Ethereum’s Strategic Pivot: The Plan to Restore Dominance | Ansgar, Dankrad & Mike Ippolito

What does Ethereum get from having L2s, right? Because I think some people are now all the way on the end of the spectrum. They're like, "Oh, the RO center road map was a big mistake." I think I think that's strong. I think we are quite confident with that imprint that's the right road map. It's again we just neglected the L1. It's a rollup ccentric road map around a very strong L1. That's where we basically we need to we need to get to right. And and so what is the benefit of of having the the L2s? I think there's two that I see and I think over time maybe we will see two different types or like some differentiation between the L2s. I think one role Elus can fill is like

welcome to bankless where we explore the frontier of internet money and internet finance and today we're exploring the frontier of Ethereum. Bankless nation the Ethereum ship is slowly turning itself around as the largest decentralized ecosystem. This is a slow process. The signals that something is wrong in Ethereum have gotten stronger and stronger as other ecosystems have grown in strength and captured the marginal growth of the industry. All while the ETH price has lagged the market for almost 3 years now. In 2025, it's no longer about whether there is or is not a problem, but rather what the

exact nature of that problem is and what Ethereum should do about it. Joining me as co-host of this episode is my friend Mico, who helps me interview Dankfist and Onscar Dietrich, who helps me interview Denrad Feist and Onsgard Dietrix, two Ethereum researchers who have been going back and forth together about how to reorient the Ethereum project and what to reorient it to. At the end of this episode, I'm left with a newfound optimism about the direction of Ethereum. Despite Ethereum being slow to adapt, it seems that there are is already strong consensus about the urgency and the short to medium-term actions that need to be taken to restore

Ethereum to a state of growth rather than a state of complacency. There is still a mountain of work left to do, still a lot of progress that needs to be done. And my takeaway from this episode is that Ethereum is on the correct path to getting there. Optimizing for short or even medium-term solutions has never been a part of Ethereum culture, but it's clear to me that shorter time frames are truly being prioritized. And the exciting thing about this is that once these short and medium-term fixes are in place, then Ethereum is actually ready to finally unleash the deeply technical long-term upgrades that it's been developing over the years, all

these long-term research investments that Ethereum made in earlier parts of it lifespan are bearing fruit in the medium term. It's still going to take some time, but it feels like Ethereum is doing what it needs to do to enter its next phases of growth. And with that, let's go ahead and get right into the episode. But first, a message from some of these fantastic sponsors. Bank the Nation incredibly excited for this episode today. So excited that I'm tapping in some extra help co-hosting this episode with me. Tapping in Mike at Belo from Blockworks. Mike, how you doing, my man? Doing very well. This should be super awesome. Thanks, David. Super awesome. Yeah. Uh we are the two

guests on the episode today. Ongar and Dankrad, two researchers at the Ethereum Foundation, who I gather have just talked a bunch about Ethereum strategy as it has been adapting uh kind of like sussing out new new directions uh new strategies for itself. Onscar Dankrad, welcome back to Banklist. Thank you. Excited to be here. Thank you. Okay, so there are just a bunch of topics that I want to run through and I think we eventually will run through all of them, most of them at least through the course of this episode. But I think we need to first start with kind of

defining the problem. Uh because you can feel a problem in the Ethereum community and there has been many attempts at defining what that problem is. People saying it's you know we emphasize roll-ups too much. Other people will say it's Ethereum culture. There's a whole slew of possible problems that are plaguing the Ethereum community and no one has really concisely pinned down exactly and diagnosed exactly what the core issue is. So I kind of want to start that conversation there. Let's first like kind of lay the landscape out of what are the things that we are

trying to address broadly in the Ethereum community and also in this podcast episode and and maybe Mike I'll I'll throw this one to you. Maybe you can help set the context and set the landscape. What what are some of the just the top level things that come to mind when we talk about defining the problem in the Ethereum landscape? Um I think it's been a little bit challenging actually to define the problem. Maybe because Twitter actually doesn't lend itself to nuance discourse. Who knew? Um, but I think there have been a lot of different voices weighing in here. And I think it's the old proverb of a bunch of blind men touching

