Recently, discussions within the industry regarding Ethereum FUD have been fervent. A while ago, Jian Ge, Haotian, and NingNing initiated a three-hour Space discussion about 'What is happening with Ethereum'. Spinach participated throughout and heard many brilliant viewpoints, learning comprehensively about the current dilemmas faced by Ethereum and the industry from the perspectives of the relationship between Ethereum and Layer 2, ideology, organizational structure, and historical lessons, and felt everyone’s deep love and responsibility towards Ethereum.
During the Space, I had already been brewing some thoughts internally, but I hesitated greatly, knowing that my viewpoint diverged significantly from most people's Web3 Native perspectives, fearing backlash (fully aware of the chaotic atmosphere in the industry). Therefore, I did not express any opinions throughout, but later decided to stand up and share my viewpoints, attempting to provide a new perspective on the challenges currently faced by Ethereum and even the entire industry from the application level that everyone often discusses. Although this viewpoint may not be mainstream, I believe that only through rational and honest discussions can we drive the industry towards a healthier direction.
This article is not intended to FUD Ethereum and the industry, nor to provoke any opposition; it merely provides a different perspective for critique and reflection. If you do not agree with my views, just smile and do not attack, thank you! The article is quite long, so Spinach has prepared an AI summary for friends who do not want to read long texts.
Background
Before discussing the viewpoints, let me introduce the current work background of Spinach. Many friends who pay attention to Spinach may have noticed that the output frequency of Spinach has significantly decreased for a long time, and there have been few opinions published on the industry.
This is because over the past year, Spinach, as a founding member of Singapore's new FinTech company Ample FinTech, has deeply participated in project collaborations with three central banks regarding tokenization and cross-border payments. This experience has shifted my mindset and focus from purely the Web3 circle to the strategic movements of global central banks and traditional financial institutions.
During this period, Spinach began to spend a lot of time researching blockchain and tokenization-related research reports and papers published by traditional forces, understanding the projects they are working on, while also keeping an eye on industry trends on Twitter and discussing the development trends of the Web3 industry with friends. By simultaneously focusing on the Web3 circle and the application development context of the traditional financial system, I was able to establish a more comprehensive cognitive structure between the two dimensions, which also gave me a different perspective on the future of the industry.
Disconnected parallel worlds
It is this dual perspective of being in two different worlds that has made me increasingly aware of the disconnection in atmosphere and development paths between the two industries. In the Web3 world, the current situation that everyone is complaining about is: an increasing number of technical infrastructures are emerging, and more and more new concepts and terminologies are constantly appearing, deliberately creating complexity and raising the threshold of understanding, with most of the ultimate goals oriented towards Vitalik and exchanges, eventually becoming 'ghost towns' after TGE, and as for whether there is real use value, who really cares?
Recently, everyone’s discussion focus has also turned to questioning Vitalik and the Ethereum Foundation. More and more voices are complaining that Vitalik and the Foundation seem overly obsessed with 'technical discussions' and 'ideal pursuits', dedicating a lot of energy to studying technical details while showing little interest in the actual needs of users and commercialization exploration. This tendency has raised widespread concerns within the industry.
During this Space, Professor Meng Yan @myanTokenGeek borrowed from the historical experience of internet development and pointed out incisively that this path of detachment from C and alienation from the market is difficult to sustain. If Ethereum continues to maintain this 'technology-first' development orientation, then everyone’s concerns are not unfounded.
However, when we turn our attention to outside the crypto circle, we find a vastly different scene: the attitudes of traditional financial forces and governments toward Web3 technology are undergoing significant changes. They not only view blockchain and tokenization as an important upgrade opportunity for existing payment and financial systems but are also actively exploring transformation paths. This shift is certainly driven by the recognition of new technologies, but the deeper motivation may be the perceived impact and threat of Web3 technology on the existing order.
In 2024, a milestone shift occurred when the Bank for International Settlements (BIS), often referred to as the 'central bank of central banks', officially proposed the concept of 'Finternet' (financial internet).
This initiative is of great significance—it positions tokenization and blockchain technology as the next-generation paradigm of the human financial currency system, instantly causing a stir in the traditional financial sector and becoming one of the most discussed topics.
This is not just the introduction of a new concept but also a significant endorsement of blockchain and tokenization technology by traditional finance. Its impact quickly spread: major financial institutions and central banks around the world have accelerated their pace, engaging in unprecedented active exploration in areas like tokenization infrastructure construction, asset digitization, and payment application implementation.
