Institutions Now Hold More ETH Than Ethereum Foundation - What This Means with Tomasz

Transcript

Even within those organizations you'll see many of the researchers, technologists or or business people will be uh saying behind the scenes you know like we we still working with Ethereum was still is the ecosystem that we're choosing and we're launching L1 because of this or this or this. They are now surpassing the Ethereum Foundation in their ETH holdings. So I'm curious how do you see the Ethereum Foundation evolving? Is it better that that they are able to be able to have such a strong amount of supply of these networks to dictate governance processes or changes or at least have a say?

Welcome back to the Rowup. We are your hosts. I'm Andy. I'm Robbie. And this is your home to learn from the biggest guest, the brightest minds at the tip of innovation. >> Our goal is to help spread the collective knowledge of everyone in our community. We are breaking crypto out of its echo chamber and taking it to the real world. >> All right, Thomas, welcome on. Uh you're the first part of the uh based rollup day that we're hosting today. Uh it's it's uh the day before the day, so you're a whole 24 hours early. Good to see you, man.

>> Thank you for having me. Great to see you. >> You're like the new George Washington of Ethereum. They they brought you in start fresh. People were ready for a change in leadership. People wanted to see a new Ethereum come out. Might I remind everyone who's watching that six months ago, Ethereum was had scalability issues. The L2s weren't weren't going to work. They were parasitic. The L1 was never going to scale and this was not going to be picked up as an institutional asset because it was only Bitcoin as a special snowflake. The community was fractured and people were leaving for Salana. Six months fast forward today, institutional adoption, DATs, base ropes are getting traction.

Still a lot of the inherent I think issues that people argue about in in the tech, but the road map is shipping and there's a lot of work to go on the L1. It's just crazy how fast some of these sentiment and things change. Thomas, how has the last sixish months for you been as the co-executive director of the Ethereum Foundation? and maybe just describe how this personal sentiment shift has has been from your perspective. >> Yeah, I think it's a it's a very very long honeymoon period so far. Uh it's been great. I think that very often I'm just the face of changes because of uh appearing on podcast and communicating much more. But the changes have been had been happening before I joined. uh they

have been happening in the in the shadows in the background like people in stealth mode uh build Ethereum together all around the world and I think the first first few weeks when I when I was joining and I was reaching out to people and asking asking for feedback and many of them were saying we're starting something big we cannot allow this uh this moment of crisis feel like it's real thing and and they'll start contributing and now you see the effects of that like many uh you mentioned digital asset treasury companies is you uh you mentioned some of the protocol work. All of that has been started sometime before I even joined and um some of it was EF leadership helping to coordinate and then that leadership

change was just just part of it. Uh so I hope this also makes people just feel very very confident that Ethereum generally has um so many leaders some of them stealth mode some of them very visible some of them communicating some of them just like quietly built in code and that's all that matters uh sentiment shift in in media. So maybe here communication is very important like just just coming and clarifying things not allowing other people to fill in the gaps and saying that that's what's happening but explaining clearly what's happening what we were working on how we're working on it what are our plans strategy and even if you if you if you shift it slightly if you make changes uh

over time people start to feel it how you communicate and and where you have more or less confidence I I think we generally have a lot of confidence evidence now because uh we're just catching up with the communication on the things that maybe were not communicated that clearly in the past but were relatively clear. There's still some areas where we exploring the technology side of how to solve uh some challenges, how to answer to the new challenges but the team is strong um at the foundation also the the engineers, researchers and business builders in the entire ecosystem are super strong. So, so yeah, great great few months. Uh, some highlights. I've been traveling a

lot and uh visiting communities everywhere and I think there is a lot of excitement. There was excitement at 10 years of Ethereum and for the next 10 years too. >> Absolutely. Yeah. And you came from a very critical role in Ethereum. You were founder of Nethermind, one of Ethereum's clients. And so I'm curious as you built up that company and was very integral to Ethereum, you also had uh surrounded yourself with very technical talent in Ethereum and you you were very deep in the the scalability roadmap and and working at some of the deepest parts.