an elephant. And I think if you were to listen to some corners of Twitter, you would say that you'd hear that it's a marketing problem, right? There are other great ecosystems out there who just shill shill shill and get the word out there. U then I think in other corners of the uh of the Twitter sphere, you might hear this northstar problem is we don't know what we're building towards and it's actually more of a product problem. And then um in other uh spheres still I think maybe one that I would be curious Onsgar and Donrad to get your perspective on is a leadership problem. Um that's one I've sort of

thought about for a little bit because generally when you get a whole bunch of discordant voices and we just can't seem to get our rudder in place and a firm direction. I kind of like well who's who's in charge here? Who are we looking to right? So I I would love to I think those are kind of the the buckets that you could take a look at maybe but you know Don Kranar you two are the experts. I'd be curious wherever you want to start there. Um I'm I'm happy to take a stab at it. I think like okay like I mean there's one there's one one obvious thing and I'm going to just get that out of the way. Like clearly what everyone

like worries about most is that the price is down. This is not what we're going to talk about today. Um we're trying to get like that is definitely also something we all worry about but uh we need to get like to the root causes kind of and I think like I think this is also like why there are so many different opinions there are layers and layers and layers of this problem and so I would say like okay like what is the big picture problem it's that yeah like I mean activity on

Ethereum is kind of down Right. And uh and like there's not as much app building, there's not as many users. It is not anymore the obvious default platform for building everything in crypto. Um and uh and so like that's kind of like I would say that's kind of the the big picture problem or like that's like where like oh yeah this is this looks like looks like something that we should consider as a problem.

And then what I would say like the the reason why people look um to the EF for it or like why we are now like why we're now here and uh is I think fundamentally it stems from kind of a longunning problem of uh the EF and Ethereum kind of being an ivory tower and like doing a lot of like very high brow research. I mean that clearly includes people like me and

Anska as well, right? Um and uh and not having at the same time a lot of people who like very actively listening to app builders and users and and all of that and therefore yeah maybe often not really building the right thing like not treating Ethereum as a product that should serve its users whoever those users are. Those users may be L2s or they may be applders or they may be like the end users but like all of those

count in some ways and like um instead we are very often very focused on what we think those users should do and uh um and therefore yes not not building what they what they want in some ways. Mhm. What's your position? Yeah, if I So, so basically I I think I agree with what Tank said when when I try to reason about like what actually went wrong because I think it's important to acknowledge that like clearly some things went wrong. I think Ethereum in

many ways is in a very good and healthy spot but like something clearly went wrong and I think the best way I can I can kind of describe what I think that is is that we never really took seriously the downream consequences of decentralization. I think basically we b we we started out of course crypto blockchains decentralized then of then there also I think was this um overall pressure on the crypto ecosystem to like you really have to look as decentralized as possible yada yada yada I think

Ethereum basically just convenient conveniently stayed in this in this uh sphere of no one is in charge of anything everyone just has their own little corner to work on and we just didn't like we didn't really have anyone whose responsibility it was to like make sure the entire picture makes sense as a whole. And so I think we had a lot of like good research. I think we also like have to make sure to not throw out the the baby with the bath water. I think actually like a lot of what made Ethereum so strong in the first place still is very strong. I think a lot of like the research is really good. I think a lot of the engineering is really

good. It's just that like no one ever stopped to make sure that it all makes sense as a product. And so you can basically go to all the individual things that D mentioned, all the individual things that people are upset about. And I think often that is the root cause like the role of the EF. It's not that the EF failed to execute on its role. It's just that it saw its role not as the leader of the space but really more just like a public goods funding or and I think it did a good job as a public goods funding or but like we need more than that, right? I think the I think we're now realizing that like you you can't you can't like win you can't

win against competitors that are a bit more ruthless on this front that are a bit more willing to just like actually have have someone in charge to to some lighter extent if there's no one who's even thinking about all these pieces. And so that to me is kind of like the moment we're in. We now have to like restructure in a ways that we we're basically acknowledging that decentralization is is important is amazing. gives us all these things we we that are valuable about Ethereum, but it also gives unique challenges and we have to be aware of them and address them.

