Author: DBCrypto Source: Medium Translation: Shan Ou Ba, Golden Finance

Ethereum is done. That's what I'm saying.

Now, Ethereum seems to be struggling to stay relevant, but with a lack of clear direction, the issues have gradually surfaced. This situation is like watching the former champion of the blockchain world being gradually surpassed by new, faster opponents. And what is most heartbreaking is that all of this is happening right before Vitalik and the Ethereum community's eyes, yet they still try to convince themselves and others that everything is fine.

Spoiler: It's not like that.

I will analyze the issues for you one by one, although some parts may seem more technical, I will try to explain them concisely to ensure you are not disappointed after reading.

Centralization: Is Ethereum really decentralized?

We must ask a question: Is Ethereum really decentralized? Yes, Ethereum has been praised as a decentralized and secure blockchain network, but a recent study revealed a concerning fact - on Ethereum, three block producers have generated over 90% of the blocks. Yes, just three participants dominate the block production on Ethereum.

Right - three. In a network that should be permissionless and decentralized, this centralization is a huge danger signal.

To combat the centralization issue caused by MEV (Maximum Extractable Value), Ethereum has introduced the MEV-Boost auction as part of its block-building market mechanism. The original intention was to create a more competitive environment and fairly distribute block-building rights. However, two years have passed, and the result is the opposite: the market has become significantly centralized. MEV-Boost did not balance competition but further exacerbated the dominance of a few players.

Even worse, the cost to access private order flow - which contains the most profitable MEV opportunities - is as high as 1.4 ETH. For new and small profit builders, this price is too high, creating a significant barrier to entry, preventing new players from competing with those who have already earned the majority of rewards.

Proposal-Builder Separation (PBS): Just a temporary patch?

Ethereum is attempting to address these centralization issues through the so-called Proposal-Builder Separation mechanism (PBS). In simple terms, this mechanism separates the responsibilities of proposing blocks (performed by validators) from the task of building blocks (done by specialized builders). Validators, elected by the network, propose the next block, while builders construct blocks to maximize profits from transaction fees and MEV opportunities.

Sounds good in theory, right? But in practice, PBS has not fully resolved the issue. Similar research found that while 88% of MEV-Boost auctions were competitive, surprisingly, 12% of auctions were not. Even when there is competition, it is not always efficient - only 79% of auctions are considered efficient. The main reason for inefficiency is block subsidies - some builders, in an effort to win auctions, end up losing money, distorting the market.

Therefore, despite Ethereum's efforts, block building remains highly centralized, and PBS has not become the panacea as expected. Instead, it has simply patched over deeper issues with another temporary fix.

The Battle of Shared Sequencers: A Losing Battle?

Now, the ethereum community is experiencing a split. Let's take a look: on one hand, ethereum researcher Justin Drake and others are pushing something called sharding. Now, this may sound fancy, but it's actually a task that's almost impossible to accomplish. Why? Because it requires coordination of all layer 2 solutions, but the motivation to do so is scarce. Of course, the main benefit is synchronous composability, which means everything can work together simultaneously, but the obstacles to achieving this goal are enormous.

On the other hand, ethereum's spokesperson Vitalik Buterin downplays this benefit. As you can see here, he doesn't seem to think synchronous composability is of great significance. Frankly, I agree with his viewpoint. Many others in this industry also agree.

But what makes things interesting is that asynchronous composability (alternative solutions) is actually equally impressive. You can achieve similar guarantees and excellent user experience while maintaining atomicity with just a little skill (everything happening at the same time or not happening at all). Furthermore, concerns about developer experience (devX) have been exaggerated. Better tools have already minimized these concerns.

Take a look at MultiversX: A better way forward.

While ethereum struggles with these issues, other chains like MultiversX are showing a different path forward. They have implemented a sharding architecture, addressing these issues at the protocol level. Ethereum is trying to pass the buck to wallets and dApps, which is like putting a band-aid on a broken bone, futile.

Let me ask you a question—have you ever experienced a situation where your internet disconnects? You call the service provider, spend an hour troubleshooting, and they finally blame it on your router. So you call the router company, another hour of tech support later, and they tell you it's the service provider's problem. That's what's happening in the ethereum ecosystem right now. Everyone is passing the buck, trying to evade the harsh reality of ethereum's inefficiency.

Vitalik understands the truth, but can ethereum keep up?

The sad reality is that Vitalik and the Ethereum community are very aware of the challenges they face, but they often overlook the astonishing innovations happening elsewhere. They continue to spend time trying to convince people that Ethereum can keep up with the development of Web3. But we all know deep down that Ethereum is already behind. However, please do not misunderstand, I have great respect for Vitalik. He is a visionary individual paving the way for many innovations seen today with Ethereum.