And so now Ethereum has grown into so much beyond it its technical capacity. There's not just developers and builders, there's founders and now there's these the these DAT companies and Tom Lee and Joe like all of these things that are now surrounding Ethereum. So I'm curious, how has your perspective changed? What was the lens that you viewed Ethereum through and how has that changed up to your current role of executive director? >> Sure. when I when I go back to when Ethereum was starting and I I was not uh during the time with Ethereum like the first one two or three years uh I feel that what was extremely important is that you had people there that were

connected to institutions you had people that were committed to the research uh against already rushing uh and there were people that were deeply technical and engineering focused and all of that together created all components of the Ethereum success And probably without any of those components they wouldn't have the the success of the early days of the early years. uh when I was joining in 2017 the ecosystem uh starting data mind I I've already seen many of the announcements of the at the time very very dynamic Ethereum enterprise alliance that was announcing one by one large institutions saying we're going to build on Ethereum and now

many years forward many of those institutions that were announcing that time are are very active or maybe sometimes they just built something tried they disapp disappeared and then coming back disappeared again. Uh and here is 2025 and it's really year of institutional adoption and you see the same names. Uh I actually learned so much and my journey with with Neammind was yeah very much more on the engineering side. I've uh I worked as an engineer before that as well with financial institutions with large institutions like city bank and then with a hedge fund dro capital where practically even as you're engineer that team is probably like at that time it was 50 to 100 people so it means that

you're a bit closer to all the events and you're observing what happens uh but still I agree likemind this very very uh engineering focus of how to how to build the cloud and performance optimization. I think in 2019 or so we were leading that push for performance matters right like you you have to really think as well that the clients can contribute to the improved performance that that engineering excellence will matter and uh that's something also like the fact that I was I was building the codebase myself at the time for a few years I was really a coder of the like core developer coder I participated in those processes that helps to understand now

the challenges uh when scaling helps to appreciate the effort of all the client teams uh also the limitations and the worries. Uh but also it means that you can be a bit more uh more brave in making some claims about what is possible and push people a bit more towards the limits. Uh you know obviously you always risk that the your cards will be overloaded feeling feeling burnt that would be crazy that would be really bad. Uh but we also understand that sometimes is that motivation that we going to the uh to the exciting times that that it all matters actually prevents the burnout when people see that everything is going well that

you're participating in something great that you're among the elite of engineers building uh building a lit project that matters then it really drives you and and I think that helps and then talking about it also is a pleasure >> and have you seen examples of that inside the Ethereum and the Ethereum foundation so far with Robin Hood coming on chain you know these companies crypto companies going public like there is adoption it is a lit protocol like these things are happening it must be very gratifying internally and also you know everyone in the community feels it have you seen those examples inside as well >> uh yeah sure I mean core developers are not disconnected from the well sometimes

sometimes they are disconnected from the news and that's great uh sometimes they they just feel the moods and and everyone in the community will will notice okay there there big announcements they there are changes in the US market there is a bit more openness from regulators there is equities trading on chain and I think that you'll see more announcements u this month uh I think is preparing something I've heard something from Coinbase today as well so so you see more trading on chain and reg is being very friendly towards that uh that is bringing that feeling that you actually have an impact. At the same time, it brings a few questions about do you do you continue working towards the

all the values related to retail users? Will you continue providing privacy and censorship resistance? Uh people start asking about about capture about maybe leaning towards uh one part of the world too much. Uh so we we pay attention, we are excited but also always cautious. We we owe that to protocol to provide security to provide all the um all the attention to what matters, what why people are building long term, why people are not leaving to to shiny new things that appear for a year or two.

And we've seen many examples of the chains that just have this like super momentum for a year or two. you feel like they they kill everything and we went from the ups and downs with Ethereum and people know that there is something deeper there why they're building why the community stays why do people in in stealth mode why they are there uh because you can always judge the size of the community of those who claim everything is going well but it's it's a bit harder to judge how many people are there that will appear in the time of crisis and term has extreme power of attracting those people that don't care about uh visible things politics and just disappear when needed and that's what makes the the chain continue going.