Behind this series of major initiatives is not a hasty decision made by the Bank for International Settlements, but a strategic choice based on years of in-depth research. Spinach spent a significant amount of time tracing and studying the decision-making trajectory of the Bank for International Settlements and discovered a gradual development context: as early as 2018, the institution began systematically researching Web3 technology and has since published dozens of highly professional research papers.
In 2019, the Bank for International Settlements took a critical step by establishing the BIS Innovation Hub to systematically launch experiments related to blockchain and tokenization. This series of in-depth research and practice ultimately led them to recognize an important fact: behind blockchain technology and tokenization innovation lies tremendous potential capable of reshaping the global financial landscape.
Among the many experimental projects of the Bank for International Settlements, the most iconic is mBridge—this CBDC cross-border payment bridge jointly initiated by its Hong Kong Innovation Center, the People's Bank of China, the Hong Kong Monetary Authority, the Bank of Thailand, and the Central Bank of the UAE in 2019. From a technical architecture perspective, mBridge is essentially a public permissioned chain based on EVM, operated by the central banks of the participating countries as nodes, supporting direct cross-border settlement of each country's central bank digital currency (CBDC) on-chain.
However, history is always full of dramatic twists. In the currently complex geopolitical landscape, especially after the outbreak of the Russia-Ukraine conflict, this project, initially aimed at improving cross-border payment efficiency, unexpectedly became an important tool for BRICS countries to evade SWIFT international sanctions.
This situation has forced the Bank for International Settlements to choose to withdraw from the mBridge project at this stage. Recently, Russia has officially launched the BRICS Pay international payment settlement system based on blockchain technology, pushing blockchain technology to the forefront of geopolitical competition.
Another significant move by the Bank for International Settlements is the initiation of the largest public-private partnership project in blockchain history—Project Agora. This project has gathered an unprecedented participation lineup: the seven major central banks (Federal Reserve, the Bank of France representing the EU, the Bank of Japan, the Bank of Korea, the Bank of Mexico, the Swiss National Bank, and the Bank of England), along with more than 40 global financial giants including SWIFT, VISA, MasterCard, and HSBC.
Such large-scale multinational collaboration has a surprisingly clear goal: to utilize blockchain technology and smart contracts to construct a globally unified ledger system while maintaining the existing financial order, thereby optimizing the current financial currency system. This initiative itself is a strong signal: the momentum of blockchain technology development is unstoppable, traditional financial forces have shifted from observing to fully embracing it, and are actively promoting its application in real scenarios.
In contrast, the Web3 industry, despite daily shouting the slogan of Mass Adoption, is actually keen on speculating meme coins, intoxicated by short-term attention economics. This stark contrast prompts deep reflection: as traditional financial institutions are actively promoting the scaled application of blockchain technology with concrete actions, should the Web3 industry also rethink its development direction?
Mass adoption: casino or application?
In this fragmented development situation, we must reflect on a fundamental question: 'What truly constitutes meaningful Mass Adoption?' Although this term frequently appears in discussions within the Web3 industry, it seems that everyone has significantly different understandings of it.
Looking back over the past few years at so-called 'blockbuster projects' in the Web3 industry, an intriguing pattern emerges: those projects claiming to achieve 'Mass Adoption' are essentially speculative games dressed in innovative clothing. Whether it’s the endless stream of meme coins, the 'P2E' models under the banner of GameFi (like the once-popular sneaker project), or SocialFi claiming social innovation (like http:// Friend.tech), a closer look reveals they are nothing more than carefully packaged 'digital casinos'. While these projects attracted a large influx of users in the short term, they did not genuinely address the actual needs and pain points of users.
If bringing more and more people to participate in speculative trading and raising coin prices is what Mass Adoption means, then this kind of 'Adoption' is merely a zero-sum game of wealth concentration among a few, and its unsustainability is obvious.
Spinach has witnessed far too many cases of friends outside the circle entering the crypto circle and losing everything, with those who can truly profit being exceptionally rare. This phenomenon has also been confirmed by recent data: a recent study by an on-chain data analyst shows that on the http:// pump.fun platform, only 3% of users profited more than $1,000, and behind this cold data reflects that making money with crypto is indeed a game for a very few.
