From Hong Kong to Denver, Ethereum is entering its "Dunkirk moment"

Author: Jocy, Founder of IOSG Source: X, @jocyln003

I believe that everyone has seen many records of Consensus HK in the past two weeks. I will not repeat them. It can be summarized that most of them are disappointed with the industry and cannot see the prospect of breaking through, and think that it has reached a bear market. At the same time, that week was also a feast for P young players and KOL masters. The impact of the trip to Hong Kong on me was rationality. Those young players and masters who work harder than funds and entrepreneurs deserve so much, and they are surreal investors. They can always embellish every transaction with a perfect period. The trading principle of many P young players is 90% or BTC, 10% active sol positions to keep PVP and sprint at any time. No matter how much profit they make each time, they will execute such position configuration. Because of the meme wave and attention economy, this has become the most lively discussion in HK.

Kaito's victory ushered in the golden age of KOLs, where attention was priced and could be quickly monetized. In sharp contrast, the entire Ethereum ecosystem was lifeless, with no one following its hollow idealistic horn. This was a heavy blow from reality. The so-called value investors were deeply trapped, and long-term holders began to be short on Ethereum and turned to Solana. Many people did not see how hungry Ethereum entrepreneurs were (on the other hand, when a dev went to L2/Ethereum to request a connection, it took an average of two weeks to wait, but with the Sol Foundation, it generally took less than two days to complete the connection, pull a group, and start communicating). This seems to be a deliberate move by the masters of the crypto industry. In this small bull market cycle, long-term holders are not encouraged, but short-term traders are given better returns. But in my opinion, this is a wake-up call for industry leaders such as Ethereum to be inactive or lack a sense of crisis.

Short-termism prevails: the collapse of industry values

At the same time, when everyone takes off their disguises and wants to make a fortune at the end of the bull market, many people begin to have no ideals/no beliefs, and become ruthless arbitrage tools. No one cares about the future of the industry. Everyone wants to make the last money of this cycle. In order to support the price and chain of their own projects, exchanges can abandon the listing standards and list some projects they have invested in; the king-level projects regard tge as the last ATM, and market makers have become the ever-victorious generals of this cycle. Relying on BD and brand, they can always get chips for free and in the overall downward trend of VC coins, the average median size of mm can get a net income of nearly 40m; it seems that everything is moving from long-termism to short-term bubbles and speculation, and the practices of these people are having a more profound impact on some entrepreneurs who insist on building.

This moment is very similar to 2018/2022. It is very deserted. Practitioners leave because they see no hope and recognition in the industry. Everyone tries every possible way to survive in the bear market. For teams that are still starting businesses and doing things, this will be painful for them. They need firmness and values ​​all the time. Trump has affected the core values ​​of the entire United States. After Trump token, the crypto industry has stimulated huge nihilistic investmentism. When practitioners and speculators think that this is a fast and short-term game, everyone also aims at how much cash they can take away before the money game button is pressed.

To sum up the trip to Hong Kong, it was a big collapse of the industry and a formal written trial of Ethereum. As the most successful entrepreneur in the industry, did he grasp the bow of the industry? Did he lead the industry to nihilism?

Challenges and transformation of Ethereum ecosystem

Too long version: The founder of Denver infra is very bearish, but the founders of applications and AI are very bullish.

Denver trip still saw a lot of shocking scenes. Some founders and developers who have been building steadily for many years were suddenly told that the Qing Dynasty was going to fall. They chose not to believe this. It seems that the Ethereum ecosystem has always had a culture of taking care of everything. They have been raising funds smoothly all the way, and have seen many projects that are not as good as them perform well in the speculative market of tokens. They may never have thought that one day they will not be able to raise money and the coins they issued will return to zero like other air coins. When there were only 6 to 9 months left in the runway, I slowly realized that I had to really make a product with income and user base, and I began to seriously think about what the problem of Ethereum was. Of course, it is never too late, but for them, it requires drastic layoffs and a total denial of their past selves. This is a huge challenge for the founder, because he is just betting on an uncertain direction, but he has to risk his entire fortune for it. According to incomplete statistics, the financing amount of projects that are deeply rooted in and built on the Ethereum and EVM ecosystem exceeds hundreds of billions of US dollars, and their overall primary and secondary market valuations add up to more than one trillion US dollars. Therefore, the question facing these projects is, should they stay in Ethereum or leave? As strong as Lido founder Konstantin, when he announced on Twitter that he would establish a second Ethereum Foundation, he instantly received DMs from hundreds of Ethereum ecosystem defi founders (including Uniswap). Of course, this is still very challenging for consensus.