Yeah. I think um it's it's worth just to uh carry on with what Denrad was saying about the price. The the price of ETH is why people feel bad and why we are confident in understanding that there is a problem. But going straight after the price itself is obviously not the correct solution. Um, I want to uh propose the possible idea that it's actually Ethereum growth that is maybe the largest, not not 100% because I don't think there's any one single thing that's 100% of what the problem is, but

it is the lack of growth in the Ethereum layer 1 specifically that is causing may maybe perhaps the majority of Ethereum's problems in the current um state of things and the lack of growth of the Ethereum layer 1. One of the main downstream consequences of that is the decreasing ETH price. Uh and especially in crypto when it is still such a young industry despite you know how how many years we are into this project. There's still a lot left to do. Marginal growth is being found on non-ethereum layer 1

blockchains. Um marginal growth is found on base and it is found on Salana. And the ETH price is reflecting that idea that growth is not happening to the Ethereum layer 1. It is being found elsewhere. And there's many reasons why, there's many inputs why that is true. Maybe it's the ivory tower nature of the Ethereum Foundation trying to find the perfect technical solution that works in 10 to 20 years. Uh maybe it is a lack of product focus. Uh maybe it is a uh

imperfect medium-term roadmap with a rollup ccentric road map. Maybe it's the correct long-term road map, but maybe it's an imperfect medium-term road map. But really trying to put some sort of like capstone on the idea of like what is the problem? It is a lack of growth at the Ethereum uh layer one level. That is just my take. I want to uh give is hear your guys' take and and reflections around that. Uh Ongar, you're nodding your head. Um just react to that for me. No, I think I think that's exactly right. But you know what the the the the common phrase that you see on Twitter all the time is it's self-inflicted. And

I actually think that is very much right. I don't think it's like that we have been struggling to have growth. It's that we rejected the growth. And I think that is basically and and and and it again comes back you said that the rob map is probably the right medium long-term strategy. I agree with this. I think I think if you basically if if you step back and this is what basically we did 5 years ago you you simply cannot scale a blockchain to like 8 billion users using it like 100 times a day you know like with all kinds of microtransactions whatever at some point you have to have these like layer twos with I I I always call that execution

compression. You take what they do you compress it you verify it on the L1. It makes sense as the long-term architecture, but at no point did we stop to think, wait, but we only need this a couple of years down the road. For now, really, the L1 is the good product. The L1 is what we need more of, right? And that just wasn't the consideration. Um, and so that that's why I think it's not that we're struggling with the growth, it's that we rejected the growth and that's a decision that we have to reverse like as soon as possible and with full force. Drad, any thoughts here?

Uh, yeah. No, I mean I think like um I I agree with a lot of what was said. I I I mean clearly like this will be largely the topic today like um growing the L1 is definitely one major focus that like we're going to put now. I think like maybe in terms of the L2s like why like right why is base not seen as our growth? Why why are people not yay base is growing and uh that that means Ethereum grows right like people try to

spin it that way and I think um yeah to me there um I think we need to answer that as well like why why this is not obviously the case and I think like there are a couple of reasons for that and um I think like the the most important ones are one like we have so far not built like L2s enough into something that feels like one product, right? Like so far Ethereum L1 is still obviously um one product and um and like

that's like how people have perceived it. Um and like L2s just feel like different chains and like there are some technical reasons for that. Like part of this is that um the interop is just not as good good as it should be and there are also some um like more marketing reasons for that actually in the way that like they are not like yeah they just they do have another logo on there and they do have like yes you could also say they they pay fees to someone else. Um but all of

these together contribute to the idea that yeah like base growth is not really the same as um Ethereum growth and like I think like we have to kind of take that into account as well. I I have a question for the two of you maybe that someone has from someone who has a little bit less insight in terms of the culture and the actual org design and makeup of the EF. Do you think that, you know, part of the re also, by the way, just as a caveat, so much of this is so hard to get right? I think there's

