Is Ethereum experiencing an existential crisis?

This post is taking part in the Lens x Kiwi Writing Contest.

In this essay, I will explore the cultural challenges facing the Ethereum community and how Ethereum’s Layer 2-centric vision, combined with ideas from Hans Widmer's bolo’bolo and Balaji Srinivasan's The Network State, can offer a roadmap for revitalizing Etherian culture. By examining the unique cultural dynamics and intended demographics of different Layer 2s, I’ll highlight strategies to address the lack of clarity in the cultural trajectory of some projects.

Rooted in the foundation of Ethereum core values, I propose a more intentional, community-driven approach to Layer 2 development that can create a collaborative atmosphere for both L1 and L2. Ultimately, I will also share my own vision—perhaps naive—hoping to foster transparency of intention and inspire open dialogue within the Ethereum ecosystem.

Is Ethereum experiencing an existential crisis?

Many of us entered the Ethereum space with “Aha” moments—realizations that crypto offered something fundamentally different from the systems we knew.

From the immutability of decentralized software to revolutionary ideas like digital ownership and advancements in incentivization strategies, there were moments of excitement and hope. However, despite years of progress, I’ve noticed a growing sense of nihilism creeping into Ethereum’s conferences and hackathons. Veteran builders often express concerns that we are simply “reinventing the wheel” and that decentralization, once our rallying cry, has become an ideal that feels distant.

When newcomers approach, the question is often: "What’s the use case?"

And too often, the best answer we have is still: "Payments!"

Ethereum’s core values—decentralization, collaboration, and openness—need to be revisited, realigned, and strengthened.

The pushback to this negative talk is subtle yet significant. I appreciate the terms we Etherians use in the space. The most notable one, in my opinion, is "Optimistic", and it speaks volumes about a fundamental part of our collective psyche.

In the end, what defines us as Degens if not our overt optimism toward our financial decisions?

But optimism alone is not enough, and as we all know, ZK is the Endgame. We also need ZK proof of the importance and scale of what we are building. So that next time my curious friend comes back and asks the same question, I can say:

"Look! Here is the proof. A proof so self-explanatory that you, with Zero Knowledge of what we did to reach here, will know whether you want to jump in or not."

Ethereum isn’t having an existential crisis—it's undergoing an evolutionary transformation. Much of the “wheel-reinvention” we hear about is simply Ethereum figuring out its scalability and real-world utility.

Layer 2s: Infrastructure or Something More?

Ethereum Layer 2s are often seen as technical solutions to scaling. But what if we think of them as more? What if, like the autonomous communities described in Hans Widmer's bolo'bolo, Layer 2s could embody different cultural, social, and economic models? And this is somewhat already the case!

This Layer 2-centric approach could allow Ethereum to serve as a foundation for not just a financial revolution but a cultural one, fostering ecosystems that operate with their own values, their own demography and governance structures.

The Foundation

Although this paragraph is strong, I think the whole philosophy page of the Ethereum Foundation could appreciate more clear definitions of the core values and not just shorten it with “and many more”.

In an attempt to clarify and reemphasize some values that are felt by many of us but are less frequent in the discussions, I would like to draw some parallels to concepts that have been mentioned in bolo’bolo.

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As said above, the following is just an attempt to point at the discussion on these topics. I don’t see anything absolute in the way I chose the name of the rights, or even if it’s a good idea to call them “rights”. I would love to know if they resonate with you, how you would define them, if I am mistaken about any of them, or if there is anything we should add.

Further on I am not proposing that the concepts in bolo’bolo, are something that should be strictly followed or attempting to construct a utopia. They are strictly used as my inspiration to write. -------------------------------------------------------------------------------------------

Right to hospitality

In bolo'bolo, hospitality is a right. Each bolo welcomes travelers with food, shelter, and basic necessities, creating a culture of mutual support and sharing. Ethereum’s conferences and hackathons embody this to some extent, offering mentorship, resources, and even covering travel expenses for some participants. However, these events often feel transactional—focused on competition or individual opportunities.

