Ethereum is lost. There, I said\u00a0it.<\/p>\n
Right now, it feels like Ethereum is scrambling to stay relevant, with no clear direction, and the cracks are definitely starting to show. It\u2019s kinda like watching the once-great champion of the blockchain world slowly get outpaced by newer, faster contenders. And the sad part? It\u2019s staring Vitalik and the Ethereum community in the face\u200a\u2014\u200abut they\u2019re still trying to convince themselves, and everyone else, that everything\u2019s fine.<\/p>\n
Spoiler alert: it\u2019s\u00a0not.<\/p>\n
I\u2019m going to lay it all out for you and at times it may seem a little technical but I\u2019ll break it down and I promise it will be worth your time so make sure to keep\u00a0reading!<\/p>\n
Here\u2019s a question we need to ask: Is Ethereum really decentralized? Sure, Ethereum is praised for its decentralization and security, but a recent study reveals something alarming\u200a\u2014\u200athree block builders now produce over 90% of the blocks on Ethereum. Yep, just three players dominate Ethereum\u2019s block production.<\/p>\n
https:\/\/drive.google.com\/file\/d\/1YI-3CPW0z7qaaLaXOHIey95lteYqFG7d\/view?usp=drive_link<\/a><\/p>\n That\u2019s right\u200a\u2014\u200athree. In a network that\u2019s supposed to be permissionless and decentralized, this kind of concentration is a huge red\u00a0flag.<\/p>\n To combat MEV-induced centralization, Ethereum introduced MEV-Boost auctions as part of its builder market mechanism. The idea was to create a more competitive environment and distribute block-building more evenly. But after two years, we\u2019re seeing the opposite: the market has centralized significantly. Instead of leveling the playing field, MEV-Boost has essentially reinforced the dominance of a few\u00a0players.<\/p>\n And it gets worse. Access to private order flows\u200a\u2014\u200awhere the most lucrative MEV opportunities are found\u200a\u2014\u200acosts up to 1.4 ETH. That\u2019s a hefty price tag for new builders, especially given their low initial profits. This creates a significant barrier to entry, preventing newcomers from competing with the already established players who are raking in most of the\u00a0rewards.<\/p>\n Ethereum has tried to address these centralization issues with something called Proposer-Builder Separation (PBS). In simple terms, this mechanism splits the role of proposing blocks (done by validators) from building them (handled by specialized builders). Proposers are validator nodes selected by the network to propose the next block, while builders construct blocks to maximize rewards from transaction fees and MEV opportunities.<\/p>\n Sounds good in theory, right? But in reality, PBS hasn\u2019t fully solved the problem. The same study found that while 88% of MEV-Boost auctions were competitive, but a surprising 12% were not. And even when competition exists, it\u2019s not always efficient\u200a\u2014\u200aonly 79% of the auctions are considered efficient. The inefficiencies are mostly due to block subsidization, where some builders effectively pay to win, distorting the\u00a0market.<\/p>\n So, despite Ethereum\u2019s best efforts, block-building is still highly centralized, and PBS isn\u2019t the silver bullet it was hoped to be. Instead, it\u2019s just another band-aid on a deeper\u00a0wound.<\/p>\n Now here is where the Ethereum community is split. Let\u2019s just lay it out: on one side, you\u2019ve got Justin Drake, Ethereum Researcher, and others pushing for something called shared sequencing. Now, this might sound fancy, but it\u2019s really an almost impossible task. Why? Because it requires getting all the Layer 2 solutions to coordinate, with very little incentive to do so. Sure, the main benefit is synchronous composability<\/a>, meaning everything can work together at the same time, but the hurdles to get there are\u00a0massive.<\/p>\n And on the other side, you\u2019ve got Vitalik Buterin\u200a\u2014\u200athe face of Ethereum\u200a\u2014\u200awho\u2019s downplaying that very benefit. He doesn\u2019t seem to think synchronous composability is that big of a deal as you can see here. And honestly, I agree with him. So do many others in the\u00a0space.<\/p>\n https:\/\/x.com\/vitalikbuterin\/status\/1803459217933623418?s=46&t=OWWPk2bYT63xTNLVjVXe7Q<\/a><\/p>\n But here\u2019s where things get interesting: asynchronous composability\u200a\u2014\u200athe alternative\u200a\u2014\u200ais actually just as good. You get similar guarantees and a great user experience, while being able to maintain atomicity (everything happens all at once or not at all) with a little know-how. Plus, the concerns about developer experience (devX) are blown out of proportion. Better tooling is already minimizing these concerns.