um a lot of, you know, criticism maybe of some of these decisions five years ago, but we didn't know how any of this stuff was going to evolve. So, I think it's just really important to say that. We're all making this up as we go. Um, but do you think some of this might be because we're missing some voices in the room? Like it could it this sounds a little bit to me like it could have been potentially partly culturally driven, right? Like if we have a bunch of kind of researchers and even engineers in a sense who love to think about cool stuff, long-term time horizons, like just building the best thing, I can see a bunch of people in that room kind of

getting raw rod about that's right, like this is the endgame. We should just go there. Whereas kind of in my experience, like it's kind of like product people and sales people who tend to be like, "Yeah, but what about yearly, man? I got to hit my quota." You know, it's actually ends up being sales a lot of the time that kind of brings you back down to earth. You're like, "Oh, Yeah, I got to sell stuff this year." So can you talk to me maybe a little bit about do you think maybe sometimes having the right voices in the room during some of these pivotal points you know uh maybe cause us to ignore the path dependence aspect of this and yeah what do you kind of make of the what is

the DNA and genetic makeup of the EF look like today? So I mean I think a big part of I think I think what you said is right with one big problem is that I think the people in the room in the past never felt like that room was special. I actually think for the last few years we were in this really weird position where inside of DF everyone just felt like well the F is one place out of many right like it happens to be where a lot of the research coaleses it some of the engineering as well although actually if you look at core development in Ethereum

the vast majority of that happens out outside of the EF and so I think the community expected the F to like take on the responsibility of where should Ethereum as a whole go and the F just didn't ever feel like it actually had that responsibility and so I think there was basically this mismatch and so yes in that room it was only voices that that cared about where should we be in 10 years like what are the interesting what are the solutions for the interesting technical questions these kind of partial partial explorations um and I think yeah again I think

basically we were in this paralysis where like no one else did it either because they thought the f was was in charge I think what we're seeing now at least I don't want to you know obviously I don't think either of the two of us can speak on behalf of of the organization on behalf of the F. But what I'm seeing now is that a lot of a lot of this is changing to some extent. I don't think the F of course will never be in charge of Ethereum. Ethereum is decentralized. There's decentralized governance. But I think the F will feel more of a responsibility to guide Ethereum holistically to to where it

needs to be in terms of the the product experience, strategy, all these kind of things. And that means that the markup of what people will be in the rooms at the Y when these types of conversations happen will will change a lot and is already changing a lot. Adam Bankra, do you would you agree with that? Yeah, I mean I think that's an interesting question and I like I mean I I highly agree with this in the room and I think like um something very interesting happens

when uh Tomas joined the EF. One of the first things he did is he opened um a a channel with a lot of people at the EF to talk about everything to talk about the strategy. And I think this is uh yeah this felt interesting because this had never happened at the EF before before that like all conversations were very small groups and like it often felt

actually like I mean I remember this actually being a very junior researcher like sometimes you heard about something that just happened. Oh, we decided this and it was like Vitalic in a telegram channel with three other people and that that was it. That had just happened, right? Um and like it made a very big difference whether you happen to be in that channel or not. Um and so I think like yes there is like it's not even just like are the right people at the

table. There was just generally always a very very small number of people um at the tables in the past. um and like discussions happened in uh quite small rooms. Uh and I think like that's definitely a big mistake but it's also at the same time a big mistake. Yes. like it was a it was a like as we said a very special selection of of people like was really very much quite academic researchers and um and engineers who basically thought about all this stuff

and there was uh I do remember actually thinking like a little bit back when the road up like the rollup scientic road map came out okay this is slightly weird so like these are going to be like they're going to be other companies selling this as Ethereum how is that really going to work? Like uh so I had like an inkling of a thought back then, but I like I clearly like I mean it it was it was uh kind of it came down and it was like okay this is what we're

doing now. Um and I think um yeah these kind of considerations yeah never played a big role and I think like it's yeah like for Ethereum it would definitely make a big difference if there would be a lot more people who like thought about this as well. Um I think like Etherealize is going to bring some of that energy into the rule. Um but I think we need much more of it like we need we need those people as well and they have so far not been listened to. And just very briefly like I I I do think it's important to

