Interpreting the Ethereum Foundation's new structure: Reaffirming self-sovereignty amid institutional trends

Author: CM

EF has proposed a new structure, taking this opportunity to reinterpret the Ethereum worldview. Crypto is amidst a massive wave, where is Ethereum heading?

EF has laid off 20% of its staff and announced a brand new structure------5 working layers. Compared to the previously loose foundation structure, EF will clearly define what it should do in the coming years. These 5 working layers are:

• Protocol Layer

• Access Layer

• User Layer

• Community Layer

• Institutional Layer

We can understand this as the division of work responsibilities within EF.

1/5 · Protocol Layer

Maintain the core attributes of Ethereum, which Vitalik has been emphasizing as CROPS:

• Censorship-resistant

• Robust

• Open

• Private

• Secure

The specific work is more focused on underlying technologies, such as safely advancing hard forks, reducing trusted dependencies, resisting quantum threats, and combating toxic MEV, etc. This part is EF's bottom-line task and the core value of Ethereum. It has always advocated not sacrificing Ethereum's self-sovereignty for short-term financialization, institutionalization, or market narratives.

Of course, this is very difficult in the current environment because, from the user's perspective, embracing institutions and markets always seems flawless. In reality, I believe decentralization is not an excuse for laziness and evasion in marketing. If we treat Ethereum as a brand new world, CROPS is the bottom line of world order. Therefore, under the premise of not leaving this bottom line, actively meeting the needs of various roles in the new world is the only way to give this world value and quickly escape the utopia of the geek world. This is undoubtedly the right thing to do. Of course, this does not necessarily have to be done by EF; EF has also expressed its position and role multiple times, and I hope more organizations can take on this task in the future.

2/5 · Access Layer

The Access Layer focuses on whether users can truly utilize Ethereum's self-sovereignty capabilities in practice. EF mentions several key actions: reading the chain, transacting, proving, authorizing, exiting. Users and future agents representing users should be able to perform these operations without relying on unverifiable intermediaries.

There is a very important principle called zero option, which means that for every intermediary path, there must be a credible, non-intermediated alternative path, and this path must remain available.

I think this is crucial. The most direct example is that if one day the front end crashes or a server goes down, you should still be able to interact with your funds directly through the contract. If you have ever been trapped, you can deeply appreciate its significance.

3/5 · User Layer

The task of the User Layer is to ensure that EF's work is based on the needs of real users and real organizations. It will focus on user segmentation and user profiling. Its existence is to connect the Protocol Layer and the Access Layer, enabling development to truly reach users, making these decisions effective rather than existing in a vacuum of imagination.

This has been a shortcoming for EF in the past; many discussions tended to be overly research-oriented or infrastructure-oriented. We can clearly see that the past prosperity of Ethereum, such as DeFi summer and NFT summer, primarily stemmed from community innovation, with no intersection between the application side and the technology side, and there was no feedback from the application side to the technology side. Ethereum thus entered an unexpected period of prosperity.

Some attribute it to luck, while others say it is an inevitable result of Ethereum's technological accumulation. In fact, the Ethereum ecosystem has indeed guided a massive explosion of on-chain applications, marking the entry of crypto into a new era. However, at that time, the choices available to developers and users were limited, so smart people and smart money gathered on Ethereum.

Today's situation is vastly different; L1 and L2 are everywhere, and the cost of launching chains has rapidly decreased. Although Ethereum still has security and stability as its biggest moat, when other competitors do not expose problems, this value is not easily recognized by users and developers. (I personally agree that security is the biggest moat for public chains.)

Therefore, the User Layer is the most important area for EF to focus on; a new world needs to understand what its residents want.

4/5 · Community Layer

Its purpose is to maintain and disseminate the consensus of Ethereum's values.

• Within the ecosystem: Help the community understand why Ethereum exists, what it should uphold, and what narratives it should not be swayed by.

• Outside the ecosystem: Help EF connect with adjacent fields such as open source, privacy, civil liberties, and public interest technology.

So what consensus does it need to establish? Based on EF's article and my understanding of Ethereum, it can be summarized as follows:

1. Not being coerced by centralized interests

2. Upholding technological neutrality, unaffected by any cultural, political, or other factors

3. Adhering to a CROPS-based value system, not sacrificing any aspect for short-term commercial interests

The loosening of consensus in this cycle, I believe, is the most severe in history. Previously, when crypto had not yet entered mainstream view, the user base was small, there were no applications, and prices were sluggish. These issues did not cause users to lose faith that decentralization is the future. However, in this cycle, with the launch of spot ETFs for BTC and ETH, the emergence of DAT companies, and the U.S. stablecoin bill, institutions began to layout and develop L1, all of which exposed more people to crypto. From this perspective, it is a significant success. However, the impacts it brings are slowly becoming apparent; these impacts are subtle but are gradually changing the underlying logic of this market.

For example, a large number of stablecoins on-chain have brought TVL while replacing the monetary attributes of BTC and ETH. How long has it been since we heard the term "coin-based"? Before USDT was born, exchanges used a coin-to-coin trading model, mostly trading against BTC. During the DeFi summer, most on-chain LPs were trading against ETH, and NFTs were priced in ETH. Today, these things are gradually disappearing; the hand of U.S. dollar hegemony has reached into the blockchain, and DAT companies have packaged crypto into a form they once despised.

Regarding decentralization, people's perspectives have shifted from opposing the opacity, corruption, and inefficiency of traditional finance to questioning whether institutions need decentralization. In fact, this question does not require much thought; the demand for decentralization from institutions is certainly limited or only applicable in certain special scenarios. The term decentralization is being discussed less and less, and it even carries a mocking connotation.

Of course, I believe crypto has no reason to reject the needs of institutions; it is permissionless, and both institutions and individual users should be accepted. However, if the underlying consensus of public chains is changed to welcome institutions and the consensus based on decentralization is altered, we cannot define it as wrong, but the ultimate outcome of this action is not much different from the second internet, where a few authoritative institutions control the network nodes. If this situation continues to develop, these chains will quickly become national chains or institutional chains, making it easy to cut off Iran's business on an American chain. Many people compare maintaining neutrality and decentralized public chains to the high seas, which seems to have some merit.

5/5 · Institutional Layer

Responsible for EF's interactions with institutions, but with self-sovereignty as a prerequisite. EF's expression towards institutions is not "making it easier for institutions to control users," but emphasizes creating better integration cases using Ethereum and cryptographic technology.

This expression is quite clear, as discussed above. Those truly universal businesses that continuously serve global users are still best suited to be placed on the Ethereum public chain because they will never be disturbed by certain coercive means and factors. In contrast, ecosystems with central control become increasingly difficult to achieve this over time.

In conclusion, we are in the midst of a massive wave that cannot be changed. However, Bitcoin and Ethereum have experienced countless market changes, whether the outside world is in dawn or darkness, the next block will continue to be produced as usual.