<\/p>\n https:\/\/x.com\/sasurobert\/status\/1796471251122147794?s=46&t=OWWPk2bYT63xTNLVjVXe7Q<\/a><\/p>\n While Ethereum is struggling with these issues, other chains like MultiversX are showing a different path forward. They\u2019ve implemented a sharded architecture that addresses these problems at the protocol level. Ethereum is trying to push the responsibility onto wallets and dApps, which is like putting a Band-Aid on a broken\u00a0bone.<\/p>\n Let me ask you something\u200a\u2014\u200aever have your internet go out? You call your provider, spend an hour troubleshooting, and in the end, they blame it on your router. So you call the router company, sit through another hour of tech support, and they tell you it\u2019s an issue with your internet provider. Yeah, that\u2019s kind of what\u2019s happening in the Ethereum ecosystem right now. Everyone\u2019s passing the buck, trying to avoid taking responsibility for Ethereum\u2019s inefficiencies.<\/p>\n The sad reality is that Vitalik and the Ethereum community are well aware of the challenges they face, yet often fail to acknowledge the amazing innovation happening elsewhere. Still sinking countless hours and days trying to convince people that Ethereum can keep up with the evolution of Web3. But deep down, we all know it can\u2019t. And don\u2019t get me wrong\u200a\u2014\u200aI have immense respect for Vitalik. He\u2019s a visionary, and Ethereum paved the way for the incredible innovations we see\u00a0today.<\/p>\n But here\u2019s the thing: the innovations have surpassed Ethereum\u2019s potential. We\u2019re talking about more efficient virtual machines (VMs), more secure and composable asset structures, and even fully sharded Proof-of-Stake (PoS) systems that can scale to millions of transactions per second\u200a\u2014\u200aall without sacrificing security or decentralization.<\/p>\n So Vitalik\u2019s dream? It\u2019s no longer just a dream. It\u2019s here. It\u2019s live. And it\u2019s functioning today, achieving the milestones Ethereum hoped to hit with ETH\u00a02.0.<\/p>\n https:\/\/x.com\/vitalikbuterin\/status\/1072162014498148355?s=46&t=OWWPk2bYT63xTNLVjVXe7Q<\/a><\/p>\n So, where does this leave Ethereum? Stuck in a lose-lose situation pretty much. With a couple options on how to move forward, but none are really all that\u00a0ideal.<\/p>\n Option 1: Ethereum can keep hoping that everyone will play nice and that shared sequencing or builder markets will work out. But let\u2019s be real\u200a\u2014\u200athat\u2019s not going to happen. It\u2019s the \u201ctrust me, bro\u201d approach, and it comes with a host of challenges.<\/p>\n One I haven\u2019t even mentioned yet? Trying to maintain credible neutrality. While you\u2019ve got half a dozen shared sequencer protocols being built currently, many prefer to stick to using Ethereum as the base layer. This is referred to as Based rollups and also comes with many limitations and\u00a0issues.<\/p>\n Option 2: Go back to the original roadmap of sharding or enshrined rollups. These two ideas are similar in that they both aim to solve Ethereum\u2019s scaling issues by increasing security, scalability, and composability. But here\u2019s the kicker\u200a\u2014\u200aVitalik himself wasn\u2019t convinced that sharding would work. Why? Because of the inefficiencies in the ERC token\u00a0model.<\/p>\n This is where MultiversX comes back into the picture. They\u2019ve solved the sharding issue by using an asset-oriented token model. In simple terms, this means your tokens are actually in your possession, unlike on Ethereum, where assets are just data in a shared smart contract. Ethereum\u2019s model? It\u2019s inefficient and even insecure, which is why we see so many hacks and wallet drains on EVM\u00a0chains.<\/p>\n I don\u2019t want to get too deep into the weeds here, but if you\u2019re curious about how this works, I\u2019ve got more content on that you can find here.<\/a> For now, let\u2019s just say that Ethereum\u2019s path forward is anything but\u00a0easy.<\/p>\n Now let\u2019s not forget about the Layer 2 market. It\u2019s growing fast, but not for the right reasons. If Ethereum decides to move forward with major Layer 1 protocol changes, it could make many Layer 2 solutions pointless. And that\u2019s a market that\u2019s booming right now\u200a\u2014\u200awhether or not it\u2019s actually solving the underlying issues.<\/p>\n The irony here cannot be missed. We\u2019re seeing a surge in Layer 2 adoption, not because they\u2019re the ultimate solution, but because they\u2019re a temporary band-aid for Ethereum\u2019s scalability issues. These Layer 2s are essentially profiting off Ethereum\u2019s shortcomings, creating a whole new set of problems in the process. Centralization risks, security vulnerabilities, and the potential for user funds to be compromised are just the tip of the iceberg. Yet, the hype train keeps rolling, with promises of a decentralized future that seems forever out of\u00a0reach.