Author | Jocy @IOSG

Foreword

I believe everyone has already seen many records of the first two weeks of Consensus HK, I will not repeat them, and I can summarize most of them as disappointment with the industry and no prospect of a breakthrough, and believe that the bear market has arrived. That week was also a feast for the P-players and KOL gods. The impact of the Hong Kong trip on me is rationality. Those little players and gods who work harder than fund managers and entrepreneurs deserve so much, and they are surrealist investors who can always put a perfect ending to every trade. The trading principle of many P-players is 90% or BTC, 10% active sol position, always maintaining PVP and sprinting, no matter how much they profit each time, they will execute this position allocation. Because of the meme wave and attention economy, this has become the hottest discussion in HK.

Kaito's victory has ushered in the golden age of KOLs, with attention being priced and quickly monetized. In stark contrast, the entire Ethereum ecosystem is lifeless, the idealized trumpet has no one to follow, this is a real blow. The so-called value investors are deeply trapped, and long-term holders are starting to be bearish on Ethereum, turning to Solana instead. Many people do not see the "Hungry" degree of Ethereum's entrepreneurs (in contrast, when a dev goes to L2/Ethereum to request a connection, it takes an average of two weeks, while it generally takes less than two days to complete the connection, pull the group and start communication with the Solana Foundation), this seems to be deliberately done by the industry's dominators, in this bull market mini-cycle, they do not encourage long-term holders but give better returns to short-term traders, but in my opinion, this is to blow the alarm for the industry's leaders like Ethereum who are not doing enough or lack crisis awareness.

Prevalence of Short-termism: The Collapse of Industry Values

At the same time, when everyone has shed their disguise and wants to make a big profit when the bull market is over, many people have lost their ideals/beliefs and have become ruthless arbitrage tools, no one cares about the future of the industry, everyone just wants to make the last buck of this cycle. Exchanges can abandon the listing standards to list some of their own invested projects in order to support the prices of their own project tokens; top-tier projects are treating TGE as the last ATM, and market makers have also become the champions of this cycle, relying on BD and brand they can get free tokens and in the overall VC coin downtrend, the average mid-sized mm can get a net income of nearly $40m; it seems that everything is moving from long-term to short-term bubble and speculation, and the actions of these people are having a more far-reaching impact on some entrepreneurs who are sticking to building.

This moment is very similar to 2018/2022, very cold, with practitioners leaving the industry because they see no hope and identity in the industry. Everyone is trying their best to survive the bear market. For the teams that are still entrepreneurial and doing things, this will be very painful, they need unwavering faith and values at all times. Trump has influenced the core values of the entire United States, and the crypto industry has sparked a huge nihilistic investment mentality after the Trump token. When practitioners and speculators all think this is a fast and short-term game, everyone also aims to take as much cash as possible before the money game button is pressed.

In summary, the Hong Kong trip was a major collapse of industry values, and also a formal written judgment on Ethereum. As the most successful entrepreneur in the industry, has he not grasped the helm of the industry well, and is he leading the industry towards nihilism?

Challenges and Transformation of the Ethereum Ecosystem

TL;DR version: The founder of Denver infra is very bearish, but the founders of applications and AI are all bullish.

The Denver trip also saw some shocking scenes, where some founders and developers who have been steadily building for many years suddenly found out that the great Qing dynasty was about to collapse, and they chose not to believe it. It seems that the Ethereum ecosystem has always had a culture of being taken care of, and they have been able to raise funds smoothly all the way, and they have also seen many projects that are not as good as them perform well in the token speculation market, they may never have thought that one day they would not be able to raise money, and their own tokens would go to zero like other air coins. It was not until their runway was only 6-9 months left that they gradually realized that they needed to really make a product with revenue and user base, and also began to seriously think about what the problem with Ethereum was. Of course, there is never a late time, it's just that for them, it requires massive layoffs and a complete denial of their past, which is a huge challenge for the founders, because they are just betting on an uncertain direction, but they have to risk their entire fortune for it. According to incomplete statistics, the total financing amount of projects deeply rooted in and built on the Ethereum and EVM ecosystem has exceeded hundreds of billions of dollars, and the total valuation of the primary and secondary markets has exceeded trillions of dollars. Therefore, the problem facing these projects is whether to stay in Ethereum or leave? Even someone as strong as Lido founder Konstantin, when he tweeted about setting up a second Ethereum Foundation, he immediately received DMs from hundreds of Ethereum ecosystem DeFi founders (including Uniswap), of course, this is still a challenge to consensus.

