Does Ethereum lack a clear "North Star" vision, and does it need one? Many argue that Ethereum's competitors like Bitcoin, Solana, and Celestia have more well-defined goals, making it easier to coordinate development efforts and market their offerings. This raises questions about whether Ethereum's perceived lack of focus is hindering its progress and ability to maintain its position as a leading decentralized platform.

The Value of a North Star

A North Star is a guiding vision that keeps a project on track towards its destination. For decentralized protocols, this could be a specific use case like Solana's "decentralized NASDAQ" for trading or Bitcoin's "digital gold" as non-sovereign sound money. Clear North Stars offer two key benefits:

• Internal Coordination: Aligning ecosystem participants on building the best protocol for the defined purpose. For example, Bitcoin's community has been able to focus on optimizing for sound money properties like scarcity, decentralization, and immutability due to its clear "digital gold" vision.

• External Marketing: Clearly communicating the value proposition to attract new users and builders. Bitcoin's North Star has made it easier to market it as an alternative to traditional fiat currencies and gold, appealing to investors seeking a non-sovereign store of value.

Having a clear North Star can also help projects make difficult trade-offs and prioritize development efforts. For instance, Solana's focus on high-performance trading has led it to prioritize scalability and low transaction fees over other properties like decentralization or censorship resistance.

Ethereum's Perceived Lack of Focus

While Ethereum has made significant progress over the past decade, critics argue it lacks the same level of clarity as competitors. There is ongoing disagreement over Ethereum's primary mission, the role of ETH, and whether the base layer needs to scale for value capture. Some argue that Ethereum's complexity as a general-purpose platform makes it difficult to define a singular North Star.

However, others contend that Ethereum is trying to be a broad platform that captures aspects of Bitcoin (money), Solana (high-performance execution), and Celestia (data availability), making it challenging to optimize for any one specific use case. This perceived lack of focus has led to delays in implementing upgrades like the upcoming Pectra hard fork, as different stakeholders prioritize different objectives.

The Path Forward

As Ethereum faces increasing competition, there are calls for greater clarity around its core value proposition. This could involve:

• Defining a more focused North Star, even if narrow, to improve coordination and marketing. For example, embracing a "World Computer" vision could prioritize scaling the base layer for high throughput execution while leveraging Layer 2 solutions for data availability and settlement.

• Embracing a multi-faceted vision but clearly prioritizing and optimizing for key use cases. This could involve prioritizing properties like decentralization and censorship resistance for certain use cases while optimizing for scalability and low fees for others.

• Strengthening narratives around Ethereum's unique capabilities and competitive advantages. For instance, highlighting Ethereum's robust developer ecosystem, credible neutrality, and ability to support diverse use cases on Layer 2s.

Ultimately, a clear North Star can help Ethereum navigate the increasingly competitive blockchain landscape and maintain its position as a leading decentralized platform.

Ethereum's Competitive Landscape

Ethereum faces competition from various blockchain protocols like Solana, Celestia, and Bitcoin. The key question is: What is Ethereum's unique value proposition and core purpose that differentiates it from these competitors?

Ethereum vs. Solana

Some view Solana as a potential Ethereum Layer 2 (L2), while others see it as a direct competitor. Solana's high throughput currently exceeds Ethereum's Layer 1 (L1) capacity, raising questions about scalability and cost-effectiveness of bridging the two chains.

For example, Solana's high throughput and low fees have made it attractive for decentralized finance (DeFi) applications like Mango Markets and Orca. However, Solana's recent outages and centralization concerns have led some projects to explore multi-chain deployments, including on Ethereum L2s like Arbitrum and Optimism. This highlights the trade-offs between scalability and decentralization that projects must navigate.

Ethereum vs. Celestia

Celestia presents meaningful synergies with Ethereum by serving as a data availability (DA) solution for Ethereum L2s. This collaborative approach allows Ethereum to offload DA needs to Celestia when L1 capacity is insufficient.

