Recently, discussions about Ethereum and its ecosystem have set off a wave of enthusiasm in the industry. A Twitter Space discussion about "What happened to Ethereum?" attracted many industry insiders to participate, covering a wide range of topics from technical games to ideological confrontations. In the discussion, there were both criticisms of the Ethereum Foundation and deep reflections on its technical ideals. This sentiment of "the deeper the love, the more severe the criticism" reflects the industry's high attention to the future development of Ethereum.

However, in this discussion, I discovered a more fundamental question: Is the “Mass Adoption” we are pursuing on the wrong path? Does the Web3 industry need to re-examine its development direction?

Background: A cross-border perspective from Web3 to traditional finance

Over the past year, as a founding member of Ample FinTech, a FinTech startup in Singapore, I have been deeply involved in cooperation projects with central banks in multiple countries in the fields of tokenization and cross-border payments. This experience allowed me to break away from the "insider perspective" of Web3 and observe the strategic trends of the traditional financial system.

This dual perspective made me clearly feel the separation between the two worlds:

  • In the Web3 community, the industry is overly focused on technological innovation, but ignores actual needs. The phenomena of hyping concepts, creating complexity, and taking shortcuts are endless.

  • In the traditional financial field, blockchain technology and tokenization have been regarded as important tools to improve the existing financial system, and central banks and financial institutions in various countries are actively promoting the implementation of practical applications.

This kind of contrast is exactly what the current Web3 industry needs to be alert to.

The fragmented parallel world: the loss of Web3 and the rise of traditional finance

Web3 world: a technological frenzy that is out of touch with reality

Currently, Ethereum and its ecosystem are facing the development dilemma of "technology first". Vitalik and the Ethereum Foundation have invested a lot of energy in technical details, but have little interest in user needs and commercial exploration. Many projects in the industry have packaged "innovation" as a speculative tool and eventually became a "ghost town".

This phenomenon has aroused widespread doubts in the industry:

  • Does technological innovation truly solve users’ pain points?

  • Is this “out-of-market” development model sustainable?

Traditional finance: From waiting to fully embracing

At the same time, traditional financial institutions’ attitudes towards blockchain technology have undergone a significant shift. In 2024, the Bank for International Settlements (BIS) proposed the concept of "Finternet" (Financial Internet), marking the official recognition of the status of blockchain technology in the traditional financial system.

This trend has driven global financial institutions to actively explore tokenization infrastructure construction, asset digitization, and payment applications. For example:

  • mBridge Project: A cross-border payment bridge based on blockchain, which has become an important tool for BRICS countries to circumvent SWIFT sanctions.

  • Project Agora: Bringing together the world’s seven major central banks and more than 40 financial giants, attempting to build a global unified ledger system.

These measures by traditional financial forces are promoting the large-scale application of blockchain technology with practical actions. However, the Web3 industry is still obsessed with short-term speculative economy and there are few application scenarios that truly solve actual needs.

Mass Adoption: Casino or App?

In this fragmented context, we need to rethink: "What is the true meaning of Mass Adoption?"

Speculation-driven “Pseudo Adoption”

Looking back at the "explosive projects" that have emerged in the Web3 industry in the past few years, whether it is MEME coin, GameFi, or SocialFi, most of them are "digital casinos" driven by speculation. Although these projects have attracted a large number of users in the short term, they have not created sustainable value.

The consequences of this "pseudo adoption" are obvious:

  • Ordinary investors lost all their money and the credibility of the industry was damaged.

  • Hacking and fraud are frequent, and the industry environment is deteriorating.

  • The speculative atmosphere inhibits the emergence of truly valuable applications.

Sustainable Mass Adoption

In contrast, true Mass Adoption should be based on the following:

  1. Solve practical problems: Develop practical solutions based on users’ real needs, for example, improving the accessibility of financial services and solving privacy issues.

  2. Lower the threshold for use: Through technological innovation (such as chain abstraction technology), simplify the user experience and make it easier for more people to use blockchain technology.

  3. Create sustainable value: Develop application scenarios with commercial sustainability, such as Web3 payments, RWA (real-world asset tokenization), and the integration of DeFi and traditional finance.

The future of Web3: the wave of compliance and the turning point of the industry

Currently, the Web3 industry is at a critical historical node. The technical infrastructure is becoming more mature, traditional financial forces are actively exploring blockchain applications, and regulatory frameworks in various countries are gradually improving. These factors together point to one conclusion: the next few years will be a critical period for Web3 applications to achieve large-scale adoption.

The rise of compliance

"Compliance" is becoming the main theme of the development of the Web3 industry. The following trends are particularly notable:

  1. Improved regulatory framework:

    • Hong Kong launches VASP regulatory regime.

    • The EU MiCA Regulation has officially come into effect.

    • The US FIT21 bill was passed.

  2. Traditional financial institutions participate:

    • BlackRock launches Bitcoin and Ethereum ETFs.

    • Banks provide digital asset custody services.

    • Investment banks set up digital asset trading departments.

  3. Infrastructure upgrades:

    • The rise of compliant stablecoins.

    • The application of privacy computing technology in compliance scenarios.

  4. Web3 Project Transformation:

    • Decentralized projects like MakerDAO embrace compliance.

    • DeFi projects introduce KYC/AML mechanisms.

Ethereum’s dual challenges

In this wave of compliance, Ethereum faces dual competitive pressures:

  • Performance challenges from public chains such as Solana.

  • Market cannibalization from compliant public permissioned blockchains from traditional financial institutions.

How to find a balance between technological innovation and market demand, and how to find one's own position in the wave of compliance are core issues that Ethereum and the entire Web3 industry must face.

Conclusion: Driving Web3 towards a healthier future

The Web3 industry needs to wake up from "technology frenzy" and "speculative economy" and turn to a more pragmatic and sustainable development path. What we need is not only technological innovation, but also a deep understanding of actual needs and a comprehensive grasp of the market ecology.

In the new era of compliance, participants in the Web3 industry need to work together to contribute to the real value of blockchain technology. Only in this way can Web3 truly realize its grand vision of subverting tradition and creating the future.