high to be unavailable.Therefore, based on this consideration, the real important development facing Ethereum is not to maintain the current balance, but to create how strong the expansion capabilities it can have.Strong enough to attract top application developers who want to bring 100 times the growth of users into the Ethereum ecosystem.
How should we view the dilemma and doubts of Ethereum?
Trace the origin of the original intention and firmly optimistic about the value development of Ethereum
Compared with the market’s doubts about Ethereum, Ethereum founder Vitalik Buterin is still firmly optimistic about the future of Ethereum and believes that it is full of hope.At the 2024 ETHTAIPEI event, Ethereum founder Vitalik Buterin once said in a media group interview:
“I thinkIn the next five years, it will be very critical for the development of Ethereum.Because before that,Many applications that are still in the theorizing stage or are smaller in scale will be ready to enter the real world from now on.Many ideas arising from the blockchain field have penetrated into the wider world through many ways that have not yet been fully understood.
Non-financial applications are also expected to start having a greater impact.The special benefit of decentralization to these projects is that almost everyone can write new clients, and when you have a new client, you can access and write the same content without having to build you from scratchnetwork effect.
At the same time, IEthereum’s basic identity space is expected to grow rapidly, technology is improving rapidly, and I really hope it will soon witness more mainstream use cases being introduced into use.Many people are worried about account identity issues, but now when people want to solve it, the first thing to consider is to make centralized solutions. I hope the Ethereum space can create a true decentralized identity alternative and make them easy to access.use.
In addition, Stable Coins may have a significant impact on the future, andEthereum can help Stable Coins become more open, decentralized, and not rely on third parties with weak trust base.You can already see the efforts of projects like Layer2 like Base.”
Looking ahead, the market needs to give Ethereum some time
1. Outlook for Pectra Upgrade
Following the Dencun upgrade, Ethereum will usher in another major technology update – Pectra upgrade in the first quarter of 2025.This upgrade will further simplify and improve the process of creating and maintaining smart contracts on the chain, which means that developers can develop more powerful applications more efficiently, and for users, they can also experience faster transaction speeds and moreLow transaction fees and safer on-chain use cases.
Pectra upgrades have direct benefits for modular blockchain, abstract accounts, abstract account wallets and other projects and users.In addition, there are also technical improvement proposals that are beneficial to the ZK Prover network during the Pectra upgrade, which is also an effort to enhance ZK technology.
2. Looking forward to PoS mechanisms, ecological innovation and strong community power
The question of whether the PoS consensus mechanism will guide centralized risks is the concern of many blockchain users.
Ethereum founder Vitalik Buterin also said in an interview with the media: The risk of centralization of the PoS consensus mechanism is the most important challenge at present.Situations with high attention that may pose centralized risks include the growth of MEV review risks and pledge activities.
Compared with other influential industry insiders in the blockchain world, Ethereum founder Vitalik Buterin and Ethereum’s core team have always been highly vigilant about the various centralized situations that have appeared on Ethereum and adhered to the concept of decentralization.Actively speaking out is also the core force that Ethereum deserves a firm look forward to.
In addition, although Ethereum’s use case innovation and growth seem to have entered a development bottleneck period, in the world of blockchain, thanks to the continuous upgrading of Ethereum infrastructure and technological improvement, Ethereum’s ecological power is still strong, andIts most unique value lies in its strong community power – this is a necessary basis for the possibility of disruptive innovation and a firm support for Ethereum’s future development.
4. Outlook ZK Technology
In the Layer2 ecosystem that improves Ethereum’s scalability, there is currently a certain consensus on the development and application of Optimistic Rollups and ZK Rollups: In the short term, the development of Optimistic Rollups with better compatibility will be faster than the ecological development based on ZK technology.But in the long run, ZK Rollups, which can ensure real-time transaction validity and provide privacy protection, will inevitably develop more actively.
Privacy is the key point that drives a new chapter in Ethereum’s future narrative.Ethereum founder Vitalik Buterin once said in a blog post about three technology transformations that Ethereum needs:Without excessive privacy technology changes, Ethereum may lose most of its users and Ethereum may fail.
The privacy protection scenario provided by ZK technology is its main application scenario in the blockchain field.As Vitalik Buterin once emphasized at the annual meeting of the Ethereum community: “In the next 10 years, ZK-SNARK will be as important as blockchain.”
As technology matures, in the next step of Ethereum development, the narratives related to ZK technology will be more diverse and attractive.
5. Outlook ETH
1confirmation founder Nick Tomaino expressed his strong optimism for the development of digital assets in a second quarter letter published on social platform X on August 24, 2024:ETH’s market value may exceed BTC in the next 5 years.Currently, BTC’s market value is about 4 times higher than Ethereum’s market value, and both will continue to grow, but ETH will eventually surpass BTC.
The accumulation of value of ETH is crucial to the success of Ethereum, which is still a relatively common consensus at present.As Ethereum Foundation members said on the 12th AMA: The value accumulation of ETH will be achieved through total fees and asset premiums, and the value growth of ETH will support the security and economic activity of the Ethereum ecosystem, thus promoting Ethereum to become a globalFinancial platform.