In practice, this could enable Ethereum L2s like Arbitrum and Optimism to leverage Celestia's DA capabilities while still settling transactions on the Ethereum L1. This could help Ethereum scale while maintaining its core value proposition as a decentralized settlement layer. For example, the Ethereum-based DeFi protocol Arbitrum has explored integrating with Celestia to improve its scalability and data availability.

Ethereum vs. Bitcoin

• Many Ethereans want to compete with Bitcoin as "ultrasound money," but Bitcoin currently leads as a monetary asset, with a market capitalization of over $500 billion and widespread adoption as a store of value.

• Bitcoin is also getting into the rollup game, with projects like Strata enabling programmability and privacy on Bitcoin. This could potentially challenge Ethereum's position as the leading platform for decentralized applications (dApps).

• This has sparked interest from Ethereum L2s like StarkNet to potentially settle on Bitcoin in addition to Ethereum, further blurring the lines between the two ecosystems.

For example, if Ethereum were to embrace a "sound money" vision, it would need to compete more directly with Bitcoin on monetary properties like scarcity, decentralization, and immutability. This could involve optimizing Ethereum's issuance model, governance, and Layer 2 scaling solutions to better align with these goals. However, this could potentially come at the cost of sacrificing Ethereum's ability to support a diverse range of dApps and smart contracts.

Ethereum's North Star

Ethereum lacks a clear, unified vision or "North Star" compared to its competitors. This lack of clarity has led to disagreements over Ethereum's core purpose, the properties it should optimize for, and the specific changes it should prioritize.

Multiple North Stars?

It's possible that Ethereum has multiple North Stars, which could be:

• Synergistic: Multiple distinct but complementary goals that benefit from being coupled. For example, Ethereum could embrace both a "settlement layer" vision for the base layer and a "World Computer" vision for Layer 2 execution, leveraging the strengths of each approach.

• Parallel: Multiple goals pursued in parallel without interference. This could involve optimizing the Ethereum L1 for certain properties like decentralization and security, while allowing Layer 2s to prioritize scalability and low fees for specific use cases.

• Conflicting: Competing goals that hinder progress towards either objective. For instance, if Ethereum were to pursue both "sound money" and "World Computer" visions in parallel, it could lead to conflicting priorities around scalability, decentralization, and issuance policies.

The challenge for Ethereum is to identify and prioritize its core objectives, while still enabling a diverse ecosystem of applications and use cases.

Competing with Everyone?

Some within the Ethereum community embrace the idea that Ethereum is competing with everyone, while others advocate for a more targeted approach, such as the L1 competing with Bitcoin and L2s competing with Solana.

A "compete with everyone" approach could lead to a lack of focus and attempting to optimize for too many conflicting goals. However, a more targeted strategy could risk missing out on emerging opportunities or ceding ground to competitors in certain domains. For example, if Ethereum were to focus solely on being a settlement layer, it could potentially lose market share to protocols optimized for high-performance execution like Solana or Aptos.

Scaling the Ethereum L1

There is ongoing debate about whether and how to scale the Ethereum L1. Some argue for increasing the L1 gas limit and reducing latency to compete on execution, while others believe the L1 should focus on settlement, leaving execution to L2s.

Settlement Layer

"Settlement layer" is a commonly cited North Star for Ethereum, but its meaning is often poorly defined. Different interpretations lead to divergent conclusions about Ethereum's priorities, such as facilitating fast commitments and interoperability versus providing a final slow verification of actions done elsewhere.

For example, if Ethereum were to optimize for fast commitments and interoperability, it might prioritize increasing the L1 gas limit and reducing block times. However, if the focus is on slow, final settlement, Ethereum could deprioritize L1 throughput in favor of decentralization and security. This debate has implications for the trade-offs Ethereum must make in terms of scalability, security, and decentralization.

Mixed Priorities

The lack of clarity over Ethereum's purpose has resulted in disagreements around how to improve the protocol and which upgrades should be prioritized. This has led to delays in finalizing and implementing upgrades like the upcoming Pectra hard fork.

