<100 subscribers
Share Dialog
In Chinese history, the Mandate of Heaven was a social contract between the emperor and the citizens, who was honor-bound to protect the people from natural and man-made disasters
In the intricate tapestry of belief systems, the rise and fall of cults often echo the cyclical narratives of history. New-age crypto cults inherit this tradition, with a social contract of prosperity (price action up only) in return for communal devotion (reply guys spam). However, once a cult attains its "Heaven" - a period of prosperity and community allegiance - it can quickly unravel from within if it neglects the core principles that once unified the four desolates (on twitter). This transformation is characterized by a dangerous paradox: the very success that solidified their power becomes the breeding ground for dissent and division.
Cults can be undone by the very same fervent belief that led to its ascendance, when its Crusaders lose touch and its original promise falters. The legitimacy of the ruling body (founders and core contributors) diminishes, leading to chaos, rebellion, and eventual decline, and thus its suppressed price action. In the absence of a formidable external threat, factions within the cult begin to emerge, each vying for individual interests rather than the collective good. The resulting fragmentation can be likened to a chain reaction, where competing factions lose sight of the common goal, allowing a new contender to rise from the ashes of their disunity.
Ethereum (ETH), the architect of smart contract platforms, held hegemony over myriad cycles. It was the platform that brought decentralized finance (DeFi), non-fungible tokens (NFTs), and an explosion of on-chain activity to the forefront. Yet, as we approach the climax of this crypto cycle, it's luster dimmed significantly. While it remains a technical, infra, and philosophical powerhouse, it has lost significant mindshare and market momentum.
This essay explores how Ethereum gained and subsequently lost its way through three interrelated dynamics: feudalization of the state, expulsion of the mercantile class, and isolation of the aristocracy. We’ll also examine how its rival, Solana, capitalized on Ethereum’s shortcomings to emerge as a dominant force. Finally, we’ll consider the bullish case for Ethereum and the lessons it must heed to reclaim its position.
Ethereum’s rise was predicated on its ability to unite a vast and diverse array of users, developers, and investors under a single banner. It offered the revolutionary concept of programmable money and became the de facto platform for DeFi, NFTs, and on-chain experimentation. Gas fees soared as users clamored to participate, and Ethereum became synonymous with innovation in Web3. It became the innovation layer of crypto, and pioneered many new novel concepts, that help onboard the masses onchain.
This ecosystem flourished because of Ethereum’s ability to foster innovation while maintaining a sense of neutrality and openness. It wasn’t tied to a single vision but instead allowed its community to experiment, fail, and succeed. Gas fees, though often criticized, were a testament to the platform’s vibrant activity, a sign that Ethereum had achieved a level of adoption and utility unmatched by its competitors.
This meteoric rise was cemented by its ecosystem's ability to attract a broad "mercantile class"-speculators, traders, builders, and users. Ethereum wasn’t just a blockchain; it was a digital economy, a marketplace, a playground, and a battleground all at once. Its stronghold on developer mindshare and its neutral, decentralized ethos earned it legitimacy and resilience.
But as the cycle progressed, cracks began to form. These issues weren’t sudden but rather the product of systemic choices and strategic missteps.
The illusion of invincibility can lead to complacency, and this is precisely the precarious position in which Ethereum currently finds itself. While the Ethereum cult still boasts a fervent following, the once-solid foundations of its commune are beginning to show cracks. The fervor that once united its adherents around a shared vision of decentralization and innovation has morphed into a landscape fraught with internal contention as it faces external threats.
As profits roll in and the initial fervor of the cult subsides, the dynamics shift; what was once a collective effort towards a common goal has devolved into a cacophony of competing interests. The once primal social contract broke, as the crypto markets began to make new highs without Ethereum. The legitimacy of Ethereum's reign falters, and discontent began to brew.
Ethereum's community, once a bastion of loyalty and innovation, now grapples with growing dissatisfaction. Factions that once harmonized under the Ethereum banner are increasingly fractious, each pursuing individual ambitions at the expense of the ecosystem's overall health. This internal strife leaves Ethereum vulnerable, exposing it to the rise of competitors eager to seize the opportunities that emerge from its disarray.
Ethereum’s transition to a Layer 2 scaling roadmap brought unintended consequences. The roadmap fragmented Ethereum’s once-cohesive ecosystem into a constellation of competing L2 chains, each vying for dominance. dApps which never needed their own chains, have decided to join the pitched battle and launch their own chains.
These feudal dukes (L2 chains) paid nominal allegiance to Ethereum. However, in practice, they pursued their own agendas, subsidized by cheap gas fees via blob subsidies to attract users and liquidity. While this approach alleviated Ethereum’s scalability woes, it diluted the sense of a unified state. Instead of a single thriving ecosystem, Ethereum became a fractured landscape, where users and liquidity were spread thin across multiple contentious dominions.
This resulted in confusion and complexity for users, diminished network effects, and a reduced sense of cohesion. This fragmentation played directly into the hands of rivals like Solana, which offered a simpler, more monolithic user experience.