To truly embody the spirit of hospitality, Ethereum needs to prioritize collaboration over competition, especially for Web3 beginners and newcomers. We need more events that focus on learning, cooperation, and inclusivity rather than prizes or prestige.

The Metamorphisis

For years, Ethereum unintentionally repelled many developers and enthusiasts, particularly those from less privileged backgrounds. The perception of Ethereum as an expensive and exclusive network was reinforced by high gas fees and the community's perceived arrogance.

After speaking with people from other ecosystems at chain-agnostic conferences, I noticed a common theme: Ethereum’s biggest criticisms—expensive fees, arrogance, Solidity’s limitations, and the inherent risks of smart contracts—have provided fertile ground for alternative ecosystems to attract newcomers. These chains gained traction simply by addressing Ethereum’s shortcomings.

Be proud, but not arrogant!

There’s no question that Ethereum has reasons to be proud:

• Ethereum L1+L2 has over $500 billion in Total Value Locked, with $30 billion of that on Layer 2s.

• As of July 2024, Ethereum alone has 8,865 open-source developers, not even counting contributions from Layer 2s.

• Gas fees have become significantly more affordable, creating opportunities for more projects and developers. Take a look for yourself!

However, with only 0.1% of the world’s 26 million software developers active in Web3, there is enormous untapped potential. It’s crucial that the Ethereum community becomes more hospitable to newcomers.

And this is no longer just about potential—it’s becoming urgent. We have plenty of blockspace but not enough users to fill it.

(Spoiler Alert: Screenshots from growthepie’s new feature)

Ethereum’s revenue from Layer 2 settlement is down by more than 99%, and the only way to reverse this trend is to bring more users and builders into the ecosystem. We need to replace any traces of arrogance with open arms and a culture of mentorship and accessibility.

By fostering a more inclusive, welcoming environment, Ethereum can attract the next wave of builders and enthusiasts who will build the applications that fill our blockspace and bring real demand to the network.

The Path Forward: Hospitality as a Strategy

The way we approach newcomers to the Ethereum ecosystem shapes their experience and determines whether they stay. When they first arrive, they aren't concerned with the complexities of blockchain technology or ecosystem politics. What they seek are simple things: a welcoming face, an interesting problem they might solve, and a personal incentive to get involved.

Our culture—the ideas we stand for and the atmosphere we create—becomes the lore that binds them to the ecosystem. If they feel aligned with this vision, they’ll stick around. Layer 2s can foster these connections through personal engagement or by supporting local, non-profit Web 3 communities.

One of the most untapped opportunities for Ethereum lies in Web 3 student clubs at technical universities. These groups naturally connect with academia for research and education while building communities through events and programs that introduce our culture to the next generation of builders and innovators.

Students are hungry for inspiration. They're often disillusioned by the rigid academic system and the rat race that awaits after graduation. Blockchains have the power to inspire and restore their sense of agency. We should tap into this potential, empowering them to see how Ethereum can redefine not just technology, but their future.

Local communities, especially with their proximity and frequency of interaction, can be the driving force behind real-world adoption of Web 3. Imagine attending the next ETH conference, and seeing Layer 2 payments accepted in local shops and restaurants, all thanks to local Web 3 initiatives.

Picture student festivals fueled by drinks and food sponsored by a specific Layer 2 chain, with discounts for those using blockchain wallets. This is about taking the incentives we're so proud of in Web 3 and bringing them into the real world. We can enable these tangible, everyday use cases that bridge the gap between blockchain technology and daily life, making Ethereum an active part of people’s communities and routines.

But for that, we need stronger local unions and it's about time Etherians chip in.

Right to One's Time: Work and labor

In bolo'bolo, work is voluntary, not something that dominates life. There is a balance between personal enjoyment, creative endeavors, and communal activities. There is also an emphasis on non-market economies like Gift Economy and sharing. The goal is to create fulfilling work that directly serves the community’s needs—free from the exploitation of wage labor and disconnected from the traditional structures of capitalism.