stress the point. It's not about I personally would resist the interpretation that the F did a bad job in the past. I think again it was a different time. I think it the role of the F was to to be very defensive. I think any looking any in any way more centralized than it did look or than it actually was I think would have been a huge problem for the space. So I think in a way it executed correctly on the only option that it had available and that was just again think of it as a public goods funding or it was there was the research group the research group did research there was this group that

did this there was no tie in between those groups as Duncot was saying but that was by design and I think I think it's important now that that changes but I I personally think the the kind of the the leadership back then did the only basically followed the only path that was available at the time. Mhm. Can I actually this is um I would love to this is something that I've sort of been thinking through and I would love to see if it resonates with the two of you at all because you've been there for for so long. Um but I think I agree with you Oscar. I think especially at the outset in the creation of the Ethereum

Foundation. This made an enormous amount of sense because it's not only what crypto needed like we didn't really know how to scale blockchains 10 years ago, right? These were big open research related questions and so it was actually very high ROI to perform this type of research and it disproportionately benefited Ethereum right there have always been smart contract challenger platforms but by and large Ethereum had an enormous share of both developers mind share assets etc. So solving these core scaling related challenges from a

research perspective I think made quite a bit of sense and then it seems like maybe the meta has shifted. We talk about meta shifting all the time in crypto but the meta has shifted maybe for what the foundation needs to be today. And the differences are we basically know how the broad directions of scaling blockchains right we don't know all the implementation details but we have the the core lanes here. So maybe we're at a period of time where we can pass some of that off to the private sector, which I think Ethereum has always been very adept at. Um, and there are more challenges to Ethereum today. Like Salana has a decent share of, you

know, DEX volume, stable coins, whatever metric you want to slice. And so the ROI now is a little bit more diluted, right? If we're just being there's a we all want to do good for the humanity and, you know, uh, advanced crypto, but also that research can then get shared across multiple ecosystems. So, is that a fair description of kind of this meta shift and pivot? And if so, how is the EF kind of thinking about tackling and maybe restructures that are happening at the EF today? Yeah, I I think it's a that's

a fair way of of of um thinking about it. Although I wouldn't even say so I think even historically like 3 4 5 years ago I think Ethereum would have already benefited from overall more of a mindset of hey we have these challenges because we're so decentralized who's in charge of this can we kind of somehow have more responsibility more clear responsibilities can we have a bit more of a product mindset I think these things would have been valuable even back then I just think that for the longest time we didn't have competitors that really executed very well on the product side and on on

the technology side, Ethereum was always ahead. Um, and I think we still I think in we right now Ethereum has a huge technology overhang in the sense that I think now that we are finally focused on tying it all together into like a very attractive bundle. I think we can we can execute on this actually relatively quickly because we already have all these individual pieces pre-developed, they just need to kind of come together and someone needs to focus on that. Um but I don't I I do think I I agree with you that Meta has shifted in the sense that now having also with a competitor

coming in and like I think it's important to say right like I think Salana is really good at product I think they they have a really good product um and I think for the first time Ethereum really had a lot of pressure from that side and so it's now especially important that we ramp up and are competitive on that front as well. I still think going forward that it will be a big benefit Ethereum has that we still have tech that fundamentally has principled answers for this and that that has answers where basically for example I think we can pretty seamlessly scale from here to 8 billion users and

if we execute well and I do think Salana will have trouble once they hit the kind of the limits of what a single chain can provide right and so so we we will still be able to like benefit from what we did in the past but it's just important that now we basically focus on where we are weak not where we are strong I I think this part of the conversation I think is really important. So I want to just trace over it uh once more uh because a lot of people that have come into crypto came in in the 2021 or later eras and that has provided them with the context of 2021 or later and not much of the

context uh that that how crypto was and what crypto was prior to that. Uhar you you use the words self-inflicted about like Ethereum's approach to itself. Um, and I I think we're also kind of like also understanding that that's not maybe it's not necessarily self-inflicted, but it was Ethereum was this way for a period of time and it is still that way and the environment that Ethereum is has shifted in the in uh under its feet like back in like 2013, 2014, 2015 like

