Will fragmentation tear Ethereum’s booming ecosystem apart? Vitalik Buterin urges “alignment,” but is it too late? Experts share their insights.
Buterin suggests ‘alignment’
Over the past few years, Ethereum’s (ETH) ecosystem has expanded rapidly. As of 2024, there are over 4,000 decentralized applications and dozens of layer 2 solutions built on Ethereum, each with a unique team and vision.
However, this diversity creates a challenge: fragmentation. How can such a large, decentralized ecosystem work together toward common goals without losing its unique identity?
The risk of fragmentation is already becoming apparent. Take, for instance, layer 2 solutions like Arbitrum (ARB) and Optimism (OP). While they aim to scale Ethereum by offloading transactions from the main chain, they operate somewhat independently. This raises concerns about how well these L2s will be able to cooperate in the long run.
Vitalik Buterin, Ethereum’s co-founder, recently addressed this issue, calling for ‘Ethereum alignment’ to unify the various projects and teams within the ecosystem.
The core problem lies in ensuring that all these independent efforts — whether by L2 teams, wallet developers, or community groups — contribute to a cohesive whole.
Without alignment, Ethereum risks becoming a collection of isolated projects that don’t integrate well, undermining its strength as a decentralized network.
Buterin has advocated for establishing clear metrics to evaluate how well individual projects align with Ethereum’s broader goals, thus reducing the risk of social layer capture — where success is based more on personal connections than on actual contributions to the ecosystem.
Let’s dive deeper into how the metrics Buterin suggests can help Ethereum grow without losing its core values.
Three pillars of Ethereum alignment
Ethereum alignment rests on three core types:
- Values
- Technological
- Economic
Each type serves as a guiding principle for ensuring projects contribute meaningfully to Ethereum’s long-term success.
Values alignment
The first pillar of Ethereum alignment is values. Ethereum was founded on the ideals of openness, decentralization, and public goods, and these values must be shared by all projects within the ecosystem.
Open source is a crucial part of this. In an ecosystem driven by transparency and trust, code that is proprietary or hidden from public view signals a red flag.
Ethereum’s base layer software, such as Geth and Prysm, is fully open-source, allowing anyone to inspect and contribute to the code. However, this standard needs to extend beyond the base layer.
Buterin argues that all core infrastructure projects should adhere to the Free Software Foundation’s and Open Source Initiative’s definitions of open-source software.
Consider the DeFi space: projects like Uniswap (UNI) are open-source, which is a major reason behind their strong community support. As of Oct. 10, the total liquidity in Uniswap hovers around $3.4 billion, and its success isn’t just due to being a great protocol — it’s because anyone can build on, fork, or improve it.
On the other hand, projects that prioritize profits over public goods—those that introduce proprietary elements — risk creating fragmentation. For instance, Polygon’s (POL) ZK rollups, while a major step forward in scaling technology, still operate largely within a centralized framework.
Proprietary code or closed projects can become single points of failure, undermining decentralization and introducing unnecessary risks. Values alignment means that as these technologies evolve, they must remain open and accessible to all, reducing the risk of centralization creeping back into the system.
Technological alignment
Ethereum’s technological backbone relies on shared standards. Without these, the network would devolve into a fragmented collection of incompatible solutions. Technological alignment ensures that projects are not only innovative but also interoperable.
Take the ERC standards as an example. The ERC-20 token standard is widely adopted, making it easy for wallets, exchanges, and applications to interact with any token built on Ethereum. As of 2024, over 500,000 ERC-20 tokens exist, showcasing the power of shared standards.
Similarly, ERC-721 has become the foundation of the NFT ecosystem, enabling the creation of unique digital assets across multiple platforms.
However, Ethereum’s technology is evolving rapidly. L2 solutions, account abstraction (ERC-4337), and cross-chain bridges are becoming more prominent, and it’s crucial that these innovations adhere to open standards.
For instance, cross-L2 transfers need to work seamlessly for users moving assets between chains. Currently, this process remains clunky and expensive.
The ecosystem also faces challenges with newer technologies like ZK-rollups. While ZK-rollups offer enhanced scalability and privacy, they introduce technical complexities that require careful standardization.
To avoid fragmentation, projects must collaborate to establish new ERCs and protocols that ensure these innovations are fully integrated into Ethereum’s broader ecosystem rather than siloed off.
Economic alignment
The third pillar of alignment is economic. Ethereum’s economy is anchored by ETH, and economically aligned projects should prioritize using ETH as the native token wherever possible.
As of Oct. 10, the DeFi ecosystem holds over $81 billion in locked assets, with ETH serving as the backbone for many protocols.
Projects like MakerDAO (MKR) and Aave (AAVE) rely on ETH collateral to secure loans, reinforcing its position as the most trusted asset within the Ethereum ecosystem. This network effect drives further adoption and strengthens the broader Ethereum economy.
However, economic alignment extends beyond simply using ETH. Buterin suggests that projects should contribute to public goods—initiatives that benefit the entire ecosystem, not just individual projects.
Gitcoin, for example, has raised over $50 million to fund open-source development, supporting infrastructure that helps the entire Ethereum network thrive.
Yet, challenges remain. Many projects, particularly those handling high transaction volumes, increasingly rely on stablecoins instead of ETH. This trend risks fragmenting Ethereum’s economic model, as ETH becomes less central to the network’s daily operations.
Ultimately, economic alignment means ensuring ETH remains the core unit of value across the ecosystem while contributing to Ethereum’s long-term success through reinvestment in public goods.
Metrics to measure alignment
To avoid making “alignment” a vague or abstract concept, Buterin proposes using specific metrics to track how well projects align with Ethereum’s values, technology, and economics. Let’s dive into the four key metrics he suggests:
Open source adoption
The degree to which a project adheres to open-source principles can be measured by how much of its code is available for public inspection.