I also met a group of Ethereum ecosystem entrepreneurs, they have always been the technical pillars of the industry, and the technical products and solutions they have developed have always been widely adopted, whether it's TEE/zkTLS/rollup, they have been the dominant player. But these people are also tired of providing ever better solutions for technical protocols without end-user demand and needs, and what now excites them is the inspiring new papers emerging in the field of AI research. To be honest, this type of founder is not uncommon, and they are one of the few founders who can really dig deep and come up with viable solutions in the industry. If a large number of such founders choose to leave, I think the impact on the infrastructure of the entire Ethereum ecosystem will be at least a 3-5 year setback.

The Wonderful Energy of the Fusion of AI and Web3

At first, everyone was saying that Denver infra was completely devoid of hotspots and vitality, but as we chatted with 3-4 new AI*Web3 projects on average every day, we saw the Ethereum community's active embrace of emerging technologies like AI, and their innovative attempts in areas like DeTraining/Inference/DePIN. Ethereum is actively adapting to new technological trends and exploring new application scenarios. Capital and entrepreneurs have become the industry's prophets, Paradigm has led a $100 million investment in the Web3 LLM company Nous Research at a $1 billion valuation, Groq has generated over $1 billion in revenue in the past year in Inference, Openmind has partnered with Yutree Technology to create RobotAI, DePAI's open source product debuted in Denver, Hyperbolic has also become one of the inference networks with the highest integration support for Web3 developers, and there are also open source Intelligence platforms like Open Gradient and Pluralis. At Ethereum conferences like Denver, smart developers and founders have already started to help Web3 embrace AI, and everyone is brainstorming how to get AI agents and more applications into Web3 scenarios. The industry has never had a stopping point, and the curiosity and research will always drive those builders further.

▲ Openmind partnered with Yutree Technology to create RobotAI, and DePAI's open source product debuted in Denver

Macro Positive Factors Ease, Crypto Keeps Pace with the Times

But in dealing with most American institutions, I found a completely different scene from Asia, where everyone is very optimistic about the crypto policy's bull market-friendly environment, the U.S. bank's policy on accepting crypto asset custody has been passed, and banks will soon gradually allow BTC/ETH to be used as collateral, and even expand to mining equipment, here we can see a clear trend that a crypto interest rate cut environment is about to form, from the original industry-wide 10% lending rate can be adjusted to around 3-4% or even negative interest rates in Japan, which will bring back liquidity to the industry. In addition, we have recently seen positive crypto policies in the U.S., Uniswap and Coinbase are both considering designing tokenized securities models to allow traditional industry investors to better evaluate and purchase tokens. The positive regulatory release in this cycle will far exceed our expectations, so I am very optimistic about the market environment in the next two years. Many people say this round of the bull market is already over, but I don't think so, each round of the bull market not only has the support of the macro market, but also the self-innovation and new applications of the crypto-native market, in this cycle we have not yet seen real innovation, if not, this will be a false bull market. In the next two years, we can expect more traditional companies/even national regimes to settle in L2 networks and issue their own decentralized networks, the prosperity of L2 business will again drive the growth and value capture of Ethereum L1.

