Many thanks to Gregor Borosa, Mischa Tuffield and Carl Cervone for review and feedback
Introduction
This article is a quest to explore the essence of Ethereum beyond its technology. While acknowledging the significant role of technical advancements, we also need to ask ourselves: What motivations, values, and driving forces are behind Ethereum’s growth and development? Mihai Alisie, a co-founder of Ethereum, put it best in his article “Learning to Dream with Open Minds”:
💡 ”Ethereum as a project is more than just a technology, even if technology is at its core. In the rush of creating, co-creating and debugging everything you sometimes lose sight of the bigger picture. You need stop for a second, take a step back and observe in order to fully appreciate what’s going on.”
No technical knowledge is required for this article, but I assume you have some familiarity with Ethereum and Web3.
Values and Principles
All human endeavours start with a word. The difference in what we value the most and put at the core of our creation drastically changes the outcome.
As we go through the journey of creating something new into the world, our ability to stay true to our values and commitments shapes our path. We may initially commit to one principle but then shift based on the forces of the world, or our daily choices may not fully align with our original ideals. Values don’t actually live on “paper”. We write them down to share with the world, but they live within people’s minds. And every time we talk about those values — we enliven them, bring them to life. That’s why it’s important to raise awareness about these values, so they live with us along with zeros and ones when we design new systems.
Ethereum’s success as a leading general-purpose blockchain stems from the community’s dedication to its values and principles, including decentralization, openness, censorship resistance, transparency, and credible neutrality. Decentralization itself is not the ultimate goal. It serves as a means to enable fairness, freedom, transparency, security, and resilience. It allows us to program these values into our technologies.
Of course, properties like usability, scalability, and great developer experience are very important. If a technology is not scalable, it cannot reach mass adoption and make a long-lasting impact in the world. If the usability of technology suffers, what is the point of scalability? it will never reach its potential. However, what value do scalability and usability hold if there is a risk of compromising credible neutrality, thereby jeopardizing the legitimacy of the system?
Most open blockchains value these principles, but the devil is always in the details. What do we value more than others? Where do we cut the corners to get faster to the ephemeral “finish line”?
How Ethereum is Different?
Nearly a decade has passed since Ethereum was first introduced to the world. During this time, several well-designed blockchain networks for general-purpose computation have emerged. However, Ethereum remains the leading Layer 1 platform in terms of developer and economic activity. What sets it apart from other Layer 1 blockchains? Is it because Ethereum was the pioneering general-purpose blockchain and gained a competitive advantage? Is it solely due to its technology? Or is there something beyond technology that drives the success and adoption of Ethereum?
Multiple factors, both mentioned and unlisted, contributed to Ethereum’s status as a flagship chain. However, I believe that its core philosophy, values, and principles serve as a significant defining factor.
But first, let me take a step back and talk about other blockchain networks that by all means had chances to achieve the same level of success as Ethereum. To understand why Ethereum takes the stance of time it’s important to understand other roads taken.
Ethereum Killers
When I discovered Ethereum in 2017, I found it to be an impressive technology. However, I expected the emergence of similar networks. I was waiting the “next big thing” that would bring even more innovation compared to Ethereum. It’s not that I believed it was flawed in some way. It just seemed natural that after introducing a new technological paradigm, there would be significant room for innovation and competition. I assumed that new systems would be built, with at least the same level of impact in the blockchain world. Ethereum appeared to be the initial attempt at creating a general-purpose blockchain, and I anticipated more organized and well-funded efforts to follow. And they did.
Creating new cryptonetworks is challenging. Apart from technology, numerous social and economic factors must be considered to successfully launch a network. However, it is relatively easy to build copycat projects. At every conference I attended, I met people who claimed to have solved the “Ethereum scalability problem.”
It wasn’t until EOS blockchain came around, which raised a record-breaking 4 billion dollars in its ICO, that I saw a big player who could innovate at new levels and make a technological breakthrough. At first, it seemed they had so much leverage for competition.
- Huge financial investment
- Improvements in scalability like inter-chain communication, parallel computation, transaction compression, etc.
- WASM VM (Virtual Machine) for modern general-purpose programming languages
- Multiindex Storage API
- Ricardian contracts and many others
They also introduced a new DPOS (Delegated Proof-of-Stake) consensus protocol that was one of the factors that allowed for the scalability gains. One of their seemingly best technology advancements was their fatal mistake.
Eventually, a crucial decision was made to prioritize scalability over decentralization. This choice had significant implications and was driven by their values and goals.
Another fundamental principle that was violated is credible neutrality. Despite the network being seemingly controlled by token owners who delegated their stake, block producers had the authority to freeze accounts, supposedly to prevent scams. This undermined the blockchain’s credible neutrality and raised concerns about the system’s legitimacy within the community. Additionally, it resulted in power concentration among large consortium groups capable of investing in data center infrastructure to support the network.
In the current market, there are several other significant players like Cardano, Polkadot, Solana, and Avalanche. These blockchains showcase fascinating technological advancements. For instance, Polkadot was designed from the ground up, considering the lessons learned from Ethereum development. It offers notable enhancements in usability, interoperability, and scalability compared to the original Ethereum design. Its architecture is compelling and holds great potential for scalability. However, despite these seemingly superior technical features, Ethereum continues to grow over the years, maintaining its position as the leading general-purpose blockchain.
Values and Trade-Offs
The permissionless blockchains mentioned above often highlight values like decentralization, freedom, fairness, and self-sovereignty on their landing pages, with some prioritizing usability or affordability. The combination of these values and the trade-offs between them shapes the path and ultimate outcome.
For instance, Solana appears to value self-sovereignty and decentralization while aiming for affordability. However, the current node requirements pose challenges in achieving long-term decentralization if the architecture doesn’t change. Over the time, fewer people will be able to afford running a full node.
Ultimately, the issue boils down to the blockchain trilemma between decentralization, security and scalability. This concept highlights the challenge of designing a blockchain where enhancing one property often comes at the expense of another. The trade-off decision space is shaped by the kind of world we want to create. We must determine what aspects we are willing to compromise on and which ones we are not, because it may put at risk the whole point of the existence of blockchain technology.
The Ethereum community strives to resolve the trilemma without sacrificing decentralization. Taking shortcuts would have been easier, but the commitment to its values has paved the way for developing scalability solutions while maintaining the system’s security and decentralization.
One such example is the Layer 2 rollup-centric roadmap. The core idea is that rollups execute transactions outside the main Ethereum chain but post data back to Layer 1, where consensus is reached. This approach enables them to inherit Ethereum’s security and maintain network decentralization. The community explored other solutions such as data sharding, plasma, and more. However, it was only when rollup designs were introduced that the path to scalability, without significant sacrifices to decentralization and security, became clear.
Another example is the Builder-proposer separation, which divides the roles of the block producer and validator, who vote on the blocks. As highlighted by Vitalik Buterin in his “Endgame” article, “All roads lead to centralized block production with trustless and decentralized validation.” Some level of centralization in blockchain systems is unavoidable. As mentioned earlier, decentralization is not a cure-all but rather a means to enable certain properties within a system. As the network grows, block production requires more processing power. This design helps maintain the system’s decentralization in critical areas.
Simultaneously, various opposing forces exist within the blockchain ecosystem. These include the risk of centralization caused by large staking pools, regulatory pressures from entities like the SEC, and frequent security incidents. Most of these forces are driven by economic and political incentives.
However, the hope is that in the long term, guiding principles will help us make decisions about which properties to prioritize and which technical solutions to adopt.
In the next part I will explore some of the community guiding principles, metaphors and concepts best describing the essence of Ethereum.
Resources