Projects that score highly on this metric follow the OSI and FSF definitions of open-source, ensuring they remain transparent and collaborative.
For example, fully open-source projects like Aave allow anyone to review their smart contracts and verify security, aligning closely with Ethereum’s core ethos of decentralization and transparency.
In contrast, projects with closed-source code risk creating centralized control points, which run counter to Ethereum’s vision.
Standards compliance
Standards compliance measures how well a project follows established Ethereum standards. Projects that adopt standards like ERC-20 or ERC-721 ensure seamless interaction with other dApps and tools in the ecosystem.
This metric also considers how actively projects contribute to new standards via Ethereum Improvement Proposals. Projects contributing to such initiatives show a high level of technological alignment.
Decentralization and security
The walkaway test is a simple but effective metric: if a project’s team disappeared tomorrow, would it continue to function? Decentralized exchanges typically pass this test with ease because their smart contracts operate autonomously without needing a central authority.
Additionally, the insider attack test evaluates a project’s vulnerability to internal exploitation. Projects heavily reliant on centralized control score poorly here, as they are more susceptible to insider attacks.
In contrast, projects resilient to such risks—due to decentralized governance—demonstrate a strong commitment to Ethereum’s decentralized vision.
Positive-sum impact
This metric assesses how much a project gives back to the Ethereum ecosystem and beyond. Projects that use ETH as their primary token, contribute to open-source development, or donate part of their revenue to public goods score highly in this area.
Experts weigh in
As Ethereum pushes toward greater scalability through L2 solutions, the balance between decentralization and efficiency becomes more delicate.
The key question is how much decentralization can be sacrificed without compromising Ethereum’s core values, and whether innovation in L2 technology risks fragmenting the ecosystem.
To explore this critical intersection, crypto.news consulted leading industry experts, whose insights reveal that Ethereum is still facing uncharted challenges—and that the future may demand trade-offs that challenge the network’s founding principles.
Ulyana Skladchikova, Head of Product at Blockscout, recognizes the realities of Ethereum’s evolving ecosystem. She sees Ethereum’s current state as one of rapid experimentation, where decentralization and scalability are constantly tested against each other.
Decentralization is a process—it’s constantly evolving. Right now, we’re in a phase where L2 solutions are launching frequently, testing different hypotheses, and iterating based on what works. There are trade-offs happening as we balance efficiency with Ethereum’s core decentralization goals, but transparency must remain non-negotiable.
Yet, while Ethereum’s decentralized identity is being tested, the journey toward full decentralization is far from complete.
We’re still years away from fully decentralized systems like sequencers and fraud-proof submissions. It’s not just about technology—it’s also about community engagement. We need more active participation. Decentralization can’t be driven by a small group of super-users; it requires a much broader base to ensure its success.
Roy Hui, Co-Founder and CEO of LightLink, offers a more pragmatic perspective. While he values decentralization, he argues that not all projects need to pursue it with the same intensity.
The importance of decentralization depends on what goals a project is aiming for. Gaming chains, for example, don’t need the same level of decentralization as financial applications. At LightLink, while efficiency might take precedence in some areas, we make sure user autonomy is never compromised. Users should always be able to control their assets, even when some trade-offs around centralization are made.
Hui agrees that decentralization remains the ultimate goal—it’s just not something that can be achieved overnight.
Decentralizing a chain is like trying to rebuild an airplane mid-flight — it’s incredibly challenging. By aligning with Ethereum’s security standards and decentralizing processes like fraud-proof submissions, we’re finding a balance between performance and decentralization without sacrificing either. It’s a gradual journey, but we’re getting there.
Both Skladchikova and Hui also raised the issue of fragmentation within Ethereum, particularly with respect to L2-L2 bridging. As Skladchikova points out:
The biggest blind spot right now is L2-L2 bridging. Without secure and transparent bridges, we risk creating isolated ecosystems where different L2s don’t communicate well with each other. This could lead to fragmented solutions, where L2s aren’t working as part of the broader Ethereum ecosystem. Bridges need to be secure and transparent, or else the entire network could face serious fragmentation risks.
While Skladchikova focuses on structural risks, Hui highlights the user experience, arguing that the complexity of cross-chain asset transfers needs to be simplified to minimize friction.
Cross-chain ownership and asset transfers are primarily a UX challenge now. Users shouldn’t need to think about the complexities of which chain they’re interacting with. The process should be seamless and intuitive. Users should be able to move assets without worrying about the underlying technicalities.
As Ethereum continues to grow, both experts also expressed concerns about social capture—the risk of power and influence becoming concentrated in the hands of a few insiders, rather than being evenly distributed across the ecosystem.
“Ethereum’s community is still relatively small, and early relationships play a big role in what gets built and promoted,” Skladchikova explains.
But as the ecosystem matures, projects built on favoritism will begin to fall away. Innovation will ultimately win out, but we need to ensure the system remains open and transparent to prevent social capture.
Hui and Dan Enright, Ecosystem Lead at LightLink, are actively working to prevent social capture within their own platform.
We’re forming a DAO that will oversee decision-making and resource allocation. By decentralizing governance, we’re making sure influence within LightLink is distributed fairly. It’s not just about who has early access—it’s about creating opportunities for everyone to participate.
Enright adds:
Our goal is to make governance accessible, so it’s not dominated by insiders. We’re working to empower independent developers and give them the tools they need to bring their projects to life. The future should be about merit, not connections.
Experts acknowledge that decentralization remains the ultimate goal, but the road forward will require compromise, innovation, and a firm commitment to keeping Ethereum an open, fair, and transparent ecosystem.