In addition, I saw a wave of Ethereum ecosystem entrepreneurs. In the past, they have always been the backbone of the industry's technical faction. The technical products and solutions they have made have always been widely adopted. Whether it is TEE/zkTLS/rollup, they are the only one. But these people are tired of providing solutions for technical protocols that have no end users and needs. It can't bring him real entrepreneurial fun. What excites him now is the exciting new papers in the field of AI research. To be honest, there are quite a few such founders, and they are the few founders who can really dig deep in the industry and make feasible solutions. If a large number of such founders choose to leave, I think the impact on the entire Ethereum infrastructure will at least set back three to five years.

The wonderful energy of the integration of AI and Web3

At the beginning, everyone said that Denver infra had no hot spots and no vitality, but after we talked about 3 to 4 new AI*Web3 projects on average every day, we saw the Ethereum community's active embrace of emerging technologies such as AI, as well as innovative attempts in the fields of DeTraning/Inference/DePIN. Ethereum is actively adapting to new technological trends and exploring new application scenarios. Capital and entrepreneurs have become the industry's prophets. Paradigm led the investment in Web3 LLM company Nous research with a valuation of $1 billion. Groq, as an inference company, has generated more than $1 billion in revenue in the past year. Openmind and Yushu Technology have created RobotAI. DePAI's open source products were unveiled in Denver. Hyperbolic has also become one of the inference networks with the highest integration support among web3 developers. There are also open source intelligence platforms such as Open Gradient and Pluralis. At Ethereum conferences such as Denver, smart developers and founders have begun to fully help Web3 embrace AI. Everyone is brainstorming how to make AI agents and more applications appear in Web3 scenarios. The industry has never ended or stopped. Research and curiosity will always make those builders go further and further.

Openmind and Yushu Technology have created RobotAI, and DePAI's open source products were unveiled in Denver

Macro-favorable conditions are being eased, and Crypto is advancing with the times

However, after dealing with most American institutions, the situation is completely different from that in Asia. Everyone is very optimistic about the loose environment of the crypto policy bull market. The US bank's policy on accepting crypto asset custody has been passed, and banks will soon gradually allow BTC/ETH to be pledged, and will even expand to mining equipment. Here we can see a clear trend that the crypto interest rate cut environment is about to take shape, and the original 10% lending rate in the industry can be adjusted to 3-4%. Even Japan can reach negative interest rates, which will bring liquidity back to the industry. In addition, we have recently seen favorable crypto policies in the United States. Uniswap and Coinbase are considering designing a tokenized securities model so that traditional industry investors can better evaluate and purchase tokens. The benefits of regulatory release will far exceed our imagination in this cycle, so I am very optimistic that the market will usher in a very good macro environment in the next two years. Many people say that this round of bull market is over, but I don’t think so. Each round of bull market not only has the cooperation of the macro market, but also the self-innovation and new applications of the crypto endogenous market. We have not seen real innovation in this cycle. If there is no innovation, it will be a false bull market. In the next two years, we can expect more traditional companies/even national regimes to enter the L2 network and issue their own decentralized networks. The prosperity of L2 business will once again drive the growth and value capture of Ethereum L1.

