The Journey of Ethereum: Unraveling Its Transformative Path

A lot of you are aware that the Ethereum network emerged from the understanding that blockchains can extend well beyond just currency, along with a dissatisfaction with prior project limitations. The fundamental concept was straightforward: a blockchain equipped with a Turing-complete programming language, enabling users to develop all sorts of applications on its foundation.

As time progressed, the vision matured and broadened. The blockchain remains a pivotal component, but it is ultimately just one part of a grander vision of “web 3.0” as articulated by Gavin Wood here: a more secure, reliable, and universally accessible internet for contracts, finance, auditing, tracking, and basic websites and web applications that leverage decentralized technology to address some of the practical, political, and technological shortcomings of previous methods. Alongside the Ethereum blockchain, we observe a comprehensive array of both internally and externally created, low-level and high-level protocols including Solidity, Whisper, IPFS, zero-knowledge proof systems, account management frameworks, dedicated browsers, and much more—all aimed at delivering a coherent vision of the internet as it ought to be.

Such a grand vision brings forth several challenges. Presently, the Ethereum initiative is undergoing a phase of intricate transition. Many of the challenging foundational efforts—myself, Gavin, Jeff, Martin, Lefteris, Felix, Vlad, and numerous others working on four compatible versions of a project that our security evaluators have noted as having “testing requirements … more intricate than anything [they’ve] examined previously,” Christoph and Dmitry’s relentless dedication in establishing over ten thousand tests, Marian, Taylor, and Konstantin’s contributions to network evaluation and emergency response strategies, Christian, Liana, and Gavin’s collaboration in launching Solidity, IMAPP’s involvement with the JIT EVM, along with many other initiatives of contributors to the Ethereum platform, too numerous to name, all culminating in the successful inauguration of a blockchain valued at over $50 million in value circulating from day one, are now behind us. Ethereum is now a reality, and those fortunate enough to accept Mircea Popescu’s proposal to acquire ETH that he does not possess, at the price of$

Simultaneously, however, several tough obstacles remain: some are technical, some organizational, and some fall into nearly every category. The essence of the issue is straightforward. Up until recently, the majority of the efforts dedicated to the Ethereum project were carried out by branches of the foundation. In the forthcoming period, while the foundation and its branches will maintain a robust and leading role, it will ultimately be the community that gradually becomes the primary force in ensuring its success. This holds true for several reasons, some unforeseen and some advantageous.

To begin with, it is indeed relevant that the foundation’s finances are constrained, and a significant factor in this was our incapacity to sell nearly as much of our BTC assets as intended before the price fell to $220; as a result, we suffered roughly$

Additionally, the project’s demands have escalated. Over the preceding twenty months, the initiative has evolved from a basic attempt to enhance Mastercoin by incorporating a programming language into a pursuit of advancing a formidable and broad vision of “web 3.0,” encompassing various technologies, some developed by ourselves and others by external parties, along with a complex software framework that unites them all with a singular objective: to simplify the process of creating secure, globally accessible, and trust-minimized decentralized applications as much as building a website – and ideally, even simpler.

The foundation and its subsidiaries alone lack the workforce required to fully realize this vision to its ultimate fulfillment, including proof-of-stake driven scalable blockchains, smoothly integrated distributed hash tables, programming languages equipped with formal verification systems powered by cutting-edge theorem provers, and various categories of middleware; although the foundation and its subsidiaries can, and will, sustain their role as the primary engine of technology at the core, a highly community-oriented model is indispensable and crucial, both to aid the Ethereum ecosystem in achieving maximum growth and prosperity and to solidify Ethereum as a decentralized initiative.which is ultimately possessed by all of mankind, and not by any singular faction.