blockchain research, blockchain development, we did it was we were running around in the dark and no one really knew exactly what they were doing. there were like Bitcoin competitors that were like, "Okay, we're going to make Bitcoin, but we're going to do it with 13 different hashing algorithms and that's going to be a more secure version of Bitcoin." Turns out that does not matter. Uh but nonetheless, like you know, millions of dollars of research went into building a blockchain with 13 13 different hashing functions. Uh and that turns out that was completely futile. And that was the era in which Ethereum was created. And

that's why Ethereum research was so valuable because in the era of 2014 to 2017, we did not know about blockchains. We knew Bitcoin worked in principle, but we did not know like really the technology of blockchain. We haven't really figured it out. And that's why so Ethereum research really dominated and won Ethereum the era between 2015 to about like 2021. And I think sometime in 2021 things changed from we actually did figure out blockchains as a technology.

We're no longer like fumbling around in the dark. And around 2021 things the ROI flipped from investing in research to investing in product. And that happened around that era where like we hit the limits of scale in 2021. All blockchains got congested. Um, and that's that's when the culture and environment of Ethereum went from being an advantage to being a disadvantage. And now comparing Ethereum to Bitcoin where Ethereum is calcified and rigid and on a single

trajectory. Ethereum has always been trying to have a roadmap. It's been trying to adapt and grow and you know follow this this long-term trajectory. But I think Ethereum is now kind of running up against something like meta adapt adaptability where the Ethereum has a roadmap but we can't figure out as a community how to change the road map when we are learning that it needs to be changed and that meta adapt adapt adaptability is I think the cause of some of the frictions and constrnations

and angst finding found in the Ethereum community right now because we are learning like oh we actually need to pivot the road map and that is a new skill that Ethereum has not developed a muscle that we have not flexed and that is being hampered by one of Ethereum's greatest benefits which is its decentralization. These are these are some some raw thoughts. Uh Onscar, what do you think about them? Interesting. Uh I think I actually I only partially agree. So I I I I am not sure that what what I'm seeing is just that like we were slow to wake up. I think but also

that is that includes the core developers, the researchers, the f but also the community as a whole. I think it took a long time to really realize that things have to change. I actually am very optimistic that they will change and they can change. Um I don't think that's that as big of a challenge as people make it make it out to be. Um I also think historically one one aspect that's important to keep in mind that like I mean now we are 10 years into smart contract platforms right for most of that time or at least for like a lot of the early days it really felt like very much and I mean I was only community

member for the first half and then then only kind of professionally involved for the second half but it really felt like more of a sandbox environment of like look we're still we're still basically developing the the infrastructure stack here we don't really have real world users yet it's mostly like some early adopters playing around kind of the developing Of course, there's already real money involved, but it's mostly like meaningless, right? And so, I think for the longest time there, the the mindset was always well, you know, it's important that once it matters, the tech is is ready, but basically now we kind of like a little bit on the back foot as kind of like as now the real world is

starting to to adopt blockchains, right? Like now it starts to matter that actually everything is ready and we are not quite ready yet, right? So, I think I think that's the moment that we're waking up to. It's like wait, we can't like be ready in 5 years, we have to be ready like in 6 months, right? like as these the institutions look at blockchain like we haven't talked about this yet so much but I think we are now very much also focused on stable coins coming on chain real world assets coming on chain like actual real use cases that want blockchains and they don't want blockchains that promise them that they'll be ready in a few years they want they want them to to deliver what

they need in today right um and so I do think in that sense the meta has changed very recently that only happened over the last year really I think um and so it's important that we I think it took longer than it should have, but I think now we're here and I'm personally quite optimistic that we can execute on on that shift. Mhm. So, what does it take then if we are now thinking in the short and medium terms, the six-month time horizon, the the one-year time horizon. Uh there's a bunch of things that are

being developed in the Ethereum ecosystem. Native roll-ups, based roll-ups, uh still kind of like technical researchy things uh which I would contend are not going to be ready for institutions who are thinking about like where to deploy today. There's there are meetings going on behind closed doors in Tradvi about what to do about blockchain right now. Uh and so we need to I think the question for the Ethereum community and for Ethereum leadership is what can we provide right now? what should we focus on in the short and medium term? Uh Don, do you have any opinions on this?