Ethereum’s never-ending experiment
To critics, Ethereum has lost the plot, but there’s more to blockchain than transaction speed.
Just as financial institutions are going all-in on tokenization of real-world assets, the leading infrastructure for enabling this, Ethereum, is in turmoil. Markets want speed, low fees, and a number-go-up reason to hold onto ETH tokens, and Ethereum has been getting outpaced on all fronts by blockchain rivals from Solana to Canton Network.
In March, the board of the Ethereum Foundation, including Vitalik Buterin – the blockchain’s elvish seer-savant and leading technologist – decreed a “mandate” that included the Foundation ceasing commercial activities. Instead it is now focused on censorship resistance, privacy, and security.
For folks looking to sell products that settle faster than Visa, or who want a platform that readily ticks all the regulatory boxes, or who want “digital assets!” but minus the casinos of DeFi, this is a head-scratcher.
Yet there is a good chance that Ethereum’s new direction will prove resilient and re-establish it as the leading venue for digital assets, both for financial institutions as well as for players who value the merits of decentralization and challenging the status quo.
Cream of the CROPS
Vitalik’s mandate focuses Ethereum Foundation’s work on realizing a package of values rather than performance metrics. It’s called CROPS, which stands for censorship resistance, openness (open source), privacy, and security.
This is the part where most readers roll their eyes and click to a story with a chart. However, the Ethereum community isn’t abandoning the arts of making money. It’s just letting new companies do that. EF will stick to quiet, behind-the-scenes technical work and try to shrink its own footprint.
The idea is that the less important the Foundation, the more embedded and resilient Ethereum itself becomes. Ethereum becomes neutral infrastructure, not a growth stock.
Of course, a lot of people bought ETH tokens because they wanted a growth stock, and they settle their assets’ transactions there because they think it makes competitive sense.
Get me outta here
Since the March manifesto, many senior figures in the EF community have left. Some were openly critical of the mandate. Others have criticized Vitalik for becoming an “ideologue” or an “extremist” whose utopianism is dooming the economic rationales that underpin a blockchain’s existence. They argue that traditional tokenomics are how to govern a blockchain, with token voting and clear commercial goals that underpin the value of the governance token (ETH).
Vitalik’s roadmap, on the other hand, affects ETH’s monetary ambitions. Ethereum enthusiasts extol ETH as “ultrasound money”, in which ETH supply shrinkage via fee burns maintains its value, in contrast to the depredations of fiat currency. But, critics say, this has been undermined by competition from other blockchains with cheaper and faster transaction speeds, and the Vitalik priesthood has decided this doesn’t matter. Ignore price, liquidity, and business development, and watch the action move to other chains: tokens list on rival exchanges, enterprises integrate with other infrastructure.
Until recently, Ethereum Foundation’s strategy seemed to have relied on L2s: layer-two blockchains that carry out a lot of functions, but move to Ethereum’s blockchain for final settlement. This has led to problems. The software that bridges L2s among each other and to Ethereum are prone to security vulnerabilities. L2s haven’t really solved the underlying problems of speed and gas fees. If L2s enabled solutions to scale, they sacrificed user experience.
Doubters worry the Mandate is the wrong pivot, because it still downplays any emphasis on transaction speed and cheap gas, making Ethereum unattractive to high-volume payments, FX, and securities trading.
Finally, there is concern about MEV (Maximal Extractable Value) on public chains. MEV represents extra value someone can earn, beyond the usual gas fees, by rearranging block sequencing. It might just mean an arbitrage, but it can also mean market manipulation, with validators and block builders able to see, and reorder, transactions in order to front-run trades. The TradFi equivalent is ‘toxic flow’ in dark pools.
Broader, deeper, and maybe better
Ethereum is the chain with the most order flow, the most players able to exploit it, on infrastructure that makes those trades visible by design. The EF has acknowledged the problem and its engineers are working on this, but for the time being, the answer to the market is, “trust us, we’ll sort it”, which isn’t anything like a regulated best-execution protocol.
It’s taking more ambitions steps to address these other issues, however. While EF is now pulling back from business development, new institutions are being established with explicitly economic goals, funded by a slice of staking yield: skin in the game. Most of the talent that has exited EF has gone to these new groups, such as Etherealize and Ethereum Institutional, which are targeting banks, asset managers, and treasuries.
The exodus out of EF is not a collapse, but a diaspora. This reflects the deliberate separation of ETH the asset from EF the research organization and from the broader ecosystem. Ethics are at the heart of the decision. EF can’t be a marketing agency or a price-pumping vehicle, but private entities can. Its mission is to defend CROPS at the base layer and let these new, capitalist entities go win business.
Meanwhile, EF isn’t ignoring the complaints about speed and gas. It’s just taking its time, incorporating technical upgrades that go beyond mere speed. These include embedded privacy and quantum-resistant cryptography. Throughput and latency are important but they aren’t the only things that matter, including decentralization, which is key to ensuring resistance to censorship. It’s a long-term play for trust. Even the MEV issue will be resolved through the CROPS principles.
Who can you trust?
We live in a dangerous world. The era of open borders, free movements of people, goods, and capital, and an adherence to norms is crumbling. The biggest banks and asset managers may prefer to operate in permissioned environments, or they want public chains that prioritize their immediate product goals. If someone’s going to do the pushing around, it’s them. And sometimes a permissioned ‘club’ is appropriate.
But as institutions build their on-chain future, can they trust the rail not to be captured or quietly changed by a single corporate or political actor?
If you are managing long-term assets, can you be sure of the timescale of the operating and governance rails?
Can you facilitate serious volumes without guarantees around both privacy and compliance?
Blockchain is useful for ensuring records are not kept by a single actor you must trust, and for features such as composability – the ease of plugging asset types in and out in a way that current systems don’t allow. So the focus on speed and gas fees kind of misses the point. These are important, yes – the economics of a financial event must make sense – but if those are the big challenges, then you don’t need a blockchain, full stop.
The hard part in this isn’t writing a smart contract; any asset can be tokenized if you can guarantee provenance and title. The hard part is ensuring the underlying registry (land titles, bond registers, bullion custody, etc) is verifiable, and that the settlement layer cannot be captured by any one party.
Ethereum’s direction is useful if you’re a little bit paranoid. And given the state of the world in 2026, a little paranoia seems healthy. EF is a work in progress. It makes mistakes. Ethereum, and EVM-compatible rails, also support most on-chain RWA volumes – but it could lose this due to drawbacks in transaction processing speeds and cost.
But EF has opted for decentralization, client diversity, censorship resistance, privacy against mass surveillance, and long-term cryptographic soundness. Bankers and investors don’t usually deal with such topics. They want to make a price, and buy and sell; the biggest players may see governance failures as something they can fix through political lobbying; “decentralization” doesn’t sound appealing at all.
But when a major political power wants a say in how things go, then even the biggest financial institutions can find themselves looking for infrastructure that can’t be swayed. And crypto may turn out to have a use other than gambling and tax evasion after all.