But the issue is that innovation has surpassed Ethereum's potential. We are now talking about more efficient virtual machines (VM), more secure and composable asset structures, and even a completely sharded proof of stake (PoS) system that can scale to millions of transactions per second without sacrificing security or decentralization.

So, Vitalik's dream? It is no longer just a dream. It has been realized, it is currently running, achieving the milestones Ethereum hopes to reach through ETH 2.0.

Ethereum's dilemma.

So, where does this leave Ethereum? Essentially in a lose-lose situation, with a few options for moving forward, but none of them ideal.

Option 1: Continue to rely on everyone cooperating, hoping that shared sorting or a builder's market can be effective. But let's be real—this is unlikely to happen. It's a 'trust me, bro' attitude and comes with many challenges.

One question I haven't mentioned? Trying to maintain trusted neutrality. Currently, about half a dozen shared sorting protocols are under construction, with many more inclined to stick with Ethereum as the base layer. This is known as 'Ethereum-based rollups,' but also comes with many limitations and issues.

Option 2: Return to the original sharding or embedded rollup roadmap. These two ideas are similar, aiming to address Ethereum's scaling issues by enhancing security, scalability, and composability. However, the problem arises from Vitalik's own skepticism about the success of sharding. Why? Because of the inefficient ERC token model.

Layer 2 Dilemma: Rapidly Growing Market with Major Flaws

Let's not forget about the Layer 2 market now. It is growing rapidly, but not for the right reasons. If ethereum decides to make significant changes to the Layer 1 protocol, many Layer 2 solutions may lose their significance. Yet, this market is currently thriving – whether or not it truly addresses the underlying issues.

The irony here is hard to ignore. We see a sharp increase in the adoption of Layer 2 solutions, not because they are the ultimate fix, but because they temporarily alleviate ethereum's scaling issues. These Layer 2 solutions are fundamentally profiting from ethereum's shortcomings, creating a host of new problems in the process. Centralization risks, security vulnerabilities, and the potential for user funds to be stolen are just the tip of the iceberg. However, the hype around Layer 2 continues, promising a decentralized future that seems impossible to achieve.

Let's be frank, when ethereum's base layer evolves to solve these issues, the Layer 2 ecosystem may collapse like a house of cards. Projects that raised millions, claiming to be the next big breakthrough? They could become obsolete overnight. It's a high-stakes game, with the bets getting higher.

zkEVM's All-In Bet

Ethereum has one last hope: zk proofs. Not zk-rollups, but a fully integrated zkEVM. Sounds good, right? But there's a catch – it's not ready yet, and won't be for at least the next five years. And even if it does, it will require significant computing power to operate effectively.

So what does this mean? Ethereum is actually boxed into a corner, with no good options on the table. While the ethereum community may be reluctant to admit it, this is why we're seeing so much turmoil now, and the gradual decline in ETH's value and dominance.

Parasitic Rollup Model

Let's talk about the obvious issue: Ethereum's current rollup model is essentially parasitic on the base layer. In the past six months, Ethereum has become inflationary, with Layer 2s occupying over 95% of the value generation. Only a tiny fraction of the value flows back to the base layer — that is, ETH. I would call it a flawed model!

Oh, don't get me started on how centralized these rollups are, ready to seize users' funds at any time. At least they all promise to strive for a decentralized future... fingers crossed behind their backs, whispering "trust me, bro".

It's time to move forward.

The harsh reality is: it's time to let go of Ethereum and move forward. Web3 is developing at an astonishing pace, while Ethereum is gradually being left behind. No amount of Ethereum Improvement Proposals (EIPs), middleware, or protocol upgrades can fix a weak foundation. You can't build a 100-story skyscraper on unstable ground, nor can you save a structurally flawed blockchain by constantly adding layers and band-aid fixes.

Many industry insiders have already realized this. Instead of trying to patch up Ethereum's damaged foundation, they are focusing on building a stronger foundation from scratch. The solutions they offer can achieve 10 to 100 times improvement in almost every aspect. This kind of innovation from scratch is something Ethereum can no longer keep up with.

The future is inevitable.

Technology will continue to evolve, which is inevitable. Yes, Ethereum is fundamentally a technology as well. Just as we have moved from dial-up internet to broadband, from mailing letters to email, from cable TV to streaming, today we are also moving from the first generation blockchain to the second, the third, and even further into the future.

The future is arriving faster than anyone expected, and Ethereum is no longer part of the future.