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Key Takeaways
Leadership Vacuum: Despite decentralization ideals, the Ethereum Foundation (EF) lacks a clear governance structure. Vitalik Buterin alone appoints leadership, causing uncertainty.
Cultural Hostility: Dismissing memecoins, Lido-like solutions, and “degen” trading alienates core users and builders, fueling rival chains’ growth.
Eroding Trust: Opaque treasury reports, conflicting L1/L2 messages, and whispers of stealth ETH sales push investors and builders to explore other ecosystems
Ethereum is stuck in the doldrums. It’s been a year of painful underperformance for $ETH holders, and rival ecosystems (Solana, Sui, Hyperliquid, etc.) are gobbling up market share. While many point to technical factors like L2 “value leakage” or EIP-4844’s further reduction in L1 fee burn, the bigger problem is cultural and political.
“Everyone is midcurving why ETH’s price performance has sucked… Ethereum leadership and culture have alienated users and builders by being hostile to its own app layer,” says David Hoffman, co-founder of Bankless. Around the same time, veteran community member Sacha Saint-Léger warned that “a culture that over-fetishizes research over engineering will always get outcompeted.” Both critiques pointed to the same crisis: Ethereum’s leadership and culture have drifted away from the user- and builder-focused ethos that once drove unstoppable growth.
Source: X (@TrustlessState)
1. The Price Slump and Waning Momentum
Throughout the past year, $ETH price has lagged, especially compared to certain alt-L1s that ramped up marketing, user acquisition, and shipping velocity. Ethereum, by contrast, appeared stuck in “theory mode”, delivering scattered execution and an unclear roadmap. The once-popular “ultrasound money” narrative also lost steam when L2s siphoned off on-chain activity, leaving fewer fees on L1 and a weaker burn rate.
At the core of the malaise is leadership drift. The Ethereum Foundation (EF), once central to the chain’s coordination and messaging, has been sending mixed signals about Ethereum’s future and how it plans to compete. Investors noticed, and a platform once viewed as a default choice for builders is now competing with emerging chains that are hungrier, faster, and more user-friendly.
2. EF’s Crisis of Purpose
Behind closed doors, the EF has faced growing scrutiny over opacity and lack of accountability:
No Clarity on Who’s in Charge: Prominent Ethereum contributors blame “lack of clear leadership” for stalled progress. Despite the project’s decentralization ethos, Vitalik admits he alone picks EF leadership “until we have a proper board.” Having one person in charge contradicts the ideal of open governance. There’s no transparent process, no vetting criteria, and no timeline for forming this proper board; only uncertainty about when real oversight will emerge.
Source: X (@VitalikButerin)
Minimal Transparency: In 2019–2021, the EF published comprehensive annual reports detailing expenses (R&D, salaries, grants). More recently, it’s offered only sporadic blog posts or quarterly grant data. Observers like DefiIgnas say the EF effectively skipped a 2023 transparency report because it never released a consolidated, audited breakdown. Instead, it shared fragments (like Q4 grants), leaving key questions about salaries, overhead, or overall treasury management unanswered, and fueling speculation of stealth ETH sales.
Source: X (@econoar)
Leadership Shake-Up, Same Confusion: Under pressure, EF’s Executive Director Aya Miyaguchi announced she’d step down to a new “President” role, but the community saw it as damage control. Vitalik’s confessional tweet about being the de-facto decider raised even more alarms.
Meanwhile, top researchers like Justin Drake, Dankrad Feist, and Danny Ryan have contradicted each other in public about L1 usage, deflation dynamics, and Ethereum’s scaling roadmap. No single voice is stepping up with a unified vision. The overall effect: confusion. Builders aren’t sure if Ethereum wants them at L1, L2, or maybe nowhere at all, while the EF leadership seems to be arguing behind closed doors.
People are questioning whether the EF could handle urgent tasks like L1 user retention, L2 synergy, or brand strategy. As Joe Lubin (co-founder of Ethereum) told Cointelegraph, “The community is identifying and screaming about something that could be considered a problem.” If EF’s not solving it, who will?