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perspective, really the social layer, the social consensus. Uh, some call it maximalism, others call it belief, some call it tribalism, others call it ideology. in decentralization, whatever you kind of want to label it, it's important to have people that care about, you know, the core ethos of what we're doing here. And I actually even put out a recent tweet about crypto entering its practical era. And unfortunately, uh, a lot of the practical decisions that are being made in the space uh, are are are coming at choosing convenience, speed, or low cost over decentralization. kind of really still trying to figure out that triangle of of kind of like core core parts of blockchain uh in its in its trilmma. And

so uh that being said uh you know I I I think the the best part about the Ethereum community in the lows in the highs is the is the steadfastness in the belief of censorship resistance in permissionless nature in decentralization in low node requirements these types of things. So that being said, we do have a very interesting paradox on our hands, which is uh companies like Bitmine and Sharpink. Uh I think Tom Lee's gone out and said that he wants to buy at least 5% of the supply. I think Sharpink is looking to get 3%. And I think it's reasonable to say that at some point in the future, there could be a world where 10% or more of the Ethereum token supply, ETH supply is in the hands of

institutions. And and the question today that I think Rob posed and you know in my own words was essentially like how do you think about this like how is it is it better that the institutional foothold with longer time horizons and a deeper understanding of what this technology is uh you know is is it better that that they are able to be able to have such a strong amount of supply of these networks to dictate governance processes or changes or at least have a say or is is this Is there a point at which this poses a systemic risk to the Ethereum protocol to the e the asset and Ethereum the blockchain? H how do you think about this now that Bit mine and Sharp link I believe have both

recently passed the Ethereum Foundation in terms of total holdings which I think is super bullish but uh I think the trend is only accelerating in a snowball like fashion. >> Um yeah sure. So probably one aspect of it is general economic theory uh where I would I wouldn't claim that I can go extremely deep there. Uh sure you think about what happens with capital over time like uh you you have institutions and people amassing capital and how how resilient this displacement of capital is over over tens of years and so on. So does it does it really affect governance

doesn't cause trouble and I I think separately so this is separate from blockchains in general from Ethereum and when you ask about the digital asset treasury companies they bring it and and you mentioned that as well that u institutions are appearing they have a bit more practical focus they will they'll maybe say that they don't think too much about the community aspect and the the long-term values you need both. So you need that pragmatist practical approach to push for excellence on engineering making sure that you can integrate all the institutional uh work institutional flows. You need also the the community and long-term vision and I think we're doing great in combining the

both. Uh I I love what happens around uh DS and bringing a lot of education to financial markets. They ask about what Ethereum is. Okay, they start they start by seeing those new tickers and then they ask questions. What is Ethereum? How is it governed? Uh what really drives it? Why is it long-term? Why can trust it? And even as you have those u like constant chanting motivation about the Ethereum success people like it as something that drives them but it doesn't mean this is a capital markets people care about risk. So after after hearing that you feel uh encouraged encouraged to read more and very often you have businesses that say all right

this is possible allocation of capital for us hold but what does it mean what are the risks and the you have rating agencies coming to us and asking questions about how we can help them to understand the governance processes uh there are people asking about security and then suddenly for the Ethereum foundation it sets a lot of a lot of additional requirements of communicating clearly uh why everything is safe why Everything is permissionless and that matters. I was um many times I mentioned now that it's the institutions that start to be the drivers of our own values and come to us and say show us show us the security uh show us that censorship resistance, show us the uh privacy for the customers of the institutions. It's the regulators that

start asking about the same things. Uh so finally we have people working together towards those goals. they they start realizing okay in the end this is that global neutral network uh that we are building together and it's combining financial markets it's combining regulators efforts and the community and now you mentioned if it's if it's 5 10% technically u well this is not risk for governance sometimes like the governance aspects you have the social consensus you have the all the protocol uh parameters and uh you have info where the capital and power is and the whole design of the network is to really balance all of them together and realize

