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09/29/2024

Vitalik's New Post: It's Time for the Entire Ethereum Ecosystem to "Align"

Achieving alignment within the Ethereum ecosystem is one of the greatest governance challenges — or more precisely, integrating decentralization with cooperation. The strength of this ecosystem lies in the diversity of its individuals and organizations — client teams, researchers, Layer 2 teams, application developers, local community groups — all pursuing their own vision of what Ethereum can become. The core challenge is ensuring that all these projects work together to

Vitalik's New Post: It's Time for the Entire Ethereum Ecosystem to "Align"

Achieving alignment within the Ethereum ecosystem is one of the greatest governance challenges — or more precisely, integrating decentralization with cooperation. The strength of this ecosystem lies in the diversity of its individuals and organizations — client teams, researchers, Layer 2 teams, application developers, local community groups — all pursuing their own vision of what Ethereum can become. The core challenge is ensuring that all these projects work together to build a single Ethereum ecosystem, rather than 138 incompatible territories.

To address this, many in the Ethereum ecosystem have proposed the concept of "Ethereum Alignment." This can encompass alignment on values (e.g., open source, minimizing centralization, supporting public goods), alignment on technology (e.g., collaborating on ecosystem-wide standards), and alignment on economics (e.g., using ETH as the token whenever possible). However, this concept has historically been defined vaguely, creating the risk of social capture: if alignment means having the right friends, then "alignment" as a concept fails.

To fix this, I believe the concept of alignment should be clarified — broken down into specific properties that can be expressed through tangible metrics. Each individual's list will differ, and the metrics will certainly evolve over time. That said, I believe we have some solid starting points:

Open Source: This is valuable for two reasons: (i) code can be audited for security, and more importantly, (ii) it minimizes lock-in risk from proprietary ownership and allows third parties to improve it without permission. Not every part of every application needs to be fully open source, but the core infrastructure components the ecosystem depends on absolutely must be. The gold standard here is the FSF's Free Software Definition and the OSI's Open Source Definition. Open Standards: Make the effort to interact with the Ethereum ecosystem and build on open standards — whether existing ones (e.g., ERC-20, ERC-1271…) or those under development (e.g., account abstraction, cross-L2 transfers, L1 and L2 light client proofs, upcoming address format standards). If you want to introduce a new feature and no existing standard fits, collaborate with others to write a new ERC. Apps and wallets can be evaluated based on how many ERCs they are compatible with. Decentralization and Security: Avoid trust assumptions, minimize censorship vulnerabilities, and reduce dependence on centralized infrastructure. Natural metrics are (i) the Escape Hatch Test: If your team and servers disappeared tomorrow, would your application still work? and (ii) the Inside Attack Test: If your team tried to attack the system, how much could they break and how much damage could they cause? An important formalization here is L2beat's rollup stages. Positive-Sum: 1) Ethereum-facing: A project's success should benefit the broader Ethereum community (e.g., ETH holders, Ethereum users), even those outside the project's own ecosystem. Concrete examples include using ETH as the token (contributing to its network effect), contributing to open-source technologies, and committing a portion of tokens or revenue to public goods within the Ethereum ecosystem. 2) World-facing: Ethereum aims to create a freer, more open world — enabling new forms of ownership and collaboration and making positive contributions to the critical challenges humanity faces. Does your project do this? Examples include applications that deliver lasting value to a broad audience (e.g., financial inclusion), donating a share to public goods outside of Ethereum, and building technologies with benefits extending beyond crypto (e.g., funding mechanisms, general computer security) that are actually used in those contexts. [Image: Ethereum node map from ethernodes.org]

Clearly, these standards won't apply to every project in the same way. For Layer 2 networks, wallets, decentralized social media applications, etc., the applicable metrics will differ significantly. Different metrics may also shift in priority over time: Two years ago, using "training wheels" for rollups was acceptable because it was still "early stage." Today, we need to reach at least Stage 1 as soon as possible. The most obvious positive-sum metric right now is a commitment to donate a portion of tokens, something an increasing number of projects are doing. In the future, we may also find metrics that clarify other aspects of positive-sum behavior.

My ideal goal is to see more entities like L2beat emerge, tracking how effectively different projects meet the above standards — along with others the community proposes. Projects shouldn't compete to have the right friends; they should compete to be as aligned as possible based on clear, understandable standards. The Ethereum Foundation should maintain a degree of distance on this matter: We fund L2beat, but we shouldn't be L2beat. Creating the next L2beat is itself a permissionless process.

This will also provide a clearer path for the Ethereum Foundation, and other organizations (and individuals) that want to support and participate in the ecosystem while remaining neutral, to decide which projects deserve support and use. Each organization and individual can, at their own discretion, identify the standards they care most about and select projects based partly on which ones best meet those standards. This makes it easier for the Ethereum Foundation and everyone else to be part of the force driving projects toward greater alignment.

You can only have merit-based governance if you define "merit"; otherwise, you end up with a social game (potentially exclusionary and zero-sum). As for concerns about "who watches the watchmen," the best solution is not to rely on hope that all influential actors will be angels, but to rely on proven techniques like decentralization. "Dashboard organizations" like L2beat, block explorers, and other ecosystem trackers are great examples of this principle at work in the Ethereum ecosystem today. If we can do more to clarify the various dimensions of alignment while avoiding centralization into a single "watchman," we can make the concept more effective, fair, and inclusive — just as the Ethereum ecosystem strives to be.