Internal and external troubles of the Ethereum Foundation: Confrontation between researchers and engineers, conflicts of interest for advisors of EigenLayer

Author: ChainFeeds

Recently, some members of the Ethereum Foundation have found themselves at the center of controversy regarding their views and actions. On May 16, Ethereum Foundation member and Geth development lead Péter Szilágyi posted on Twitter his thoughts on some current solutions to Ethereum's issues, arguing that many of these solutions do not fundamentally address the problems but rather democratize them by distributing benefits to silence dissent. This viewpoint sparked heated discussions, especially as it contrasted with the views of Ethereum Foundation researcher Dankrad Feist, leading to a fierce debate between the two.

Following this, on May 21, Dankrad Feist announced that he, along with Ethereum Foundation researcher Justin Drake, had become advisors to Eigenlayer and received millions of dollars in token incentives, further raising questions and discussions within the community. As members of the Ethereum Foundation, their involvement in external projects with potential conflicts of interest with Ethereum, along with accepting project token incentives, inevitably led the community to question their neutrality and stance.

Confrontation Between Researchers and Engineers

Handling of the MEV Issue

Péter Szilágyi is a core member of the Ethereum Foundation and the development lead of Geth, the most important execution client for Ethereum. Dankrad Feist is also a researcher and core member of the Ethereum Foundation, with Danksharding named after him.

One of the focal points of the debate between Peter and Dankrad Feist is the issue of MEV. Peter criticized the current methods of addressing the MEV problem. He believes that MEV was originally an attack on Ethereum, but by sharing profits with enough stakeholders, the issue is perceived as resolved. The Ethereum ecosystem has shifted towards a traditional financial system, eliminating protests against MEV by distributing benefits to certain groups. He worries that this approach will lead to increased centralization of Ethereum.

Dankrad Feist, on the other hand, argues that solving the MEV problem is not straightforward. MEV is a fact that cannot be completely eliminated, as it is an inevitable byproduct of useful and valuable protocols on-chain. He specifically mentioned the importance of promoting the development of MEV-Boost: before the Merge, a more balanced mechanism was needed to handle MEV without harming the interests of independent stakers. Without flexible solutions for liquid staking, large staking pools could earn higher returns than independent stakers, potentially forcing them to exit. Before a better solution is found, it is better to promote the development of MEV-Boost than to delay the Merge or "destroy" independent stakers.

State Growth Issues

In addition to the MEV issue, they also debated the topic of state growth. As transactions and smart contracts on Ethereum increase, the network's state (i.e., the information of all accounts and the current data of smart contracts) is rapidly expanding. This brings challenges in storage and processing. Currently, stateless validation is one solution aimed at reducing the amount of data nodes need to store, making node operations more efficient. Through stateless technology, nodes do not need to hold the complete network state but can dynamically obtain the necessary state information to validate transactions and blocks.

Peter criticized this approach for potentially leading to the centralization of state control, as only a few large nodes would be able to store the complete state, which could result in power and profits being concentrated in the hands of a few large participants, causing node operators to lose control over their own data and rely on authorities for balance information.

Dankrad Feist believes Peter's criticism sounds like he thinks the design of protocols is aimed at satisfying monetary interests rather than establishing a fair system. Stateless solutions improve user experience and network performance, which is a necessary technological advancement, not driven by commercial interests. The main goal of the stateless proposal is to lower the cost and technical barriers for running full nodes, allowing more people to participate in the Ethereum network.

A Side Note: Issues in Ethereum's Development Process

Just when it seemed the discussion would end, a day later, on the 17th, Peter and Dankrad Feist engaged in another debate about how to respond to competition in Ethereum's development process.

Peter criticized the Ethereum development team for hastily patching issues in response to competitors like Solana, abandoning the necessary development processes and cautious attitudes. He believes the development team is driven by fear of competitors, rushing to release solutions rather than following a reasonable development process and careful review. For example, in an effort to prevent users from migrating to platforms like Solana or Bitcoin, they rushed to propose EIP-4844 without sufficient processes and reviews.

Dankrad Feist rebutted Peter's criticism of "hasty" development, emphasizing that the EIP-4844 proposal took two years from its introduction in February 2022 to its mainnet launch. He pointed out that Ethereum's development process is carefully planned and reviewed, and it is progressing normally according to the data availability roadmap. He believes it is unreasonable to label it as "hasty."

The series of disputes between Peter and Dankrad Feist reflects the divisions within the Ethereum community regarding the direction of protocol development. While both are committed to decentralization, they differ in their choices of solutions, and the direction of these choices often has significant implications for Ethereum's evolution. As Vitalik said: "While there are many paths toward building a scalable and secure long-term blockchain ecosystem, it's looking like they are all building toward very similar futures." In this ever-evolving ecosystem, finding the best solutions will be a long and complex process.

As Advisors to EigenLayer, Can They Balance Ethereum's Interests?

Another discussion related to members of the Ethereum Foundation is that in the past week, Dankrad Feist and Justin Drake announced on Twitter that they have become advisors to the Eigenlayer project, which has sparked community discussions.

EigenLayer is a leading project in the Ethereum ecosystem for restaking, and the two Ethereum Foundation members, as project advisors, received millions of dollars in token incentives. How can they manage the conflict of interest between Ethereum and Eigenlayer while maintaining neutrality?

Dankrad Feist disclosed that he received a substantial amount of tokens as incentives from this position. However, his role as an advisor is personal and does not represent the Ethereum Foundation, so he can hold dissenting views on Eigenlayer. Dankrad Feist mentioned a series of issues with the current restaking mechanism, including potential centralization risks, attacks on the Ethereum protocol, and the misalignment of interests between token holders and stakers. However, he believes that if the restaking mechanism is effectively implemented, it could also benefit the Ethereum ecosystem, such as providing some advantages of LST to independent stakers and offering temporary solutions for projects constrained by Ethereum network resources. One of the main goals as an advisor is to help avoid the centralization risks and potential attacks on the Ethereum protocol that may arise from restaking services.

Justin Drake also explained in his disclosure the millions of dollars in token incentives he received as an advisor, which exceeds the total of all other assets. He committed to using all advisor earnings for valuable projects within the Ethereum ecosystem and is ready to end his advisory position if EigenLayer takes actions contrary to Ethereum's interests. Justin Drake stated that his default public stance will continue to lean towards criticism of Eigenlayer. He is concerned that the restaking mechanism may lead to a decrease in the number of independent validators, negatively impacting Ethereum's decentralized nature. Therefore, he hopes that by serving as an advisor, he can gain deeper insights and guide the Eigenlayer project to avoid the risks associated with the restaking mechanism.

Community feedback on the disclosures from both was starkly different. Regarding Dankrad Feist's decision to become an advisor, the community expressed dissatisfaction and raised questions: "Do you really think that receiving substantial compensation from an organization with different incentives than Ethereum won't affect your decision-making?" On the other hand, while there were also questions about Justin Drake's disclosure, such as: "As a core contributor to the Ethereum Foundation, what are you doing accepting a role with a project that conflicts with Ethereum's interests? Where is the credible neutrality?" the community overall seemed more accepting and congratulatory, viewing this disclosure as transparent and a model for the industry.

The stark difference in attitudes is primarily due to Justin Drake's clear commitment to reinvesting all advisor earnings back into the Ethereum ecosystem, reflecting his loyalty to Ethereum and a clear stance. In contrast, while Dankrad Feist also stated his position, he did not commit to any concrete actions, leaving the community feeling dissatisfied.

Controversies often arise from differing interests. The community seems skeptical of Dankrad Feist's views and actions, so which side do you support?