that even through the social consensus that if if some capture of the protocol would be possible just simply by capital then it's still the capital will be really really worried that uh that some some totally uh totally uh sort of like don't want to use bad words but uh irresponsible okay responsible action from the capital loan ers would put that capital at risk if they face the social consensus. It's it's a bit like a community revolt, right? That is possible. It's extremely unlikely that you ever enter into this uh dynamics. Uh but because it's possible it holds also some aspects of protocol

beyond the technical aspects we beyond the the formalization of the protocol, it keeps everyone everyone in check. So you have digital asset treasury companies that definitely are great for distribution of the of the knowledge education about Ethereum. Uh but they also should be scrutinized on all the risks underneath. There will be some of them um that are probably extremely trusted by the people involved. some other ones where people are coming with maybe uh either less experience or they're simply rushing that as an opportunity to to make money or simply trying to create a structure that wraps their holdings

and I think over time they will differ between each other and there are definitely risks between between them and among the digital asset treasuries and all of that has to be scrutinized and verified for the risk. So uh some optimism it's great it's happening and also some some warning signs here and and as a foundation coordinators will just keep reminding people that there are risks there. >> Yep. And the Ethereum Foundation early on was a shepherd of the ideology like you said you you were almost front running the institutions now they're coming in and they're realizing what Ethereum is and what it what it could do. regulators are coming

in and they're asking these questions about decentralization, censorship resistant and these were ideologies the the Ethereum Foundation and the early innovators of Ethereum had in their mind and they they were the pilgrims that spread this to the rest of technology, finance, the this industry as a whole. And so couple that with the institutions coming in, the regulators now taking notice and the other fact Andy brought up in his previous question about now these institutions in terms of uh capital and weight with respect to the Ethereum network, they are now surpassing the Ethereum Foundation in their ETH holdings. So I'm curious, how

do you see the Ethereum Foundation evolving as these other entities start to take a greater role in the network and Ethereum Foundation seems to have a lesser role? How does how does this play out? >> I I don't think that Ethereum Foundation was ever using its uh its Eve holdings as a way of uh of promoting the the values. We're using really the legitimacy of the researchers and thought leaders and uh the money is there to to spend on the operational expenses uh to cover the team within the foundation to support institutions uh that were that have been spawned over the last year years and needed some

initial funding to to become independent from the foundation. So that's that's where very often the the funding was directed. So now when you look at the foundation's treasury which would be probably around $1.1 billion and um and you say that some some of the digital asset treasury companies will uh will will be beyond that like they are holders of more Eve but neither we are using that for governance u nor them necessarily using that for governance they have limitations like they can stake obviously the Eve but does it mean that they will have much more to say than the general protocol voting but then it's I'll call it 10% it will not be it will not be 33% and it will not be

even if it's 33% it will be distributed among different holders and then this is just capital but there's still uh a very strong influence of the alore devs of the researchers of the of the those who believe in the values and just activate through their influence because they are fault leaders. So all of that balances and I I don't think it's a any shift in the foundation role just because its holdings are lower than holdings of others because we're not using those holdings for governance. They're just like for for paying the expenses and also foundation doesn't really asserve the central role. It hasn't had the central role. It has this role of

filling in the gaps. uh it was less visible in the in the last years when when maybe it was uh a bit risky to be uh to be too visible uh but it's it's more visible now but also because it understands that there's so many other organizations are visible so it's so clear that we are not central that we're just like one of many uh one of many institutions some of them are more business focused we are more coordination focused and and guidance and research uh so that role maybe uh you will have maybe nosis, maybe nomic and a few other foundations that really work on on ZK research and so like Zox Xpark and a few others and they

all serve that role but maybe not in combination of like research and governance coordination. So foundation is sometimes unique, sometimes just one of many. >> Yeah. Yep. Yeah. And to your point, the foundation still has probably the largest base of intellectual capital focused on scaling Ethereum. And to that end, the Ethereum Foundation has outlined three focuses, really three priorities uh to to to really just continue to scale Ethereum to the extent that uh we all we all know it can achieve. And those three are scale the L1, scale L2s, and improve UX. This was part of a