What is even more worrying is that the entire industry has become a breeding ground for hackers, phishing, and fraud. Occasionally, you can see on Twitter news about certain whales losing heavily to phishing permits. Not to mention ordinary retail investors, according to the latest FBI report, in 2023 alone, the American public suffered over 5.6 billion dollars in fraud losses within the cryptocurrency industry, with victims over the age of 60 surprisingly accounting for 50% of the total number, and many ordinary investors' interests cannot be protected in this 'dark forest'.
However, speculative behavior and increasingly serious hacking incidents are deteriorating the industry environment, prompting us to reflect: are we chasing the wrong direction of 'Mass Adoption'? In the fervent speculative atmosphere, are we ignoring the truly sustainable value creation?
It is important to clarify that I am not trying to completely deny the speculative nature of Web3. After all, the vast majority of participants enter this industry with the intention of obtaining investment returns, and this profit-seeking motivation is not without merit; the speculative nature will continue to exist. However, Web3 should not and cannot merely stop at being a global casino. It needs to develop truly sustainable and practically valuable application scenarios.
Among them, payments and finance are undoubtedly the industries with the greatest potential for the application of Web3 technology. This has already been recognized by traditional financial forces, national governments, and market levels: we see traditional financial forces exploring various innovative applications on a large scale, including payment system innovation, tokenization of real-world assets (RWA), integration of DeFi and traditional finance, and the emerging PayFi concept. These active explorations and practices clearly point to the most pressing needs in the current market.
In my personal opinion, for Ethereum or the industry, the core issue may not lie in whether the technical direction is correct, but whether we truly understand what constitutes valuable applications. When we overly focus on technological innovation while ignoring market demands; when we are keen on creating concepts while distancing ourselves from real scenarios, is this developmental direction really correct?
This line of thinking raises a deeper concern: if we continue to develop in this way, will the traditional financial system or SWIFT network that we once aimed to disrupt instead become the driving force behind the true large-scale adoption of blockchain? Furthermore, might we see a scenario where public permissioned blockchain systems led by traditional financial forces and governments dominate the vast majority of practical application scenarios, while public chains may be marginalized into niche 'speculative playgrounds'?
While the Web3 industry’s focus is still on challengers like Solana, it seems that no one is paying attention to the fact that traditional financial forces have already sounded the horn for entry. In the face of this major change, shouldn't we consider not only the current development strategy for Ethereum or the entire industry but also how to position and assert our value in the future wave of gradual compliance in the industry? This may be the true test the industry faces.
Having observed these trends, I have the following thoughts on the true healthy and sustainable path to Mass Adoption in the industry:
The primary focus should be on solving practical problems:
Whether in infrastructure or applications, we should be grounded in real needs and focus on solving genuine pain points, such as the many ordinary people and small enterprises around the world still struggling to access financial services, or the privacy issues businesses face when using blockchain, etc. The value of technological innovation ultimately needs to be reflected through solving practical problems.
Secondly, lowering the barriers to entry:
The ultimate goal of technology is to serve users, not to create barriers. The plethora of jargon and complex concepts emerging in the current Web3 world somewhat hinders true popularization. We need to make technology more accessible, such as using (Based Chain Abstraction) chain abstraction technology to address user experience issues.
The third is to create continuous value:
The good development of the industry must be based on sustainable business models and cannot rely excessively on speculative trading. Only projects that truly create value can survive long-term in the market’s tests, such as Web3 payments, PayFi, and RWA, etc.
The importance of technological innovation is indisputable, but we must also recognize that applications are the primary productive force. Without practical applications as a foundation, no matter how many infrastructures or how advanced the technology, they ultimately remain castles in the air.
The turning point for Mass Adoption of Web3 applications has arrived.
Throughout history, attempts to integrate blockchain with the real world have never ceased, but often failed to materialize due to various factors such as timing, regulatory restrictions, or technical bottlenecks. However, the current situation presents an unprecedented opportunity: the technical infrastructure is maturing, traditional financial forces are beginning to actively embrace innovation and explore practical applications, and simultaneously, regulatory frameworks around the world are gradually improving. These signs all indicate that the next few years may very well be a critical turning point for Web3 applications to achieve massive adoption.
At this crucial juncture, regulatory compliance is both the biggest challenge and the most promising opportunity. Increasing signals indicate that the Web3 industry is gradually moving from the initial 'wild era' into a 'new era of compliance'. This transition not only signifies a more regulated market environment but also heralds the beginning of truly sustainable development.