Fortunately, the community has already taken initiative. Here are a few examples illustrating aspects of the Ethereum ecosystem that the Ethereum Foundation and its affiliates have not been involved with:

• Augur: a forecasting market that has garnered $4.5 million in its recent (and still ongoing) crowdfunding effort
• GroupGnosis: another forecasting market being developed by Consensys, already facilitating wagers on Ethereum block difficulty, sports events, and soon presidential elections
• Embark: a NodeJS-centered dapp creation, testing, and deployment framework
• Truffle: another framework for developing, testing, and deploying dapps
• Ether.camp: a blockchain explorer
• etherscan.io: another blockchain explorer
• TradeBlock: did I forget to mention that there’s yet another ethereum block explorer?
• EtherEx: an asset exchange based on Ethereum
• The Ether.camp web-based integrated development setting (coming soon)
• EthereumWallet.com: an online ether wallet
• The Ethereum Java implementation (where original work was carried out under the Foundation, but which is now progressing entirely independently)
• And the Ethereum Haskell implementation, this time with absolutely none of our involvement whatsoever!
• MyEtherWallet: another ether wallet
• Metamask: an Ethereum browser-in-a-browser
• Andreas Oloffson’s development guides
• The inaugural data feed contract
• Ethereum Alarm Clock, an implementation of one of our primary planned features for Ethereum 1.1, but functioning as a decentralized middleware service on the 1.0 Ethereum blockchain!
• dapps.ethercasts.com: a site listing many of the aforementioned, and more (no, I’m not mentioning the ponzies and gambling sites, except to credit Martin Holst Swende’s excellent work in documenting the dangers of creating a blockchain-based casino with a faulty random number generator, and Qian Youcai’s ongoing efforts on RANDAO to ameliorate this issue).

Indeed, the Ethereum ecosystem is evolving nicely, and appears drastically different from what it was barely a year ago.

Internally, we have Ethereum Foundation subsidiary developers creating additional block explorers and other resources in their spare time, and some developers are already engaged in implementing Ethereum-based lightning networks, identity systems, reputation mechanisms, and beyond. In the near future, numerous non-profit and for-profit organizations will emerge in and around this domain, some involving Ethereum team members, and many having partial collaboration from my side. The first of these to introduce itself is the Wanxiang blockchain research institute and fund located in Shanghai (yes, this is the “significant collaboration” I recently referenced, and is also my long-awaited response to “how was your trip to China?”), which encompasses (i) a deal to acquire 416K ETH, which has already finalized, (ii) an upcoming conference in October, (iii) a non-profit blockchain research institute, and (iv) a $50 million blockchain venture-capital fund, all emphasizing Ethereum development. I fully anticipate that within six months the Ethereum for-profit landscape may be significantly more well-funded than the Foundation itself.

Keep in mind that a notable number of staff from the Ethereum foundation subsidiaries will be transitioning to the rapidly expanding for-profit Ethereum ecosystem in the coming six months to attract more resources, engagement, and and development focus into Ethereum territory; thus far, everyone I have conversed with who is departing the foundation subsidiaries plans to pursue this, and they will frequently continue, and enhance, the same projects they have initiated either under foundation subsidiary employment or as personal side ventures, undera new banner. Ming Chan, who has lately joined the organization, will be handling the foundation’s administrative tasks, assisting in the creation of an updated and more comprehensive strategic plan, supervising DEVcon 1 preparation, and generally ensuring that operations on the foundation side run seamlessly during the various concurrent shifts occurring; we have also broadened our advisory board, with new advisors to be introduced shortly.

In light of these situations, we must inquire, what actions will the Foundation undertake (and refrain from doing)?

Finances

Let’s begin by presenting a summary of the Foundation’s financial condition. Its present assets include approximately:

• 200,000 CHF
• 1,800 BTC
• 2,700,000 ETH

Along with a 490,000 CHF legal fund earmarked to cover potential legal defenses (similar to insurance). The foundation’s monthly expenses are currently around 410,000 CHF and projected to decrease to 340,000 CHF starting October 1; a mid-term goal has been established at 200,000 – 250,000 CHF as a suitable target to fulfill our remaining, yet vital responsibilities. Assuming we achieve this within three months and that ether and bitcoin values remain constant (heh), we have sufficient resources to last until approximately June 2016 at the 340,000 rate, and potentially until September-December 2016 considering the planned transitions; by that time, the aim is for the foundation to secure alternative income streams.