Ethereum’s ethos is rather close to this concept. By supporting projects that allow people to pursue creative, community-driven work, the ecosystem is actively rejecting the rigidity of traditional labor markets. This paves the way for a future where work is driven by passion and contribution, rather than profit alone.

We see this shift in action through mechanisms like Retroactive Funding, public goods grants, and protocol grants. Platforms like Optimism’s Retro Funding, Gitcoin, Giveth, Glo Dollar, and Octant are all experimenting with new ways to reward contributions that benefit the entire ecosystem.

As a builder in growthepie, I’ve seen firsthand how critical these resources are. They ensure that builders’ work is both impactful and financially sustainable, reflecting Ethereum's commitment to aligning work with meaningful contributions.

Right to Cultural Diversity

Bolo’bolo envisions a world where each bolo embodies different cultures, lifestyles, and practices, but still engages in mutual support and trade with other bolos. Ethereum Layer 2s can serve as decentralized networks that reflect different values, demographics, and goals, while still benefiting from a shared underlying infrastructure.

Layer 2s have to start pointing out their focuses, narrative, and the kind of demography that they intend to attract to themselves by making their values clear as the sunny summer sky.

It’s done either by the kinds of events they plan, the kinds of people they approach and the projects they support and partner with.

MegaETH

MegaETH for example is already on this. They have set their eyes on the young generation. For ETH Brussels 2024. They gave students from RWTH Aachen, Cambridge, and Oxford University full scholarships to join the Ethereum community for the whole week, and the way we were treated was nothing but exemplary!

Our student organisation Aachen Blockchain Club was part of this scholarship and we managed to send 14 passionate students to Brussels, and our teams won 2 hackathons.

They are attracting, the ambitious, the alternative, the youth. Diversity is their north star and they are bringing Etherian culture to places in the world that need it the most.

It will be interesting to see what they plan for token distribution and builder support, but based on my conversations with them I know it's not going to be like we have seen before.

Optimism

Optimism, on the other hand, has a pronounced focus on the Regen Culture. They are at the forefront of experimentation and research in new public funding mechanisms like Quadratic Funding. They strive to empower open-source software and aim to redefine labor incentives.

They are the standardization maxis, and love writing well-thought protocols and guidelines and are always ready to iterate. They are in a way policymakers of the decentralized autonomous societies of the future, they are setting the foundation. Impact = Profit is revolutionary and if it resonates with you know where to go.

Their devotion and alignment to the core values of Ethereum are clear.

ZKSync

From their initial phases, they set their eyes on the Network State. They are changing the outlook of Onchain governance with a strong focus on their community. The have made their intentions clear with the ZK Credo.

They attract the privacy-oriented, the digital revolutionary, the highly technical, and experts in security.

It's too soon to see how they voice their vision and how successfully they attract their desired demography, and it seems that their Airdrop wasn't exactly what they needed to attract them.

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It's a shame I don't have enough information and experience with other Layer 2s to be able to pinpoint their culture. However, it can be helpful to see how their Blockspace has been used till now.

It seems that Linea, as an emerging Layer 2 has had a focus on Social activities and NFT in general, and Base, mantle, and scroll are highly finance-focused.

It's important to point out that these stats are highly skewed due to extensive farming activity in the whole ecosystem, and in general, it's too soon to determine the actualization of a Layer 2s culture in these early stages. But it is going to take more work on the part of Layer 2s to push their vision and culture in the next 2 years.

MEV Subculture

The MEVers and farmers are one of the most important subcultures that exist in the Ecosystem. They are the Bootstrappers of new layer 2s, they drive the much-needed initial boost in activity and revenue. They point out bugs and incentive misalignment, by accident or intentionally.

All in all, farmers have been the greatest source of revenue for many Layer 2s Pre-EIP 4844. Take this example from ZKSync.

For a whole year before $ZK TGE, ZKSync was the most active Layer 2 in the whole ecosystem. Their profit? ZKSync had a whopping $20 million in profit in the year before its TGE.

And now, in the Post-EIP 4844 era, the MEVer subculture seems to be one of the greatest revenue generators for Layer 2s. Most notably on Base in the past 6 months.

