In a recent thought-provoking article, Ethereum co-founder Vitalik Buterin revisits crypto's foundational principles, arguing that blockchain's ultimate purpose should extend beyond financial speculation to embrace broader Web3 values. He acknowledges the tension between idealism and financialization but proposes integration rather than exclusion as the path forward.
Understanding the Web3 Vision
The Core Objectives of Crypto and Blockchain
The deeper vision behind cryptocurrency and blockchain technology extends far beyond creating isolated tools or games. It aims to establish a more free and open societal and economic environment—what we now call Web3. Achieving this requires alignment across technical, social, and economic dimensions.
The fundamental理念 of the crypto community: Web3
The term "Web3" was originally coined by Gavin Wood. From a technical perspective, its goal is to construct a more open network stack.
Why Web3 Matters
Why pursue Web3? To extend the spirit of openness and freedom into modern digital life. Even when applications are built on open-source code, user data often passes through centralized servers operated by single entities. These companies can arbitrarily read user data, change rules, or engage in platform capture to extract more value from users.
To expand the open-source software ethos into today's world, we need systems that enable multi-party modification and access. Ethereum represents one crucial system working toward this goal.
Defining Web3's Characteristics
What would an ideal Web3 technical and application landscape actually look like? Vitalik identifies several key characteristics:
- Permissionless: Theoretically open to participation by anyone in the world.
- Decentralized: Applications should continue functioning even if core developers disappear, minimizing reliance on any single participant.
- Censorship-resistant: Centralized forces shouldn't have the ability to interfere with user or application operations. Societal concerns about bad actors should be addressed at higher technical layers rather than at the protocol level.
- Auditable: Anyone should be able to verify application logic and ongoing operations to ensure services follow the rules developers claim.
- Credibly neutral: Anyone should be able to observe the infrastructure's neutrality, even without trusting the developers.
- Tools, not empires: Empires attempt to capture and trap users within walled gardens, while tools accomplish their tasks and interact broadly with other open ecosystems.
- Collaborative mindset: Even competitive projects should share codebases, research, security solutions, community foundations, and other valuable resources.
The Reality Gap: Current Challenges
Industry Realities: Financialization and Speculation
Unfortunately, since 2017, these visionary goals have gradually faded from focus. Today's crypto ecosystem contains many elements that don't adhere to the values described above. Several examples illustrate the current industry state:
- While people in many countries do use cryptocurrency for remittances and savings, they typically use centralized methods, transferring funds within centralized exchange accounts or trading USDT on Tron.
- Systems marketed as Layer2 solutions sometimes rely on multi-signature protections without plans to transition to more secure designs.
- Account abstraction systems emerge that are simpler than the ERC-4337 standard but eliminate public mempools while introducing trust assumptions—ultimately counterproductive.
- Many NFT projects store image metadata on centralized servers rather than more resilient options like IPFS.
- Staking interfaces sometimes unnecessarily direct users and liquidity toward already-dominant staking pools, increasing centralization.
What Created This Gap?
Vitalik identifies rising transaction fees as the primary culprit behind excessive financialization and speculation.
When on-chain costs are minimal, people can imaginatively use blockchain for creative applications. But when transaction fees exceed significant amounts, only one audience remains willing to participate—speculative traders seeking wealth through financial maneuvers. This dynamic gradually transforms blockchain products and user bases toward financialization and speculation.
Resisting these tendencies is challenging, but without effort, the crypto ecosystem risks losing its unique value proposition, becoming merely a Web2 replica with extra steps and inefficiencies.
Vitalik acknowledges that moderate speculation isn't inherently problematic, noting that many enter crypto for financial reasons but eventually stay for the ideals. However, when speculators become the dominant user group, it shifts external perceptions of crypto culture and generates numerous negative impacts.
Ethereum's Social Layer Experiment
The industry continues progressing through trial and error, having solved many historical problems including scaling solutions, social recovery for private keys, anti-scam infrastructure, and MEV resistance. These technical advances create opportunities for users to explore new possibilities.
But technical solutions alone cannot achieve ideal crypto理念. Social consensus—how users utilize blockchain technology and the attitudes they embrace—remains equally important.