Potential revenue avenues past that timeframe include:

• Developer workshops (including extended in-person “courses”)
• Conference tickets and sponsorships
• Donations and grants from third parties (either to the Foundation or to projects that the Foundation would otherwise be investing resources in)

Another measure that may be considered is, when Ethereum transitions to proof of stake, retaining 50% of the old issuance rate for one year and channeling the issuance into a certain mechanism, possibly a simple voting system or something more intricate that incorporates delegated voting, decision markets, and potentially other game-theory-based revealed-preference strategies to compensate developers. Regardless, our initial commitment that the issuance rate shall not surpass 26.00% annually, alongside the objective that the eventual final issuance will be significantly lower (likely between 0-3% annually) under proof of stake, will be upheld. We eagerly encourage community feedback on whether and how to pursue this course; if there is substantial opposition we will abstain from this, although the community should recognize that NOT pursuing this may lead to increased dependence on the profit-oriented ethereum ecosystem.

Focus

Until about six months ago, the Foundation and its subsidiaries were involved in nearly every aspect of the ecosystem; presently, the foundation and its subsidiaries still cover a broad scope, though some community members have emerged to rival its offerings – in certain situations, in my personal opinion, quite impressively. Moving forward, the Foundation and its subsidiaries will strive for a more concentrated strategy, where they undertake only a portion of the work within the ecosystem, but do so effectively. A rough outline of the Foundation’s initiatives can be illustrated as follows:

• Education
  
  • Online documentation and developer resources (a new documentation site is soon to be launched!)
  • Conferences (DEVcon 1 scheduled for November!)
  • Hackathons, workshops
  • Potentially compensated in-person development courses

• Coordination of conferences, events, and Meetups
• Outreach, marketing, and promotional efforts, aimed both at the media/public and institutions
• Compliance and regulatory upkeep
• Certifying businesses, individuals, etc. (either directly or through a third-party partner)
• Highly focused core development tasks, including:
  
  • Some core client programming
  • Network monitoring and coordinating emergency responses
  • Maintaining test suites, certifying clients
  • Funding certain security audits

• Research, entailing:
  
  • Proof of stake (Casper)
  • Scalability
  • Upgrades to virtual machines
  • Abstraction
  • Formal verification
  • Integration of zero-knowledge proofs

• Official specifications for protocols and sub-protocols

Higher-level development tasks will predominantly be carried out by for-profit organizations, volunteers, and other community members in the medium term, although the Foundation’s subsidiaries will continue to employ a significant number of developers in the short term.

Transparency

The Ethereum Foundation wishes to reiterate its commitment to being as transparent as possible in its operations; to this end, we are disclosing the aforementioned information, and as an initial experiment in advancing this, we are collaborating with Consensys to utilize their (Ethereum) blockchain-based accounting tool Balanc3 for documenting all expenses related to Devcon 1.

A significant facet of transparency involves more open and participatory development; consequently, we are actively working to transition discussions from Skype to Gitter where they become more publicly accessible (e.g., you can review this room right now) allowing the public to engage more effortlessly. We are also assessing the feasibility of implementing a more formal and inclusive approach toward reaching agreements on protocol upgrades and appreciate input from client developers on this matter. Furthermore, additional announcements from us and others will follow shortly.

In summary, despite indications of growing pains, the state of the Ethereum nation is positive, its ecosystem is flourishing, and its outlook is promising.

As a Foundation, we shall persist in our commitment to advancing and supporting research, development, and education to deliver decentralized protocols and tools to the globe that empower developers to create next-generation (d)apps, collectively forging a more universally accessible, freer, and more trustworthy Internet.