Ethereum's Leadership Crisis 🥶
Hello dispatchers! Welcome to Wednesday's crypto dose.
A long week already?
An incoming president launching his own memecoin, then came the to-be first lady’s memecoin, followed by both of them crashing, and Donald Trump saying, “I don't know much about it (TRUMP official memecoin) other than I launched it”.
Meanwhile, Bitcoin has managed to sail past the $100K mark and is holding up well there.
Crazy times.
For today, though, we move our focus to the world’s second-largest blockchain Ethereum, which has found itself caught in a leadership crisis.
"The person deciding the new EF leadership team is me," said Vitalik Buterin.
When the man who worship’s decentralisation says something like this, you know the house is not in order.
Let’s look at what’s brewing.
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The Crisis
For long, Ethereum has been facing scathing criticism from its own community.
On social media, memes have gone viral about ETH’s stagnant price, while the rest of the crypto seemed to be enjoying an industry wide bull-run.
Meanwhile, others are slamming the foundation for its centralised governance and project roadmap.
The crisis is hot and fresh now, but it follows a prolonged list of setbacks for the foundation.
May 2024: Conflict-of-interest scandal over EigenLayer advisory roles
Summer 2024: 99% collapse in base layer revenue post-Dencun upgrade
Q4 2024: Loss of DeFi market share to Solana
January 2025: Missed Trump memecoin opportunity to Solana
The current numbers show an even more glaring picture.
38% drop in on-chain activity
Balancer and Morpho down 65%
Uniswap volumes declined 40%
Layer-2 solutions struggling with $25.8 billion combined DEX volume
Average transaction fees stubbornly high at $5.50
Fallen out of top 5 in weekly fees
$49 million in weekly fees vs Solana's $85.11 million
ETH stuck below $3,500 since January 7
The gap between Solana and Ethereum widened further after Trump's memecoin launch drove Solana platforms like Raydium, Orca, and Meteora to record 200%+ volume gains.
The Ethereum community is complaining about the network’s lack of efforts in building a public image and staying away from the corridors of political collaborations.
Instead, they claim the leadership team is more focused on technical objectives.
The Bulls' Rebellion
Ethereum stakeholders are also criticising about the Foundation's $900 million treasury management.
Three key concern areas.
Resource Management
Bloated budget and headcount
Insufficient developer support
Underutilised treasury assets
Lack of market responsiveness
Political Positioning: While XRP's CEO dines at Mar-a-Lago and Solana hosts Trump's memecoin, Ethereum remains conspicuously absent from the political arena and these prized opportunities. This self-imposed isolation comes despite Ethereum hosting Trump-backed World Liberty Financial.
Developer Relations: Core developers express growing frustration.
A generational divide has emerged in Ethereum's leadership approach.
The old guard was focused on technical excellence, resistant to political engagement and preferred gradual and considered changes.
Meanwhile, the new vision advocates are pushing for aggressive market positioning, support for institutional engagement, demanding for treasury activation and calling for leadership overhaul.
What now?
The Ethereum foundation did take notice.
Last week, it attempted to win back the trust of some of its loyal community members by rebuilding its social media presence to make it more public friendly?
That didn’t help.
The memes and criticism kept coming.
Crypto Twitter wasn’t the only one demanding change at the helm though. There were more.
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Block That Quote
Anthony Donofrio, Ethereum founding member:
"The Ethereum Foundation is a paradox. Despite its commitment to decentralisation, it operates as a centralised entity, with a director, a treasury, paid developers, and an inner circle. These structures, while necessary for coordination, create tensions with Ethereum's decentralised ethos."
Donofrio wrote in an opinion piece on Coindesk that the Ethereum Foundation no longer carries the vision it once had to minimise internal and external threats both internal and external.
He also blamed the foundation for leaving its community feeling disconnected.
Ethereum co-founder and ConsenSys CEO Joseph Lubin proposed replacing Miyaguchi with a dual leadership structure: Danny Ryan, who led the Merge, and Jerome de Tychey, president of Ethereum France.
His message was clear - "We are now in a very different kind of environment in our industry. And it requires a very different kind of Ethereum Foundation."
What started as noise and rumours around Ethereum replacing Executive Director Aya Miyaguchi, soon turned into social media harassment against the director, including death threats.
Buterin condemned it as “pure evil” and gave a statement - a confirmation on the churn at the top level.
“We are indeed currently in the process of large changes to EF leadership structure, which has been ongoing for close to a year. Some of this has already been executed on and made public, and some is still in progress,” Buterin said in a post on X.
His post also spoke about what the foundation was trying to achieve with the changes to leadership structure.
That was not all. He also clarified the things Ethereum wouldn’t be doing.
Defiant leader? Still fell short of appeasing the audience.
Crypto influencer asked X users to “keep the pressure” on demanding for Miyaguchi’s resignation.
That was it - the snapping point.
Buterin wasn’t taking any more of this.
"No. This is not how this game works. The person deciding the new EF leadership team is me," Ethereum co-founder Vitalik Buterin said.
Damage Control: The 50,000 ETH Play
The Foundation's latest move reveals its scramble to regain community trust.
On January 20, recently appointed leader Hsiao-Wei Wang announced a significant shift in treasury management - deploying 50,000 ETH ($167 million) into DeFi protocols through a new multisig wallet.
The Foundation has established a new 3-of-5 multisig wallet structure for active DeFi participation. This marks their first major attempt to address longstanding transparency concerns over treasury management.
Paul Dylan-Ennis, prominent Ethereum commentator at University College Dublin, sees potential: "If there is a sort of middle ground that most people could rally around, it is probably the EF involving itself in dapps more."
The Foundation's historical approach to treasury management emerges as a central point of contention:
Past Practices
Converting ETH to stablecoins for operational expenses
Minimal ecosystem participation
Limited transparency in decision-making
Restricted DeFi engagement
New Direction
Active DeFi participation
Enhanced transparency through multisig setup
Direct ecosystem support
Public accountability measures
This pivot toward active ecosystem participation shows that the Foundation's traditional hands-off approach may no longer serve Ethereum's interests in an increasingly competitive landscape.
Token Dispatch View 🔍
Ethereum's current crisis reflects a fundamental challenge in crypto: how to balance ideological purity with market reality. While competitors court political influence and embrace market trends, Ethereum's leadership remains steadfast in its principles - perhaps to a fault.
Three critical insights emerge.
The Decentralisation Paradox: A foundation dedicated to decentralisation now faces criticism for centralised control. Vitalik's assertion of sole authority over leadership decisions, while perhaps necessary for stability, highlights this inherent contradiction. The 50,000 ETH deployment to DeFi feels less like innovation and more like a reluctant concession to market pressure.
The Cost of Principle: Ethereum's commitment to staying above the political fray made sense in crypto's early days. Now, as Trump launches memecoins on Solana and XRP's leadership dines at Mar-a-Lago, this principled stance comes with a clear cost: declining market share and developer mindshare. The numbers - 38% drop in activity, falling out of top 5 in fees - tell a story of principles meeting market reality.
Evolution or Extinction: The foundation faces a stark choice - evolve its governance while maintaining its core values, or risk relegation to technical irrelevance. The old guard's focus on technical excellence served Ethereum well during development, but the new era of mainstream adoption demands different skills.
2025's critical question will be whether its governance can adapt before market forces make that question irrelevant.
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