The Next Steps:

By going to the roots of our values and ideas - practicing the archeology of our knowledge - we can revitalize them again.

Drawing from The Network State essay, this cultural push is akin to what Balaji calls a "Network Union."

"Unlike a social network, a network union has a purpose: it coordinates its members for their mutual benefit. And unlike a traditional union, a network union is not set up solely in opposition to a particular corporation, so it can take a variety of different collective actions."

After we have these conversations again, and consequently show the new generation the things we care about, it would be time for a realignment and focus on the next steps:

Build trust offline, keep it trustless Onchain

Start holding more inclusive in-person meetups of increasing scale and duration while simultaneously building a strong internal economy using cryptocurrency. Zuzalu is a great example of such an initiative, however, they could definitely appreciate more of our attention and support.

Also, Solana Ecosystem Superteams all around the world have been exceptionally successful in the last year. And there might be something for us to learn from them, too.

Superteams are groups of passionate individuals tasked with building and maintaining relationships with universities and local Web 3 non-profits by sponsoring their events and getting their help to host Superteam's Solana events, i.e., Local Hackathons, Ideathons, Devshops, etc.

They simply offer us a budget for food, drinks, and rooms, and we host their events. In return, we get recognition, and more engaging and fun events to offer to our members, and possibly new club members.

What do participants get? Contacts to their future employers, a community, and access to alternative ways to fund their studies! And, yeah also free food! We students go the extra mile for that!

Crowdfund physical nodes

The next level would be crowdfunding physical spaces—apartments, houses, and eventually entire towns—to bring digital citizens into co-living communities in the real world. And these will be projects that Layer 2s need to collaborate together to make possible.

This is where Layer 2 federations come into play:

Layer 2 Federations

I propose these federations as a collaborative effort to fund and enable bigger projects that benefit the ecosystem at large and not just for the benefit of one Layer 2. These federations can be in the form of collaborative Matching Pools in Quadratic Funding Rounds focused on the bigger picture.

Let's take Crowdfunding physical nodes as an example of what these federations can strive for. Where are the best places for these physical nodes then?

I believe smaller, technical, and entrepreneurial student cities are the best to focus on, in the initial phases. It will also be easier to get the cooperation of local authorities, and there will be a new wave of freshmen every semester to join the associations and clubs. It would be best that these cities be in close vicinity of multiple major cities, for easy access to major airports, and external inflow of residents.

Aachen is a great example! Once the city of coronations, now the spring of visionaries! A city with 26% of its 250K population being students.

RWTH Aachen is the second biggest Technical University in Germany, bringing forth the greatest number of startups nationwide. There are 3 European capital cities in Europe in the 3-hour radius of Aachen, along with Cologne, Düsseldorf and Frankfurt, all reachable with high-speed trains.

Final Words

Layer 2s, far beyond being mere scalability solutions, hold the potential to reshape Ethereum’s cultural landscape. They provide a playground for experimenting with governance, economic models, and community-building and ultimately the first Network States. By embracing the principles of hospitality, creativity-driven work, and cultural diversity, Ethereum can continue to lead—not only in technology but also in defining new social and economic structures.

The time has come to replace any traces of exclusivity or arrogance with open arms, welcoming the next generation of builders, innovators, and thinkers. By clearly defining our shared intentions and recognizing the trajectories we’re on, we can inspire more people to contribute meaningfully. growthepie embodies this transparency—let's make our goals and passions visible and bring in those who are eager to join forces.

What's my intention? As naive as it might seem, I want to make Aachen the first Network State playground in Europe, sprouting out from an already existing start-up city. Co-live with other builders and together transform our immediate surroundings to create proof of possibility!

The metamorphosis is already underway. What remains is our collective commitment to foster a more inclusive, optimistic, and culturally rich ecosystem—one that mirrors the best of what Etherians stand for. And in doing so, we can create ZK-proofs of our intentions, making our values not just ideals, but verifiable truths.

What are your intentions? Visions? Aspirations?