The dissolution of the Ethereum Foundation within the next few years may be the only way forward.
Written by Brunny.eth
Compiled by Alex Liu, Foresight News
This week, two Ethereum Foundation researchers (Justin Drake and Dankrad Feist) disclosed that they have become advisors to the EigenLayer Foundation.
This behavior undermines the credible neutrality of the Ethereum Foundation. Below I will argue that a commitment by the Ethereum Foundation (EF) to dissolve within the next few years may be the only way forward.
background
The Ethereum Foundation has a clear set of principles:
“We try to reduce our power and resist the natural tendency of organizations to grow and accumulate power.”
“Whenever possible, we will remove ourselves from the equation so that Ethereum can thrive with the support of the broad community, not just EF.”
“We will not try to control or force the natural course of the ecosystem, but we will do our best to help the community preserve its values and, in doing so, help Ethereum preserve its soul.”
If your first reaction when you saw the title of this blog post was “Disbanding the Ethereum Foundation is a ridiculous idea”, I have a few questions for you:
Does the Ethereum Foundation today adhere to these explicit principles?
Is the Ethereum Foundation truly credibly neutral today?
Can we reduce our reliance on and influence over the Ethereum Foundation, either this year, next year, or over the next decade?
If the answer is no, why not?
If we want Ethereum to be the world’s computer, or the global settlement layer, or whatever your favorite description of the Ethereum 100 year vision is, we need to start shedding the power and influence EF maintains in the ecosystem and allow the ecosystem to drive Ethereum’s growth over the next century.
Intellectual honesty is a core value of mine.
Trustworthy neutrality is the core value of Ethereum.
In this case, both values are violated.
Let me quote some of the disclosures from these two researchers (I’ve bolded the emphasis):
“The advisory position comes with a large EIGEN token incentive, which could easily exceed the combined value of all my other assets (primarily ETH). We are negotiating millions of dollars in tokens, vesting over three years. I am committed to reinvesting all advisory income into valuable projects in the Ethereum ecosystem.” — Justin Drake
“I do receive a significant amount of tokens from this position. I don’t think they will change or influence my position on how the core protocol should be developed, but I think the community should know it so they can hold me accountable. I think EigenLayer will bring significant benefits to Ethereum if run by people with high integrity. I believe the current leaders intend to do so, and I plan to hold them accountable.” - Dankrad Feist
In both disclosures, the researchers described the substantial financial incentives they received. I respect that they explicitly disclosed this financial incentive, though I doubt they would have made this disclosure if not for Cobie’s initial tweet and the continued backlash from the “social layer.”
Yet, in both disclosures, these researchers, who are apparently well-versed in game theory and economic incentives (based on their work), claim they are able to avoid having their positions influenced.
Economic incentives are the most important force driving almost all human behavior, in this industry as well.
How absurd is the idea that these two particular researchers are somehow immune to these extremely powerful incentives?
I do believe that deep down in their hearts, Dankrad and Justin believe they are more powerful than financial incentives. I don’t know them, but by various reports, they appear to be very good people. I am not suggesting that I strongly doubt they are greedy or malicious individuals. Perhaps they are the most powerful and disciplined people in the world.
What I don’t understand is how they can assume that the credible neutrality of Ethereum itself won’t be compromised by these advisory roles.
I'm sympathetic to the idea that advisory shares might work if they were disclosed immediately (rather than after public backlash) and the purpose was publicly stated, while the proceeds were also partially allocated to organizations that make Ethereum more robust... However, this Not how this all evolved. Instead, this approach shows a significant corruption of the ecosystem’s core values.
Trustworthy and Neutral
This brings me to the Ethereum Foundation and the concept of trusted neutrality.
Vitalik has mentioned credible neutrality as a guiding principle before (emphasis added):
When building mechanisms to determine high-stakes outcomes, it is important that those mechanisms are credibly neutral.
Essentially, a mechanism is credibly neutral if, simply by looking at the design of the mechanism, it is easy to see that the mechanism does not discriminate against any particular person…
That is, not only should a mechanism not be designed to favor particular people or outcomes; equally important, a mechanism must be able to convince a large and diverse group of people that it strives to be at least generally fair.
This is where the two EF researchers failed to do so. Despite their pursuit of opposite outcomes, it’s easy to see how their relationship with Eigenlayer has compromised their ability to remain credibly neutral (and, more importantly, the Ethereum Foundation’s ability to remain credibly neutral).
Some examples where credible neutrality is violated:
March 2023 (according to Justin’s own timeline, Eigenlayer begins approaching Justin about an advisory position) - Justin implicitly proposes EigenLayer as a possible based rollups solution.
July 2023 - Bankless’ “Restaking Alignment” podcast, where both Dankrad and Justin appear, “debating restaking”.
December 2023 - Justin Drake’s talk at the Restaking Summit (sponsored by Eigenlayer! and posted on Youtube by EigenLayer!) promises to “detail some of the incentive distortions that restaking introduces.”
April 2024 - Sequencing and Preconfirmation Calls, EF (represented by Justin) funds various groups to research L2 preconfirmation... with restaking as a soft requirement.
They are not low-level Ethereum Foundation employees. For better or worse, they are employees who speak on behalf of the EF in public discourse and have significant influence on protocol decisions. Don’t just take my word for it — see what the head of the Geth team (the most widely adopted Ethereum client) says about their influence.
Of course, the importance of EigenLayer in the entire incident cannot be ignored. EigenLayer is more than just an application on Ethereum — it has the potential to significantly impact everything from the protocol economics to the integrity of the PoS consensus itself (as Justin describes in the “Restaking Alignment” podcast above, it seems that after he received Eigenlayer Consulting Shares before).
Call to Action
I love Ethereum. Ethereum is the only reason I stay in this industry. I write this article in the hope that I can play a small part in the infrastructure of human progress over the next century.
EF does incredible work, from funding PSE to Devcon to Summer of Protocols and countless other projects. Some of my favorite people in crypto work at EF, and it's hard to give EF enough credit for the work it's done over the past decade. I'm incredibly grateful to the people who have worked on Ethereum over the past decade and made it great, especially Dankrad and Justin, who have played a big role in making Ethereum great.
But now is the time to follow EF’s guiding philosophy of long-term thinking, subtraction, and values management.
I want to be clear and specific in my call to action. In my opinion, a positive outcome would be:
The Ethereum Foundation commits to a multi-year timeline to freeze the protocol and dissolve the Foundation, or
If the EF continues to exist, it will have a constitution that sets out certain principles that the organization must abide by and must not violate. Allowing its key decision makers to take large advisory shares is equivalent to Supreme Court judges holding large equity stakes in the companies they rule on.
I'm not sure what the EF will do with the funds (burn them?), or how All Core Devs will continue to operate (Protocol Guild?), or the answers to any of the 100 open questions about the exact mechanism that would be followed to disband the EF. Hopefully this is the start of a 5 or 10 year timeline and ongoing discussion, rather than a request for immediate disbandment.
But it’s obvious to me that the only way to “help Ethereum retain its soul” and “resist the natural tendency of organizations to grow and accumulate power” is to dissolve the Ethereum Foundation and allow Trusted Neutral to flourish again.