Integrating Rather Than Rejecting Economic Incentives
Regarding crypto's excessive financialization and capitalization, Vitalik advocates for integration rather than exclusion. His vision involves blending crypto's idealistic and chaotic elements, transforming differences into symbiotic relationships. For example, utilizing cryptocurrency incentive mechanisms to drive decentralized open-source project development—something previously difficult to achieve. Three examples illustrate this approach:
- Cryptocurrency incentives shift social attitudes: PGP attempted to put encryption keys in everyone's hands but ultimately failed due to lack of adoption. With cryptocurrency, millions suddenly possessed key pairs, enabling development of decentralized applications like encrypted email that fulfilled PGP's original vision.
- Cryptocurrency fuels decentralized industry development: Historically, open-source decentralized projects often faced chronic underfunding. Blockchain-based projects can now more easily secure funding through token issuance or derivative ecosystem rewards like Gitcoin Grants and Optimism RetroPGF.
- Interest-driven network consensus: Ethereum's security derives from ETH staking backed by significant market value. This security emerges not from stakeholder benevolence but from rational self-interest.
The Limitations of Technical Solutions
Incentives alone prove insufficient. Perfectly integrating financial attributes with Web3理念 remains challenging. While anyone can easily create incentives to attract stakers, encouraging decentralized staking participation proves far more difficult.
Purely protocol-based methods—relying solely on technical development—may never achieve the vision of "perfectly integrated incentives." Many critical parts of the decentralized stack lack viable business models.
The Value of Ethereum's Social Layer
Ethereum's governance itself remains non-financialized. Instead of token-staked voting rights, capable core development teams collaborate through discussion, making Ethereum potentially more robust than financially-governed ecosystems.
Ethereum maintains a strong social layer that can enforce its values where pure incentives fail, without creating a centralized "Ethereum Alliance" concept that becomes a new form of political correctness.
How can future protocols achieve this integration—valuing incentives without being consumed by them? Vitalik suggests no simple solution exists, but rather a series of iteratively developed technologies combined with accumulated social consensus. This represents what Ethereum has already achieved and where its fundamental value lies.
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Frequently Asked Questions
What does "Cypherpunk" mean in blockchain context?
The cypherpunk movement originated in the 1980s advocating for privacy-enhancing technologies through cryptography. In blockchain, it represents the ideology that systems should prioritize individual privacy, freedom from censorship, and decentralized control rather than replicating traditional centralized power structures.
How does Ethereum differ from purely financialized blockchains?
Ethereum maintains a balance between financial applications and broader Web3 utilities through its development philosophy. While supporting financial applications, its governance model and development roadmap continue prioritizing decentralization, censorship resistance, and open participation beyond mere financial speculation.
Can financial incentives actually support idealistic goals?
Yes, when properly structured. Financial incentives can bootstrap participation in decentralized networks, fund public goods through mechanisms like quadratic funding, and align stakeholder interests with network security and growth. The challenge lies in designing systems where incentives serve rather than dominate the core values.
What are the risks of over-financialization in blockchain?
Over-financialization can lead to excessive speculation, regulatory scrutiny, increased centralization through wealth concentration, and neglect of non-financial use cases. It may also create perception problems that hinder broader adoption for utilitarian purposes beyond trading and investment.
How can users contribute to balanced blockchain development?
Users can support projects aligning with Web3 values, participate in decentralized governance, use non-financial applications, choose decentralized platforms over centralized alternatives, and educate others about blockchain's potential beyond mere speculation.
What technical developments help reduce financialization dominance?
Layer 2 scaling solutions reduce transaction costs enabling non-speculative applications, improved wallet experiences make non-financial uses more accessible, zero-knowledge proofs enhance privacy for non-speculative use cases, and better governance mechanisms help maintain balanced development.
Conclusion: Integrating Token Incentives Responsibly
Vitalik's approach to Ethereum's speculation challenge ultimately focuses on integration rather than elimination. The vision suggests people may initially join for profit but ultimately stay for the理念, thereby accelerating progress toward an ideal Web3 world.
The practical approach mirrors Ethereum's protocol governance itself, which balances interests with expertise through collaborative development team efforts advancing the protocol toward idealistic goals. This balanced approach represents Ethereum's core value and offers a reference model for other protocols seeking similar integration.
The future of Web3 likely involves appropriate integration of token incentives rather than their rejection, creating systems where financial and idealistic elements coexist productively rather than conflict destructively. This balanced approach may ultimately prove more sustainable than purely idealistic or purely financialized alternatives.