3. Cultural Decay
3.1. Policing “Approved” Use-Cases
Hoffman’s tweet singled out how Ethereum “exorcised” Lido Finance, one of its most successful staking protocols. Instead of celebrating Lido’s adoption, many influencers demonized it as a centralization risk, an abstract concern that overshadowed Lido’s real utility. Builders got the message: be too successful and you’ll be pilloried.
It didn’t stop there. Few Ethereum insiders often dismissed memecoins and degen trading as trashy. A chunk of the community embraced a “holier-than-thou” stance: if your project or token attracted speculation, you weren’t on the “approved” list. Meanwhile, Even Vitalik Buterin himself has shown a bit of this cultural hard line. He has publicly rejected the idea that Ethereum should embrace “crypto casinos” or anything-goes gambling apps, pushing back against critics who say Ethereum is intolerant of degenerate use-cases. Also, Justin Drake once declared, “the L1 is not for users,” sparking outrage. The takeaway for many was clear: Ethereum’s top minds considered everyday user behavior beneath them.
3.2. Over-Focus on Theory, Under-Focus on Reality
Sacha Saint-Léger’s lament that Ethereum’s “faulty feedback loop” fails to see “reality for what it is” struck a chord. dataalways.eth similarly criticized the community’s obsession with theoretical elegance over empirical user needs. While Ethereum’s research wing churned out proposals for advanced cryptography and multi-year roadmaps, users were screaming for simpler improvements: a more affordable L1, user-friendly wallets, frictionless bridging from L2s.
Ethereum culture started to fetishize academic purity, ignoring the baseline demands that made DeFi and NFTs blow up in the first place. Rival chains quickly stepped into that gap.
4. Infighting Destroys Investor Confidence
Ethereum once outshone its competitors because it had cohesion: a shared vision uniting Vitalik, the EF, core devs, and the broader community. That unity has splintered. The EF rarely provides a clear plan; high-profile devs openly contradict each other on social media. Meanwhile, speculation that the EF is selling ETH from its treasury at suspicious times only amplifies the distrust. The sum effect:
Big Investors see disorganized leadership and bail, pivoting to ecosystems with clearer brand direction.
Smaller Builders question which layer to target (L1 or L2?) and get frustrated by the “figure it out yourself” vibe.
Traders see no strong catalysts for ETH’s price, especially if the EF leadership can’t even align on meme narratives or how to handle core governance.
Source: X (@lookonchain)
5. Alienating Investors and Builders
Unsurprisingly, the combination of leadership dysfunction and cultural gatekeeping eroded investor confidence. Market watchers noticed:
No Clear Catalysts: With the EF seemingly in disarray, big funds found little reason to hold ETH over other assets. The once-optimistic ultrasound money thesis hasn’t materialized at scale; fees dropped, burn rates plummeted, and supply growth wasn’t deflationary.
Major Builders Defect: Some iconic Ethereum-native teams have begun hedging their bets. MakerDAO, for example, decided to explore a Solana-based codebase for its “NewChain” rather than sticking purely to Ethereum. That’s a troubling sign when your own Defi pioneer is building elsewhere.
Reduced Mindshare: The once-loud cheerleading from devs and whales fell to a dull murmur. If everyday users feel unwelcome at L1 and the EF appears rudderless, why should new teams bet on Ethereum?
The net effect: Ethereum’s on-chain activity growth flatlined while alt-chains drew in new liquidity, builders, and users. Ethereum still dominates, but that lead’s shrinking.
6. Looking Forward
Ethereum isn’t losing because its technology is outdated. It’s losing because its leadership and cultural immune system turned inward and forgot about the people who make blockchains thrive. Researchers got stuck in theoretical perfection, while EF leadership drifted, overshadowed by power struggles and lack of transparency.
Yet Ethereum still has the raw ingredients to remain the home base of global Defi, NFTs, and decentralized innovation. A year or two of internal drama doesn’t negate the project’s massive lead in developer talent, capital, and brand. But time is running short. If Ethereum wants to remain the universal settlement layer and hub of Web3, it must shake off the elitism, revamp its governance, and embrace real users again.
Ethereum was born from an idealistic vision of unstoppable applications for everyone. Now is the moment to rekindle that vision, by creating a truly inclusive, transparent leadership framework, shipping improvements that users crave, and respecting the wild, messy energy that makes crypto unique.