For instance, the Pectra hard fork aims to introduce various improvements, including increasing the gas limit, reducing call data costs, and enabling new opcodes. However, disagreements over the prioritization and tradeoffs of these changes have delayed the upgrade's implementation. Some stakeholders prioritize scalability and throughput, while others emphasize decentralization and security.

The Ethereum Dilemma: Sound Money or World Computer?

Ethereum faces a critical decision: should it prioritize becoming a sound, non-sovereign money or focus on being the world's decentralized computer? Both paths present compelling arguments and potential benefits, but a clear direction must be chosen to resolve the ambiguity around Ethereum's fundamental objectives.

ETH as Sound Money

• ETH can surpass Bitcoin as the superior digital gold with better economic policy and technical architecture for trustless scaling via Layer 2 solutions. For example, Ethereum's deflationary issuance model and ability to support Layer 2 rollups could make it a more attractive store of value than Bitcoin in the long run.

• ETH's deflationary issuance model makes it "ultrasound money," superior to Bitcoin's fixed supply. According to data from Ultrasound.money, Ethereum has already burned over 3 million ETH since the implementation of EIP-1559, reducing its total supply.

• As a permissionless and decentralized ledger of record, Ethereum becomes the necessary settlement layer for all Layer 2 activity, with faster execution layers built on top. This could position Ethereum as a more versatile and scalable alternative to Bitcoin for various financial applications.

For example, if Ethereum were to embrace a "sound money" vision, it could optimize its monetary policy, governance, and Layer 2 scaling solutions to better align with properties like scarcity, decentralization, and immutability. This could involve implementing more aggressive issuance reductions, strengthening censorship resistance, and enabling trustless Layer 2 scaling solutions like ZK-Rollups.

Ethereum as the World Computer

• Ethereum's real moats are its robust technology platform, developer ecosystem, and credible neutrality as a global smart contract platform. According to Electric Capital's Developer Report, Ethereum has the largest and most active developer community among blockchain ecosystems.

• Scaling Ethereum's Layer 1 is essential to preserve decentralization, censorship resistance, and the ability to run a node on consumer hardware. This could involve implementing sharding or other scaling solutions to increase the base layer's throughput.

• A scalable Layer 1 execution layer benefits Layer 2 solutions by providing a credible fallback, interoperability, and sequencing capabilities. For example, Ethereum's Layer 2 solutions like Arbitrum and Optimism rely on the base layer for security and final settlement.

If Ethereum were to prioritize being the "World Computer," it could focus on scaling the base layer for high throughput execution while leveraging Layer 2 solutions for data availability and settlement. This would involve increasing the gas limit, reducing latency, and optimizing for execution-centric workloads like decentralized applications (dApps) and smart contracts.

For example, Ethereum could implement sharding to increase its Layer 1 throughput, enabling it to compete more directly with high-performance blockchains like Solana while maintaining its robust developer ecosystem and credible neutrality.

Conclusion

While the "ETH is money" and "Ethereum is the World Computer" narratives are not strictly exclusive, they require different architectural decisions and opinionated stances on key issues. Directionally, the author prefers the World Computer path, focusing on shipping tech upgrades more aggressively while preserving Ethereum's robust and neutral execution layer. However, rallying around either vision would be better than the current indecisiveness.

Incremental improvements to Ethereum's Layer 1, such as faster block times and increased throughput, can be made responsibly today, signaling a commitment to the Layer 1's future and paving the way for further scaling over time. This could involve implementing short-term solutions like increasing the gas limit and enabling new opcodes, while working towards more significant upgrades like sharding or alternative execution engines.

Ultimately, Ethereum's success may depend on its ability to clearly define and communicate its core value proposition, aligning its community and ecosystem around a unified vision. Whether that vision is "sound money," "World Computer," or something else entirely, a clear North Star can help Ethereum navigate the increasingly competitive blockchain landscape and maintain its position as a leading decentralized platform.