Ethereum co-founder Vitalik Buterin has claimed that the original vision of Web3 as a more open internet stack has "faded somewhat into the background."

In a lengthy blog post, Buterin identified rising transaction fees as the "number one culprit" for a shift away from Web3's ideals. He argued that ENS is the only non-financial application being used at scale, while an "ideological rift" has opened between the crypto world and non-blockchain advocates of decentralization, who now see crypto as a "distraction."

Buterin also claimed that "few talk about consumer crypto payments," and that where people do use crypto to transact or save money, "they often do this through centralized means" such as exchange accounts or trading the stablecoin USDT on Tron.

Rising transaction fees have, Buterin said, excluded all but "degen gamblers" from using blockchains, as they are "the only audience that remains willing to pay" when transaction fees soar. When that niche community of degens dominates a blockchain's user base, he said, "this adjusts the public perception and the crypto space's internal culture," leading to negative outcomes.


It's not all bad news, though. Buterin pointed to positive developments over the past year, including scaling solutions such as rollups, the ERC-4337 account abstraction standard, and light clients on Ethereum.

He also zeroed in on privacy solutions such as Railway and Nocturne, and devoted a large portion of the essay to zero-knowledge proofs, a "very powerful new tool" used to prove that something is known without directly exposing the known information.

"The programmability of zero knowlege proofs means that we can get past the false binary of "anonymous but risky" vs "KYC'd therefore safe", and get privacy and many kinds of authentication and verification at the same time," Buterin wrote. He pointed to use cases such as Zupass, an in-person authentication system that enables anonymous voting and identification.


Buterin has previously advocated for "privacy pools" using zk-proofs to validate users aren't using criminal blockchain addresses, while retaining the anonymity of their transactions.

As well as building out Ethereum's technical stack, Buterin held forth on the importance of its "social layer," which, he said, "vigorously enforces its values in those places where pure incentives can't." He pointed to the challenge of  integrating "degen gamblers" who come to the crypto ecosystem out of a desire to get rich, but who are turned into "avid believers" in the ideals of Web3 and decentralization.

That, he believes, can be achieved through a mix of incentives, community and "hard norms of neutrality, open source and censorship resistance."

For Ethereum to succeed, Buterin said, "we need not only a vision for a technical stack, but also the social parts of the stack that make the technical stack possible to build in the first place."

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