thought piece. I think Vitalic might have put it out. It was on the Ethereum Foundation blog, and it highlighted these three priorities. And so, you know, because we have this based rollup, a native rollup live stream that's going to be continuing throughout the day. We're going to drop a market map. I'm curious of those three, scaling the L1, scaling L2s, and improving UX. Why are these the three most important priorities for the Ethereum protocol and how do base rollups and and and native roll-ups help us achieve one or more of these areas of focus?

>> Sure. So we we set those three priorities for one year starting around uh April this year which means that we are almost like half halfway through and really it spans over the two forks of well starting with Bectra in May and then you have Fusaka and then you have Glamsterdam. So it's like two or three forks together. Uh Glamster may come slightly later. I don't know if it'll be March or June. The this three priorities were selected based on the the draw mode feedback from the ecosystem combination of knowledge of uh about cords and researchers and what really matters and how you can

create some synergies and it doesn't mean that this is something that we'll continue talking about uh two years from now or even like one year from now. We start talking about the next priorities based on the refresh of uh what's happening now. So this is more tactics uh behind the values of thinking always about the the privacy s c s c s c s c s c s c s c s c s c s c sensorship resistance security of the network uh this is always there as the base then you have some like let's say 10ear strategy of where big problems it is solving and we started talking about it slightly during 10 years of Ethereum and we uh for now we were a bit more quiet about it not to distract people but but we talk about some big problems ahead of

humanity and vision and then you have maybe three years uh view which is what we do for the next generation of protocol and then you start talking about lean Ethereum and what Justin Drake is talking about and look maybe more in if if research topics uh and then you see those like one year response to the the problems now um and some of them are technical and those are talking about how to make a credible commitment of scaling L1 on for for the L2s, how to uh how to scale L2s directly through the through the blobs and how to solve all the questions around interop and UX. So so really there is clarity that is a single ecosystem between the

L2s and L1's and whichever one you choose you can connect and you can move the assets and you can move your deployments of applications pretty easily and you can use the the same tooling in many cases. Not always is like a a perfectly comparable. Some some of those chains on the L2 level will be EVM chains, some of them will be non EVM. Uh some will go just more standard rollup direction. The other ones will go with this base and native rollup. And you're asking me about base and native rollups. I think they add a lot of uh additional flavor and choices and options for for some very important cases like nowadays some of the institutions will come and ask. So if if

we are to launch an L2 which uh which to choose like which ecosystem to choose within the L2 space uh how to do it and with the base and nature roll up some some of the solutions will be just much more no-brainer easy to deploy and will be not focused on community and branding and innovation like very often it is with the tools and that matters and we benefit from that a lot like that distribution through a fashion of branding to the approach of community or maybe regional focus is what makes Ethereum unique nowadays. And with native rollups, you'll have this bland roll up like very very L1 aligned that is just focused on okay just just deploy a roll up. we needed for our internal processes. So we need

to connect to the network as something that we already have that exists and the institutions and and independent operators or maybe so people who will be operating agents and AI will be able to choose which flavor works the best. Uh yeah. >> Yeah. And just one followup on this is we we've seen some institutions like Stripe, they've went and they've launched an L1. Circle, they have, you know, said that they're going to launch an L1. And a lot of people on crypto Twitter have said that these guys in the long run are going to end up switching and being an Ethereum L2. So I'm curious, what's your pitch to these guys? Like why should they be Ethereum L2s rather than be their own L1?