The Ethereum Foundation’s ideological stance further eroded its user base. In an effort to distance itself from speculation, the foundation shunned the very activities that fueled on-chain activity. Unlike Solana, which embraced DeFi and speculative fervor, Ethereum’s leadership actively avoided it.
This ideological purism led to the expulsion of the mercantile (onchain speculators and users) class. DeFi protocols, once Ethereum’s crown jewels, received little institutional support. The Ethereum foundation elected to selling ETH for its own pursuits, instead of leveraging any of the advanced onchain defi platforms to finance itself. Speculators, liquidity providers, and traders, the lifeblood of onchain activity, found Ethereum increasingly inhospitable. Gas fees plummeted, not because of efficiency gains but due to a lack of activity. This void created fertile ground for Solana, which embraced speculation, fostering a flywheel of activity, innovation, and mindshare.
Perhaps the most insidious issue of all was the self-imposed isolation of the aristocracy (core devs and the core community). While Ethereum’s early culture thrived on public debate and engagement, its community leaders and influencers increasingly retreated into walled gardens like Farcaster and r/EthFinance.
This isolation created a notable vacuum in public discourse. Without a robust system of reply-guys to counter misinformation, Ethereum became an easy target to FUD and bully. Aspiring rivals like Solana took full advantage, crafting narratives that painted Ethereum as slow, expensive, and out of touch.
By retreating from the public agora (twitter), Ethereum ceded the narrative war to its competitors, a fatal mistake in a space where perception drives adoption.
Among these challengers, Solana has surged forth as a potent force, appealing to those who feel marginalized or stifled by Ethereum's more conservative approach. Solana's embrace of speculation and meme culture resonates with a burgeoning segment of the crypto community, drawing in those who seek a vibrant, agile environment.
While Ethereum clings to established practices, Solana thrives on its willingness to adapt and innovate, quickly launching products that align with the ever-evolving desires of users. Solana’s strategy was simple: embrace everything that Ethereum discarded. It welcomed speculators with open arms, created a seamless user experience with low fees, and built strong momentum in emerging sectors like DePIN, payments, and AI agents.
Solana’s focus on speed, scalability, and ease of use made it attractive to both developers and users. Its speculative flywheel ensured constant activity, creating a vibrant ecosystem that now rivals Ethereum’s in many respects.
In stark contrast, Ethereum's development teams engage in lengthy deliberations over scalability and governance, allowing Solana to capitalize on its speed and efficiency. This agility has made Solana increasingly attractive to new projects and users, gradually eroding Ethereum's once unassailable position as the preeminent platform for decentralized applications.
The specter of decline looms over Ethereum, not due to any singular failure but rather from a slow, insidious erosion of its foundational principles amid internal conflict and an unwillingness to adapt to the shifting landscape. Without a cohesive strategy to counter the rise of Solana and other emerging contenders, Ethereum risks not only losing its mandate of heaven but also its relevance in an ever-evolving crypto ecosystem.
As Solana continued to innovate and provide tangible benefits to its users, Ethereum's leaders remained ensconced in their ivory towers, dismissing the shifting tides as mere noise rather than recognizing it as a legitimate threat. This hubris served as a catalyst for the disintegration of Ethereum's once-united front, as internal factions squabbled over direction and strategy while a new challenger gained ground.
Despite these challenges, Ethereum remains a formidable force. Its strengths lie in its unmatched developer ecosystem, technical decentralization, and credibility as a neutral platform. Ethereum is also the only blockchain asset besides Bitcoin to have a U.S.-listed spot ETF, which could attract significant institutional flows later into the cycle
Moreover, Ethereum’s green credentials, thanks to its proof-of-stake consensus, position it as a long-term sustainable choice in a world increasingly focused on environmental impact. The challenge, however, lies in articulating Ethereum’s unique value proposition. Investors and users alike often struggle to differentiate Ethereum from Bitcoin, failing to grasp its programmable money narrative. Reclaiming mindshare will require a concerted effort to educate and engage the broader community.
Solana is also not without its own challenges. Despite its dominance in amongst newer retail mindshare and primacy on Twitter dialogue, it could see the very same fragmentation as the foundation is looking to launch its own version of L2s. Whether history repeats is of anyone's guess, but Ethereum's experience with its L2s will be a great lesson for Solana.
The rise and fall of crypto cults highlight the fragile nature of belief systems and communities in the digital age. As we witness the interplay of ambition, loyalty, and power, it becomes evident that maintaining a mandate of heaven requires ongoing vigilance and commitment. Just as emperors of old faced the ever-present threat of rebellion and usurpation, so too must crypto cults contend with the reality that their success can sow the seeds of their own destruction. Cults, whether in crypto or history, must continually engage their communities and adapt to changing circumstances. Loyalty in crypto is fleeting, and mercenary actors abound.
In an era defined by rapid innovation and competition, the lesson is clear: unity is paramount, and the cultivation of shared goals and values must remain at the forefront of any cult's strategy. Only by working collectively can these communities withstand the trials of internal strife and external challenges, ensuring their continued relevance and success in the ever-evolving landscape of digital finance. The question remains: as crypto cults navigate their own tumultuous journeys, will they learn from history, or are they doomed to repeat it.
Lawrence
2,367
Comments