Reconstructing Ethereum Governance: Towards Mainstream and Commercialization

On the third day in Denver, I attended Pragma hosted by ETHGlobal, where I met several core EF developers, who revealed the upcoming new organizational structure adjustments for Ethereum. What's interesting here is @dannyryan, whose reputation and voice in the Ethereum core developer circle has been well-known, and the newly established @Etherealize will also shoulder the mission of the new era of ConsenSys, helping Ethereum move towards the mainstream world and commercialization; In addition, the two Co-EDs of the Foundation, Hsiao-Wei @hwwonx, have been deeply involved in Ethereum for many years, following Vitalik since 2016 (the photo in 2019 shows the one sitting next to Vitalik at the Ethereum hackathon in Beijing), and Tomasz @tkstanczak as the founder of Nethermind, is very familiar with the entire Ethereum ecosystem projects, and as a third-party dev shop, they understand the more sustainable business logic, and can help Ethereum find a balance in the infra and commercialization path.

▲ The photo in 2019 shows the one sitting next to Vitalik at the Ethereum hackathon in Beijing, which is Co-EDs Hsiao-Wei @hwwonx

In fact, the problems Vitalik is facing are the same as all entrepreneurs, the team is too big and difficult to manage. Friends who understand the study of personal characteristics can try to analyze V's inner journey, from the Milady emoji Twitter avatar to the disappointment with the crypto OGs, replacing it with the half-human, half-bird Druid image from World of Warcraft, which also represents his reconciliation with the community's calls, and the next day he officially announced the new team structure of Ethereum. Ethereum may be the first truly decentralized organization and economy in history, we should be more tolerant of this man who is just thirty years old, he indeed has not performed particularly brilliantly in organizational structure management and Ethereum application commercialization, but who can lead this organization to create more brilliance and results? Perhaps Ethereum can also learn from Elon Musk and create a DOGE committee, specifically responsible for dismissing some irresponsible devs and sinecures, how to measure the value contribution and KPIs is an important issue facing V. In addition, providing clearer value propositions and development needs for internal core developers, and giving the management team more specific roadmaps and management time limit requirements, to better return Ethereum to community and democratic governance. As the cornerstone of Web3, Ethereum is also actively exploring Layer2 solutions and technical upgrades to meet the growing application demands.

There Has Never Been a Messiah, V Needs to Encourage More Application Entrepreneurs

For Ethereum, is technical R&D so important now? Perhaps in 2017 it was important, in 2020 it was important, in 2022 it was important, but now applications should be more important than technology. The test of Ethereum's next most important milestone and the greatest confidence for ecosystem builders will be whether Ethereum, as the world computer, can produce groundbreaking super-app products.

Many people have seen Vitalik as the savior of Ethereum, Ethereum is the industry's savior, but there has never been any savior. Everyone should be the savior, I have appealed in a previous tweet, all organizations that have accumulated generous capital and stable business income in this industry should actually contribute to the future of this industry, they can donate to some Ethereum open source organizations, or create better opportunities for young people in the industry, in addition to using Grants to support, many entrepreneurs still need financing support, in this wave of Altcoin bloodbath, it has also dealt a heavy blow to the already shaky Asian funds, many funds have started to shut down or transform into secondary markets, the Asian entrepreneurial environment is difficult, if we lose the support of Asian VC institutions, the industry will also become more fragile. Here I still call for, in the Ethereum ecosystem organizations, early-stage venture capital support must not be missing, I suggest that all exchanges can set aside 1-2% of their annual revenue to support the development and innovation of the Ethereum open source ecosystem.

Will Ethereum perish in the next bull-bear cycle? I don't think so, this is the most successful decentralized organization in the Web3 industry, we should not let it fail, its failure means that the hundreds of billions to trillions of talents and project assets built on the Ethereum business empire will have to start over, the entire industry will be set back 5-10 years, meaning that many OGs will leave.

Please cherish your Ethereum, if you look at it from a 10-year perspective, when you look back on the events of 2020-2030 in 2030, you may find that the doubts and clamor of 2025 were actually trivial, how to judge value and innovation on a 10-year scale, this is an issue worthy of more consideration.

Optimists are often right, in the most difficult and turbulent stages, we should maintain confidence and optimism.