“What do you think of the merger?” I innocently asked William “Wills” de Vogelaere the other day, co-founder of Spankchain and probably half a dozen other protocols in the creepy underworld of Ethereum.
I was referring, of course, to the long-awaited software upgrade that kicked off Ethereum’s miners and replaced them on September 15 with a cohort of eco-friendly stakeholders.
“You mean Ethereums” delusion?” de Vogelaere withdrew bitterly.
“oh oh!” I thought. This can get juicy. It turned out that De Vogelaere expressed an opinion that was rarely broadcast publicly: that the merger was a mistake. Or, if it’s not an italic error, some sort of… irrelevant diversion.
“It didn’t add anything of value except the environmental factor,” he fulminated.
According to De Vogelaere, the entire enterprise has been a naive capitulation. The influential people who worried about Ethereum’s huge carbon footprint were only exploiting the fears of environmentalists for their own cynical ends, he said. “No one can care if something is green, as long as it works,” he said. “Companies don’t fucking care as long as they can be perceived as caring.”
maron’! Admittedly, it’s not hard to see why people like the Vogelaere are in a bad mood – since the merger unfolded, the price of ETH has fallen. Bitcoin supporters ridicule the change. Dark murmurs The fact that Ethereum is now a “security” has raised the hairs of the neck of even the most old-school Ethereum connoisseurs — and even propelled some into the embrace of a long-rejected band of fanatical Ethereum militants. (We’ll get to that.)
As de Vogalaere told me, the idea that public opinion on Ethereum would improve in the wake of the merger may have turned out to be a canard. Regulators, he said, will hardly change their tune now that this one environmental complaint has been eliminated, especially given the renewed willingness to label it as a safeguard.
And yes, yes, the merger used to be a fantastic display of technical prowess. Putting Ethereum together in real time was the equivalent of turning on a car’s engine as it hurtles down a highway at full throttle, we’re told. It’s groundbreaking from an R&D perspective, but so was the atomic bomb.
Nevertheless, the alleged technical improvements of the merger are overhyped, according to De Vogelaere. It was supposed to allow for several upgrades that would introduce more efficiency in the network. But de Vogelaere believes that these solutions have been around for a long time anyway, in the form of: side chains—appendixes to the flagship network using different validation methods, such as: polygon. Only Ethereum’s computing environment, the “virtual machine,” has any real value, he argued — and that’s in no meaningful way affected by the shift to the strike model.
He also (good heavens!) pointed out that those who don’t have the minimum amount to wager on their own – 32 ETH, about $42,500 dollars and falling at the time of writing – must wager through centralized exchanges like Coinbase. That means the bulk of Ethereum has to be placed on a corporate exchange with a single point of failure.
So we have determined that the price of Ethereum is now in trouble and the regulators are on the move. But is De Vogelaere’s view perhaps only a minority view?
Not so! Kristy Leigh-Minehan, a longtime Ethereum miner (who is admittedly a bit biased), is not quite anti-fusion in the same resentful vein as our de Vogelaere. Rather, she wonders if it hasn’t come a little too soon. “The move to proof of stake is an important part of Ethereum’s DNA and has always been the intention,” she said. “It was necessary and required for future optimizations and scalability features – the question everyone should ask themselves is: was now the right time?”
Minehan isn’t so sure. “Personally, I don’t think this was in the current regulatory environment,” she said. She wonders if the prospect of ETH being reclassified as a security could risk scaring validators, operators and entrepreneurs. The primacy of US regulators, she added, can be especially unnerving. Echoing De Vogelaere, she said, “There’s no denying that Ethereum has taken root in the US — that will be its greatest strength and weakness.”
At least some pedigreed Ethereum proponents remain optimistic. “It may have some impact on regulatory decision-making,” said Mat Dryhurst, a left-wing podcaster and one of the early adopters of NFTs. “But to be honest, I don’t really get an impression that is too worrying on the developer side. People are excited to build more utilities for the network, and the merger felt like a celebration of another milestone on a long roadmap.”
But isn’t it a bit overhyped? “It’s not a big technological innovation, and I don’t think it was meant to be,” argued Dryhurst. “Rollups, zkEVMs [zero-knowledge virtual machines] etc. are still needed to scale. I think it will only increase the credibility of this corner of crypto and increase confidence that other ideas discussed will be implemented.” He added that he was recently at ETH Berlin and the energy was “as optimistic as ever”.
The happy old guard
There may be one cohort that fully agrees with all the dire diagnoses of the merger of De Vogelaere and its ilk – and is unabashedly jubilant about it. They are the custodians of another now-defunct network that, they would argue, was also betrayed by the dastardly handlers of Ethereum itself: an older, abandoned iteration of the Ethereum network called Ethereum. Classic whose supporters are arguably the most OG you can get in the short but melodramatic lifespan of Ethereum politics.
Ethereum Classic was born in 2016 in the wake of a malicious hack of the Ethereum network’s first decentralized autonomous organization, or The DAO. Mainstream Ethereum developers voted overwhelmingly to roll back the hack and make the entirety of the victims, which was seen by a few proponents as a deadly betrayal of Ethereum’s core tenet of immutability. They clung to the old, hacked network and Ethereum was split in two. They have been waiting for the merger ever since, believing that newly unemployed miners (whom they actively tried to to tempt) would flock to Ethereum Classic in search of new revenue.
Incredibly, after six years of patient waiting, they were right.
“We have seen a significant increase in interest in Ethereum Classic in recent months,” said Bob Summerwill, executive director of the ETC Cooperative, the foundation behind the development of Ethereum Classic, whose ticker is ETC. “The merger was clearly a catalyst.” He added that the amount of mining power on the network has since grown about tenfold, and that Ethereum Classic is now the third largest proof-of-work chain by market cap and second by volume.
Summerwill, like others, pointed out that fears of the network’s conquest by the US and the new powerful regulators may have spurred many of these miners and drove them to ETC. “Ethereum Classic appears to benefit from providing a known and likely safer alternative to these concerns,” he said. It was a bumpy start nonetheless: Ethereum Classic, like many others, took a recent dip and its miners are running at a loss. “We’re still trying to find a new balance,” Summerwill said.
Still, it’s a somewhat stunning reversal. After years of agonizing wait, you have to wonder if the petulant old pedos of the Ethereum Classic network — and even Ethereum’s would-be regulators — have had last laugh.
As De Vogelaere said, “ETH may have played its own damn self.”
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