<\/p>\n And let\u2019s be real, the moment Ethereum\u2019s base layer evolves to address these issues, the Layer 2 landscape could crumble like a house of cards. All those projects that raised millions on the premise of being the next big thing? They might just find themselves obsolete overnight. It\u2019s a risky game, and the stakes are higher than\u00a0ever.<\/p>\n There is still one more hope left for Ethereum: zk proofs. Not zk-rollups, but a fully integrated zkEVM. Sounds great, right? Except there\u2019s one problem\u200a\u2014\u200ait\u2019s not ready yet, and it won\u2019t be for at least five years. And even then, it requires massive computing power to run effectively.<\/p>\n So, what does this mean? Ethereum is essentially backed into a corner, with no good options left on the table. And while the Ethereum community might not want to admit it, this is why we\u2019re seeing so much turmoil right now, along with a steady decline in ETH\u2019s value and dominance.<\/p>\n Let\u2019s talk about the elephant in the room: Ethereum\u2019s current rollup model is parasitic to the base layer. Over the last six months, Ethereum has become inflationary, and L2s are keeping over 95% of the value generated. Only a tiny fraction is trickling back down to the base layer\u200a\u2014\u200aETH. That\u2019s what I would call a broken\u00a0model!<\/p>\n Oh, and don\u2019t even get me started on how all these rollups are entirely centralized and can steal users funds at any time. At least they all promise to work towards a decentralized future\u2026with fingers crossed behind their backs and a quiet whisper of \u201ctrust me,\u00a0bro<\/em>\u201d.<\/p>\n So Here\u2019s the harsh reality: it\u2019s time to move on. Web3 is evolving at breakneck speeds, and Ethereum is being left behind. No amount of Ethereum Improvement Proposals (EIPs), middleware, or protocol upgrades can fix a weak foundation. You can\u2019t build a 100-story skyscraper on a plot of land that can\u2019t support it. And you can\u2019t keep adding layers and band-aid fixes to a blockchain with structural issues.<\/p>\n Many in the space already understand this. Instead of trying to fix Ethereum\u2019s broken foundation, they\u2019re focused on building stronger foundations from the ground up. They\u2019re delivering solutions that offer a 10\u2013100x improvement in nearly every aspect. This is the kind of 0 to 1 innovation that Ethereum just can\u2019t keep up with\u00a0anymore.<\/p>\n Look, technology evolves. It\u2019s inevitable. And yes, Ethereum is technology. Just as we moved from dial-up to broadband, from mail to email, and from cable to streaming, we\u2019re now moving from Gen 1 blockchains to Gen 2\/3 and\u00a0beyond.<\/p>\n The future is coming faster than anyone expected, and Ethereum isn\u2019t part of\u00a0it.<\/p>\n https:\/\/medium.com\/media\/8bb0cf6a161bd4e6347c94566b890ac9\/href<\/a><\/p>\n The End of Ethereum? Why ETH May Be Facing an Impossible Battle<\/a> was originally published in Coinmonks<\/a> on Medium, where people are continuing the conversation by highlighting and responding to this story.<\/p>","protected":false},"excerpt":{"rendered":" Ethereum is lost. There, I said\u00a0it. Right now, it feels like Ethereum is scrambling to stay relevant, with no clear direction, and the cracks are definitely starting to show. It\u2019s kinda like watching the once-great champion of the blockchain world slowly get outpaced by newer, faster contenders. And the sad part? It\u2019s staring Vitalik and […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-8861","post","type-post","status-publish","format-standard","hentry","category-interesting"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/8861"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8861"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/8861\/revisions"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8861"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8861"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8861"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Proposer-Builder Separation (PBS): A Band-Aid on a Bigger\u00a0Problem?<\/h4>\n
The Shared Sequencer Debate: A Losing\u00a0Battle?<\/h4>\n
Look at MultiversX: A Better Way\u00a0Forward<\/h4>\n
Vitalik Knows the Truth, But Can Ethereum Keep\u00a0Up?<\/h4>\n
Ethereum\u2019s Lose-Lose Situation<\/h4>\n
MultiversX Shows the Way\u00a0Forward<\/h4>\n
The Layer 2 Dilemma: A Growing Market with Major\u00a0Flaws<\/h4>\n
The zkEVM Hail\u00a0Mary<\/h4>\n
The Parasitic Rollup\u00a0Model<\/h4>\n
It\u2019s Time to Move\u00a0On<\/h4>\n
The Future Is Inevitable<\/h3>\n