Opinion: What caused Ethereum (ETH) to lose its vitality?

The continued decline in the ETH/BTC Exchange Rate has led to heated discussions in the community. Despite the challenges, the authors believe that the long-term trend of ETH is stable, with decentralization at its core. (Synopsis: Vitalik Buterin domineering: Give me respect!) The Ethereum Foundation sells ETH not to play people for suckerssucker, but to ensure operations and development) (Background added: ETH/BTC largest long-headed whale suspected of "dumping 20,000 coins" Ethereum, Vitalik rarely shouted with confidence) This weekend social networks are very lively, and a new round of debate on ETH has begun, and I think that there should be two, first Vitalik and ETHPanda The interview has aroused extensive discussion in the Chinese community, on the other hand, compared to SOL, ETH's continued decline in the BTC exchange rate has also caused widespread dissatisfaction. On this issue, the author also has some views that I hope to share with you. In general, I think the long-term trend of ETH is no problem, because there is no direct competitor in the market, because in the Ethereum narrative, the positioning of "Decentralization's execution environment" is more critical to "Decentralization" than "execution environment", this basic disk has not changed, and there are two core reasons for the current bottleneck in the development of ETH, one of which is Restaking The track has caused the Vampire Attack on the Layer 2 of the mainstream technology development path, diverting a large number of resources from the ETH ecosystem. The core mechanism subject to Restaking will not create incremental demand for ETH, which directly leads to the application side being unable to obtain sufficient development resources and user follow, and the promotion and user education are stagnant. The second is that the key opinion leader of the Ethereum ecology is being aristocratic, forming an interest class, which makes the class flow solidified, the developer ecology lacks sufficient incentives, and innovation naturally appears weak. Restaking Vampire Attack on Ethereum ecological resources, resulting in the application side unable to obtain enough development resources The discussion of this point was actually discussed in my previous article, I hope to take this opportunity today to revisit it. We know that the official development path of Ethereum has always been to form a fully decentralized execution environment through sharding, in layman's terms, a fully distributed, non-controlled cloud. Applications can obtain computing and storage resources through bidding on a single cloud, and all resources are completely regulated by supply and demand in the market. Considering the complexity of the technology. Sharding is chosen because you can't tolerate 100% redundancy of your entire data, which is a significant waste. Therefore, the data can only be processed separately by different areas, and finally a relay can summarize the processing results. Given the complexity of the technology iteration, Sharding's technology selection actually changed somewhat, and the community finally finalized the Rollup-Layer2 solution as the mainstream direction. In this solution, all applications can choose to be built in a separate Layer 2, while Ethereum Mainnet sinks into the infrastructure for all AppChains, which can also act as an information relay in addition to bringing data finality to AppChain. Such a master-slave architecture is a good solution in terms of efficiency and cost, both the cost of application execution and the "security" built on the degree of decentralization. At the same time, Ethereum also designed a relatively self-consistent business model, designing a good economic model for ETH. On the one hand, the POW Consensus mechanism of mainchain is switched to an asset voting POS mechanism, and in exchange, each participant can obtain the right to dividends on mainchain's fee income. On the other hand, each AppChain needs to confirm the finality of the data through the mainchain transaction, and the transaction needs ETH as the Gas, so as long as each Layer2 as an AppChain remains active, it will indirectly promote the activity of the Ethereum mainchain. This gives ETH the ability to capture value from the entire Ethereum ecosystem. However, things really went wrong when it started hot late last year, the ETH ReStaking track represented by EigenLayer. The original creativity of this track is actually not complicated, and those who have participated in Decentralized Finance may know that a considerable part of the projects are innovative around idle assets, the so-called "matryoshka dolls". It's just that Restaking is bolder, choosing to directly reuse the ETH participating in PoS Staking and directly provide the execution function, which is called AVS. Although in terms of entrepreneurial creativity, I very much agree with this direction. But in fact, this is the most direct cause of Ethereum's current predicament. Because at that time, the technology selection of Layer 2 has basically been completed, and a more mature technical solution has been run. It is time to work on the application side, such as more accelerated iteration-related applications, more adequate marketing budgets, etc. However, the emergence of the ReStaking track is actually a Vampire attack on Layer 2, which directly caused ETH to lose its ability to capture value. Because ReStaking provides an "second consensus solution" for applications that do not need to pay the cost of mainchain ETH, the most intuitive understanding is to take the current AVS, DA layer as an example, the so-called DA refers to data availability, that is, through a technical solution to make data immutable, can also be equivalent to data finality. In the previous narrative, it was clear that AppChain brought finality to its data by calling contracts on the mainchain, which created the need for ETH, but Restaking offers a new option to buy Consensus through AVS, in the process you don't even need to pay ETH, you can pay for Consensus with any asset. This makes the entire DA market, from the previous Ethereum monopoly market to the Oligopoly competitive market with ReStaking and Ethereum co-occupied, which naturally makes Ethereum lose the pricing power of the market, directly affecting its profits. Not only that, but more importantly, it squeezed out the precious resources of the Bear Market at that time. These resources should have been diverted to various application sides for promotion and market education. However, it was attracted to the "reinventing the wheel" of infrastructure, and today's Ethereum dilemma is officially due to the lack of enough active applications, resulting in a downturn in the value capture system. Those who have done projects may understand that the rhythm of project operation is very important, and the launch of the right products in the right market will make the project usher in long-term development, and any wrong decision may bring development to a standstill. So it can't be said that it is not embarrassing. Of course, the essence of this problem is understandable, and this is actually a problem of the democratic system, that is, the efficiency problem caused by the lack of unity of power. In an organization that pursues decentralized decentralization, natural voices can compete for development and resources according to their own will, which is more conducive to value capture in the Bull Market, because the potential for innovation is very large. But in stock in the Bear Market...