How is the Ethereum Team Addressing the ETH Price Dip? Insights from the 12th AMAOn the evening of September 5, 2024, the Ethereum Foundation held its 12th Ask Me Anything (AMA) session, aiming to address community questions about Ethereum's future development. This event featured key members like Ethereum co-founder Vitalik Buterin, Foundation members Justin Drake, and Dankrad Feist, with discussions centering around the reasons behind ETH's price struggles, the team's response strategies, and Ethereum's future direction
How is the Ethereum Team Addressing the ETH Price Dip? Insights from the 12th AMA
On the evening of September 5, 2024, the Ethereum Foundation held its 12th Ask Me Anything (AMA) session, aiming to address community questions about Ethereum's future development. This event featured key members like Ethereum co-founder Vitalik Buterin, Foundation members Justin Drake, and Dankrad Feist, with discussions centering around the reasons behind ETH's price struggles, the team's response strategies, and Ethereum's future direction. This summary analyzes the AMA content, focusing on the Ethereum team's views on the ETH price dip and their corresponding countermeasures.
Layer 1 Scaling Plans: Beyond Layer 2 Efforts
While Layer 2 is considered crucial for Ethereum's scaling, the team emphasized the ongoing Layer 1 scaling initiatives. Justin and Vitalik highlighted that optimizations in virtual machine execution pre-compiles, ZK proof technology, and Verkle tree application will further enhance the scalability of the Ethereum mainnet. These technical improvements will enhance Layer 1 performance, complementing Layer 2 and collectively driving Ethereum's scaling.
ETH Value Proposition: ETH as "Money"
Regarding the ETH price dip, Justin Drake explicitly stated that ETH appreciation is vital to Ethereum's success. He attributed ETH's value proposition to three key factors: first, ETH supports the economic bandwidth of trillions of dollars in decentralized stablecoins; second, ETH offers undeniable economic security; third, ETH's economic vitality attracts attention from major economic players. In essence, ETH's role as "money" is the fundamental basis for its long-term appreciation.
Layer 2 Strategy Impact on ETH: Not Diversion, but Extension
Community concerns regarding potential ETH usage reduction and value impact due to Layer 2 development were addressed by Dankrad. He argued that Layer 2 doesn't weaken the Ethereum mainnet but instead provides greater expansion space for it. The low fees and efficient transactions offered by Layer 2 enable more applications to thrive within the Ethereum ecosystem, ultimately supporting high-value transaction scenarios on the mainnet. Justin emphasized that the key lies in increasing overall transaction volume, not the amount of individual transactions.
Ensuring Network Neutrality: Addressing Government Censorship Measures
Ethereum's trusted neutrality has always been a core value. Vitalik mentioned the Foundation's exploration of further decentralizing the validator set and improving the consensus layer to empower decentralized validators to forcibly include transactions in blocks. These improvements aim to ensure Ethereum network neutrality and openness even in the face of governmental pressure.
Ethereum Foundation Funds and Future Planning
The Foundation currently holds $650 million in reserves, primarily in ETH, with an annual expenditure of $100 million. Evidently, ETH's appreciation is equally critical for the Foundation's operations. While the Foundation staff has expanded to over 300 people, Vitalik and the team recognize that effective resource management and driving ETH appreciation are crucial tasks.
Facing Bitcoin Competition: Ethereum's Unique Value
When asked how Ethereum would maintain its competitiveness if Bitcoin successfully developed a Layer 2 ecosystem, Vitalik provided four answers: greater data availability, POS's decentralized advantage, the power of the Ethereum community and culture, and Ethereum's continuous drive for innovation. However, these answers remained ambiguous in the view of some community members. Vitalik's stance in the POS vs. POW security debate sparked further controversy.
Conclusion: The Urgency of Application Layer Innovation
Throughout the AMA, while the Ethereum team demonstrated substantial efforts in technical scaling and network neutrality, they lacked a forceful response to the community's most pressing concern: the scarcity of application layer innovation. The ongoing ETH price dip, the potential diversion of value from the mainnet by Layer 2, and other issues require a more defined strategy from the Ethereum team in the future. For the Ethereum community, current challenges lie not only in optimizing technical aspects but also in driving ETH appreciation through innovative applications. Whether Vitalik and the team can propose actionable solutions will determine Ethereum's performance in the next market cycle.
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