The 12th Ethereum Foundation Ask Me Anything (AMA) session took place on September 5, 2024, via Twitter Spaces. As one of the most anticipated community events, this AMA brought together core developers, researchers, and contributors—including Vitalik Buterin, Justin Drake, and Dankrad Feist—to discuss Ethereum’s current challenges and future roadmap. With ETH’s market performance lagging behind broader crypto trends, many in the community are asking tough questions about value accrual, scalability, and long-term sustainability.
This article recaps and analyzes the key takeaways from the session, focusing on Ethereum’s technical evolution, economic model, and strategic direction—while addressing widespread concerns about ETH’s underwhelming price action.
Ethereum’s Scalability: Beyond Layer 2 Dependence
A recurring theme during the AMA was whether Ethereum relies too heavily on Layer 2 (L2) solutions for scalability. The answer from the team was clear: Ethereum is not solely depending on L2s—Layer 1 (L1) itself is actively evolving.
Vitalik Buterin and Justin Drake emphasized that multiple L1 upgrades are in progress to enhance performance and reduce network strain. These include:
- Precompiled contracts for VM execution: Optimizing how smart contracts run at the protocol level.
- ZK-based proof acceleration: Speeding up zero-knowledge proofs to improve verification efficiency.
- Verkle trees: Replacing Merkle Patricia trees to drastically reduce node storage requirements and improve light client functionality.
Dankrad Feist clarified that L1 and L2 scaling are complementary, not competitive. While L2s handle transaction volume, L1 continues to evolve as a secure settlement and data availability layer.
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Is ETH Still “Money”? The Value Proposition Debate
One of the most pressing questions addressed was: Why has ETH underperformed compared to other major cryptocurrencies?
Justin Drake gave a direct response: “ETH is money.” He argued that ETH’s appreciation is not just desirable—it’s essential for Ethereum’s long-term success. To support this claim, he outlined three core pillars of ETH’s value:
- Economic bandwidth for trillion-dollar decentralized stablecoins
Ethereum aims to become the backbone for global digital asset settlement, particularly for large-scale stablecoin ecosystems. A robust, secure base layer is critical for hosting high-value financial infrastructure. - Unquestionable economic security
As a Proof-of-Stake (PoS) network, Ethereum secures its chain through staked ETH. The more valuable ETH becomes, the more costly it is to attack the network—creating a positive feedback loop between price and security. - Economic vitality that attracts major participants
From institutional investors to DeFi innovators, Ethereum remains the primary hub for serious economic activity in Web3. Its ecosystem continues to draw developers, entrepreneurs, and capital.
These factors suggest that ETH isn’t just a speculative asset—it plays a fundamental role in securing and powering a decentralized economy.
Do Layer 2s Drain Value from Ethereum?
A common narrative in the crypto space is that L2 rollups “leak” fee revenue and Maximum Extractable Value (MEV) away from Ethereum, weakening its economic moat.
Dankrad Feist pushed back strongly on this idea. He stated that L2s do not parasitize Ethereum—instead, they extend its reach. High-value transactions, such as large settlements or cross-chain bridges, will continue to occur on L1. L2s simply absorb low-value, high-frequency traffic that would otherwise congest the mainnet.
Justin added a crucial perspective: Focus on total ecosystem revenue, not per-transaction fees. Even if individual transaction fees drop to fractions of a cent, massive scale can generate substantial income. For example:
If Ethereum supports 10 million transactions per second at an average fee of $0.01, daily revenue could exceed **$8.6 billion**.
The real bottleneck today isn’t fee levels—it’s insufficient application-layer demand. Without compelling use cases driving user activity, transaction volume remains limited.
This insight shifts the conversation from protocol economics to ecosystem innovation: Ethereum needs killer apps that attract billions of users, not just better fee mechanics.
Preserving Credible Neutrality: Governance and Decentralization
Credible neutrality—the idea that no single entity controls the network—is considered Ethereum’s foundational principle. During the AMA, concerns were raised about centralization risks due to the growing number of corporate and government-affiliated validators.
The Ethereum Foundation acknowledged this challenge and highlighted ongoing efforts at the consensus layer to preserve decentralization. One notable proposal involves allowing decentralized validator sets to enforce transaction inclusion, reducing the risk of censorship or preferential treatment by large staking pools.
This aligns with Ethereum’s long-term vision: a resilient, permissionless network where no single player—whether nation-state or corporation—can dictate outcomes.
The Economics of the Ethereum Foundation
An often-overlooked but vital topic is the financial health of the Ethereum Foundation (EF).
As revealed in the AMA:
- The EF spends around $100 million annually.
- It holds approximately $650 million in reserves, mostly in ETH.
- The organization employs over 300 people, including researchers, engineers, and operations staff.
This raises an important point: The EF has a strong incentive for ETH to appreciate. A falling ETH price erodes its purchasing power and threatens funding for critical research and development.
However, some community members have questioned the EF’s operational efficiency. With a large team and significant burn rate, transparency around budget allocation and productivity metrics remains crucial.
Why Ethereum Still Leads: Vitalik’s Four Pillars
When asked what gives Ethereum a sustainable edge over competitors, Vitalik outlined four key advantages:
- Superior Data Availability (DA) capacity
Ethereum’s roadmap prioritizes massive DA expansion through proto-danksharding and full danksharding—enabling thousands of L2s to operate efficiently. - Stronger decentralization via Proof-of-Stake
Contrary to popular belief, Vitalik argued that PoS enables greater decentralization than Proof-of-Work (PoW). By lowering hardware barriers, more users can run validators independently. - Resilient community and culture
Ethereum boasts one of the most active, ideologically aligned developer communities in crypto—a major moat against fragmentation. - Shared values and long-term vision
From open access to anti-censorship, Ethereum’s ethos continues to inspire builders worldwide.
While some critics found these points abstract, they reflect a deeper truth: Ethereum’s strength lies not just in code, but in collective belief and coordination.
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FAQs: Addressing Key Community Concerns
Q: Is Ethereum losing relevance due to Layer 2 fragmentation?
A: No—fragmentation is temporary. The goal is seamless interoperability between L2s via shared liquidity layers and account abstraction. Ethereum remains the central trust anchor.
Q: Can ETH ever become a global reserve asset?
A: Potentially yes—if it secures trillions in on-chain value (e.g., RWA tokenization, stablecoins) and maintains unmatched security and uptime.
Q: Why hasn’t application innovation kept pace with infrastructure?
A: Infrastructure matured faster than expected. Now, the focus must shift to UX improvements, privacy tools, and real-world use cases like identity and payments.
Q: Does high staking concentration threaten decentralization?
A: It's a risk, but mitigated by ongoing improvements like distributed validator technology (DVT) and protocol-level anti-centralization measures.
Q: Will lower L1 fees hurt miner/staker income?
A: Stakers earn from issuance and MEV—not just fees. With higher throughput and adoption, total rewards can grow even if per-transaction fees decline.
Q: What’s the timeline for full sharding?
A: Proto-danksharding is expected around 2025; full sharding may take several more years, depending on testing and security validation.
Final Thoughts: Beyond Price—Building the Foundation
While many hoped for bold announcements or immediate fixes for ETH’s price stagnation, the AMA revealed a different reality: Ethereum is playing the long game.
Instead of chasing short-term market hype, the core team is focused on foundational upgrades that will matter in 2030—not just 2025. Scalability, security, decentralization, and sustainability remain the north stars.
The path forward requires patience—and trust. But for those who believe in a decentralized digital future, Ethereum still stands as the most credible platform to build it on.
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