Reconstructing Ethereum Governance: Towards Mainstream and Commercialization

On the third day in Denver, I attended Pragma hosted by ETHGlobal and met several core EF developers who revealed Ethereum’s upcoming new organizational structure adjustment. The more interesting one here is @dannyryan, whose reputation and support in the Ethereum core developer circle are obvious to all. The newly established @Etherealize will also shoulder the mission of the new era Consensys to help Ethereum move towards the mainstream world and commercialization. In addition, the two Co-EDs of the foundation, Hsiao-Wei @hwwonx, have also been deeply involved in Ethereum for many years and have followed Vitalik in his battles since 2016 (see the picture on the Ethereum hackathon selection day in Beijing in 2019, the one sitting next to Vitalik is him). In addition, Tomasz @tkstanczak, as the founder of Nethermind, is very familiar with the entire Ethereum ecosystem project. As third-party dev shops, they are well versed in a more sustainable business logic of survival and can help Ethereum find a balance between infra and commercialization paths.

Attached photo: On the selection day of Ethereum's hackathon in Beijing in 2019, the person sitting next to Vitalik is Co-EDs Hsiao-Wei @hwwonx

In fact, the problem Vitalik encountered is the same as that of all entrepreneurs. The team is too big and it is difficult to lead. Friends who know how to study personal characteristics can try to analyze V God's mental journey. From the Twitter avatar of Milady emojis to the disappointment with crypto OG, he changed to the half-human, half-bird image of Druid in World of Warcraft, which also represents his inner reconciliation with the community's call. On the second day, he officially announced the new team structure of Ethereum. Ethereum may be the first truly decentralized organization and economy in history. We should be more tolerant of this man who has just turned 30. He does not have a particularly outstanding performance in organizational structure management and Ethereum application commercialization, but who can lead this organization to create more glory and results? Perhaps Ethereum can also learn from Elon Musk to create a DOGE Discipline Inspection Commission, which is responsible for dismissing some irresponsible devs and empty positions. How to measure contribution value and KPI is an important issue facing V God. In addition, give internal core developers clearer value propositions and development requirements, and give the management team more specific roadmaps and management time limit requirements, so as to better return Ethereum to the community and democratic governance. As the cornerstone of Web3, Ethereum is also actively exploring Layer2 solutions and technology upgrades to meet the growing application needs.

There has never been a savior, V God needs to encourage more application entrepreneurs

For Ethereum, is current technology research and development so important? Maybe it was important in 2017, 2020, and 2022, but now applications should be more important than technology. The next most important milestone for Ethereum and the greatest confidence for ecosystem builders will be whether Ethereum, as the world's computer, can produce a cross-era super application product.

Many people regard Vitalik as the savior of Ethereum. Ethereum is the savior of the industry, but there has never been a savior. Everyone should be a savior. I called on all organizations that have obtained generous capital accumulation and stable business income in this industry to contribute to the future of this industry. They can donate to some open source organizations of Ethereum and create better opportunities for young people in the industry. In addition to using Grants to support, many entrepreneurs still need financing support. In this wave of bloodbath of industry altcoins, it also dealt a heavy blow to the already shaky Asian funds. Many funds began to stop operating or transform to the secondary market. The entrepreneurial environment in Asia is difficult. If Asian institutions lose investment in VC, the industry will be even weaker. Here I still call for the support of early venture capital in the Ethereum ecosystem. It is recommended that all exchanges can take out 1-2% of their income each year to support the development and innovation of the Ethereum open source ecosystem.

Will Ethereum die in the next bull-bear cycle? I don't think so. This is the most successful decentralized organization in the Web3 industry. We should not let it fail. Its failure means that hundreds of billions to trillions of talents and project assets built on the Ethereum business empire need to start over. The entire industry will fall into a major setback of 5-10 years, which means that many OGs will leave.

Please be reluctant to sell your Ethereum. If you look back on what happened from 2020 to 2030 in 2030 with a 10-year dimension, you may see that the doubts and noise in 2025 are actually insignificant. How to judge value and innovation in a 10-year dimension is even more a priority worth thinking about.

Optimists are often right. The more difficult and turbulent the stage is, the more we should maintain confidence and optimism.