This shift is reflected in multiple aspects:
1. The regulatory framework is becoming increasingly complete
Hong Kong has launched a comprehensive regulatory system for Virtual Asset Service Providers (VASP)
The formal implementation of the EU MiCA regulation
The US FIT21 Act passed in the House of Representatives in 2024
Japan amended the Fund Settlement Law to provide a clear definition of crypto assets
2. The standardized participation of traditional financial institutions
Large asset management institutions like BlackRock have launched Bitcoin and Ethereum ETFs
Traditional banks are beginning to provide custody services for crypto companies and launch tokenized bank deposits
Mainstream payment companies are launching compliant stablecoins
Investment banks are establishing digital asset trading departments
3. Compliance upgrade of infrastructure
More exchanges actively applying for compliance licenses
Widespread application of KYC/AML solutions
The rise of compliant stablecoins
The application of privacy computing technology in compliance scenarios
The launch of central bank-level blockchain (CBDC currency bridge mBridge, Singapore Global Layer 1, Bank for International Settlements Project Agora, etc.)
4. The regulatory pressure on Web3 and the compliance transformation of projects.
The largest decentralized stablecoin project MakerDAO transforms Sky to embrace compliance.
FBI phishing law enforcement meme projects market makers.
DeFi projects are beginning to introduce KYC/AML mechanisms.
In this trend, we are seeing:
More traditional financial institutions are entering the Web3 industry through acquisitions or partnerships
Traditional financial forces are continuously controlling the price discourse of Bitcoin through Bitcoin ETFs
A new generation of compliant Web3 applications is rapidly rising
The entire industry is gradually establishing order under regulatory pressure, and the opportunities for overnight wealth will continue to diminish
The application scenarios of stablecoins are shifting from speculation to substantial uses like international trade
Undoubtedly, the future battleground for blockchain technology will focus on several key industries: payment system innovation, tokenization of real-world assets (RWA), emerging PayFi concepts, and the deep integration of DeFi and traditional finance (CeFi). This reality presents an unavoidable proposition: if the industry is to achieve breakthrough development at the practical application level, it must confront interactions with regulatory agencies and traditional financial institutions head-on. This is not a multiple-choice question, but a necessary path for development.
The reality is that regulation has always been at the top of the industry ecosystem. This is not only an objective fact but also a rule repeatedly validated in the development history of the crypto industry over the past decade. Every major industry turning point has almost been closely related to regulatory policies.
Therefore, we need to seriously consider several fundamental questions: Should we choose to embrace regulation and seek a symbiotic path with the existing financial system, or stubbornly adhere to the 'decentralization' concept and continue to linger in the regulatory gray area? Should we pursue a purely 'casino-like' Mass Adoption, repeating the speculative-driven path of the past decade, or commit to creating real, sustainable value to truly realize the innovative potential of blockchain technology?
Currently, the Ethereum ecosystem faces a significant structural imbalance: on one hand, there is an ever-increasing stack of infrastructure and a constant stream of technical innovations, while on the other hand, the development of the application ecosystem is relatively lagging. In this contrast, Ethereum faces dual challenges: it must respond to the strong offensive from emerging public chains like Solana in terms of performance and user experience, while also being wary of the encroachment of compliant public permissioned chains laid out by traditional financial forces in the practical application market.
More challenging is that Ethereum has to simultaneously deal with competitive pressures from two directions: on one side, public chains like Solana are gaining more market share and user attention in the meme market due to their performance advantages; on the other side, public permissioned chains led by traditional financial institutions are gradually laying out in practical application scenarios such as payments and asset tokenization, likely to occupy first-mover advantages in these key industries in the future.
How to seek breakthroughs under this dual pressure while maintaining technological innovation without losing market competitiveness are key challenges that Ethereum must face when seeking a breakthrough.
The above points only represent a personal perspective, hoping to spark more constructive thinking and discussion within the industry. As participants in the industry, we should all contribute to promoting Web3 towards a healthier and more valuable direction.
Due to personal cognitive limitations, I welcome everyone to engage in friendly discussions to explore the future development direction of the industry together. Additionally, I also trade coins and want to make money, so please don't attack me as a meme coin player or a staunch believer in decentralization. My viewpoint is simply that the industry should not only focus on speculation but also include some positive elements.
【Disclaimer】The market carries risks, and investment requires caution. This article does not constitute investment advice. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Invest at your own risk.
This article is republished with permission from: (PANews)
Original author: Spinach