>> Yeah, sure. So you've seen recently some of the L1's transitioning to to Ethereum. So you've seen Cello and uh they now very clearly say they see better numbers, better adoption, better reaction of community and that that helps them to succeed. uh you've seen recently Ronin announcing that they'll be switching to D2 and there is that question of this this uh aspect of of beating for which ecosystem to belong to which which maybe is u less less of something that I would like to to see and then you have uh then you have those L1s for for payments for stable coins that been launching

recently and people would say transition to L2 and I think that there is a bit of preference for oh we'll get the L1 premium uh then maybe we launch something and then there is always space to transition to L2. I think that we should maybe also start talking of this direct direct Ethereum ecosystem premium like not not going around and not losing those years of just just being maybe like less openly adopted by everyone because you just keep claiming isolation from from the ecosystem. they they're not really isolated like they're launching and they say we'll be EVM we'll be bridging to Ethereum we'll

remain very close to Ethereum ecosystem and it happens like so even within those organizations you'll see many of the researchers technologist or our business people will be uh saying behind the scenes you know like we we still working with Ethereum we're still the ecosystem that we're choosing and we're launching L1 because of this or this or this which means that they feel that they feel there is a a tension between those choices that they might be putting something at risk that they don't want to lose the community support. They don't want to lose that power of leadership that comes from Ethereum from Ethereum ecosystem saying they're one of us, right? like so so it's never like like walking away entirely and that's

why we probably have that conviction that at some point the switching to O2 and we maybe should start talking more and more often about why sometimes or very often this will be a mistake to not go directly in that path of of just being very clear we belong to ecosystem it's not only EVM but it's also uh all of the values global aspects interoperability that all of the effort And research improvements that will come from the uh not only from the foundation but the entire ecosystem is something that will drive their technology forward. And if you go alone that suddenly you realize that they launched a chain and then another institution launches a chain and another and then suddenly they start competing with this

uh if you're successful there will be like 20 or 30 of those corporate chains institutional chains and those start um doing the same that what we see everywhere else like you you're launching the video streaming uh company and then you start fighting for the exclusivities for uh you blocking some content and and at some point people say, "Oh, maybe I just go back to piracy like 10 years later because the entire market gets disrupted and you have some great UX very often and some market is covered but then you start competing regionally and and I think that's might be the case here as well. So choosing Ethereum I think you go to those global uh platform immediately. So that's where

the conviction comes from. uh sometimes this will be reasonable business strategy for for some more regional or niche market. Sometimes it'll be great for for some period of time but will not have the same guarantee of never disruption. Um yeah it's also like launching a major investment bank nowadays and saying that you no actually you don't go with with digital assets you don't go with blockchain you just build a traditional system as well. That's that's much more extreme case and maybe it's not a good analogy. Uh but you always can get some temporary premium but you're not coming with the same guarantees of of global neutral network.

>> Um Andy, I think you got your >> I think that's probably what a lot of of the logic ended up coming down to be. Um Thomas, thank you for for kicking us off on the base rollup day today. Um, hope you enjoy the map of the teams building uh in in the based ecosystem. I know uh we're kind of coming low on time here, but yeah, any closing thoughts for the teams who are building based roll-ups for Ethereum. >> Um, I think that that's clear there's uh support for base rollups like the there's coordination around it. There is uh lots of excitement. I think that when you think about base rollups though um one year ago it was it was like in the

in the middle of creating all the new directions and and innovation in the base rollups and then maybe in the last last months on one side there is continued coordination some teams are already deploying uh lots of those novelties but also maybe you've heard in some areas you've heard less about base rollups I think that should not be discouraging there is there's lots of support for that. It's it's part of this strategy uh longer term and and it'll be probably extremely relevant for many of the of the institutions. So there'll be there'll be market for base rollups for native rollups for sure and and even as we talk about the broader ecosystem L2s

that shouldn't be discouraging. It's just that we see all of these flavors of Ethereum very relevant in many different aspects and they'll find their own uh users uh their own deployments and their own revenue models. >> Awesome Tamas. Thanks so much. It's you speak of the gravity of Ethereum. Ultimately, it is this black hole, this sync for intellectual capital, social capital, financial capital, all of it is coming to Ethereum. And uh you are its shepherd and its steward. So, thank you so much for coming on and uh sharing your time with us.

>> Thank you so much once again for inviting me.