More than a decade after its founding, Ethereum is undergoing its most challenging period yet.
Critics have lambasted the network’s non-profit steward, the Ethereum Foundation, for losing pace with competing blockchains, such as Solana.
Complaints have mounted that the fix for speeding up the network, such as so-called “parasitic layer 2s,” was killing Ether’s price action.
Meanwhile, more financial institutions are warming to DeFi as Washington caters to the crypto industry with proposed new rules.
Is Ethereum, the cornerstone of DeFi and a blockchain valued at $295 billion, about to miss its moment?
Unwieldy organisation
Appointed by the Foundation as co-executive director in March, Tomasz Stańczak is labouring to make sure it doesn’t.
Sporting a beige mesh knit shirt and flared business chinos, the former Citigroup engineer turned crypto exec appears serene when we meet in June on the bank of the Spree, the river winding through Berlin.
Indeed, the 40-year-old Polish national looks better fit for a chic beach holiday than re-energizing the unwieldy organisation that steers the most important blockchain network in DeFi.
His brief for the new post is simple: Whip Ethereum back into shape before it’s too late.
“The ecosystem called out,” Stańczak said.
“You’re operating too disorganised, you need to operate a bit more centralised and way more accelerated to be there for this critical period.”
‘People say we need the Foundation now.’
— Tomasz Stańczak
And just three months into his new role, he’s already setting a new tone.
In June, the Ethereum Foundation laid off 19 employees and offered severance packages to two others as part of a streamlining effort in the core development team.
Moving forward, he’ll take a more hands-on approach to making new hires as well.
“I asked to be able to review all of these hirings,” he said. “I was asking about the processes, checking how interviews were going, asking what are the compensation levels?”
Dual role
Even as Stańczak embarks on his task, he’s taking heat for staying on as CEO of Nethermind, the third-largest execution client for Ethereum.
Execution clients are responsible for handling block creation on the network, executing transactions, and managing the network’s ledger of account balances.
Meanwhile, Stańczak and the Foundation’s other co-executive director, Hsiao-Wei Wang, are also intensifying the network’s development pace by setting upgrades every six months.
“This is a change to the previous approach of the foundation that always talks about the long term and the end game,” Stańczak said. “People say we need the Foundation now.”
But notching developer milestones has been simple. Core Ethereum developers have consistently demonstrated their ability to deliver crucial network upgrades on the fly over the years.
Instead, Stańczak biggest challenge may be convincing the Ethereum community that there is clear decision-making at the top of the Foundation.
He said he’s spoken with hundreds of members of the Ethereum community over the last few months.
Stańczak is also spending more time on social media and at conferences than his predecessor, Aya Miyaguchi.
In June, Stańczak clashed with Péter Szilágyi, the lead developer at Geth, the largest Ethereum execution client.
Szilágyi, who was ousted from the Foundation in November, said the Foundation had built and funded a Geth fork without informing Szilágyi.
Szilágyi also said that the Foundation had offered him $5 million to spin out his operations into an independent company.
He alleged that the Foundation was keen on winding down the client altogether.
Stańczak chalked up much of the dustup as a mischaracterisation of events.
“That obviously didn’t happen,” he said. “The Geth team is very important for the Foundation to support researchers.”
Despite Stańczak’s calm demeanour, the task before him and Wang is herculean.
That’s because the broader crypto industry has piqued Wall Street’s interest in the last 18 months, unlike ever before.
Investments in spot Bitcoin exchange-traded funds have surged to $135 billion 18 months after their debut.
Shares in Circle, the issuer of the USDC stablecoin, have skyrocketed 474% since they were listed on the New York Stock Exchange in May.
At the same time, global banks and asset managers such as BNY Mellon and BlackRock are rolling out custody solutions to let institutional clients hold cryptocurrencies.
But Ethereum competitors such as Solana were quicker to exploit business opportunities.
The Solana Foundation, for instance, struck a tokenisation deal with R3, the global software group, in May. Solana also backed three publicly listed companies, which poured millions into SOL tokens this spring.
Even as most top cryptocurrencies notched all-time highs early this year, Ether lagged the field.
In March, Danny Ryan, previously a core developer at the Foundation, announced he was joining the newly founded Etherealize, an initiative to pitch the network’s services to financial firms.
Representatives from the group also met with the Securities and Exchange Commission’s crypto task force in May to discuss how the regulator could accommodate turning stocks and bonds into tokens on a blockchain via tokenisation.
A big part of Stańczak’s job may sound like heresy to some in DeFi. But centralising authority could help the network do business.
“Institutions need someone to be the face of the organisation that is representing Ethereum,” Stańczak said.
So far, the signs are good.
In June, Shopify, the e-commerce giant, announced support for stablecoins as a payment method using Base, the Ethereum layer 2 network operated by Coinbase.
On Monday, Robinhood announced plans to roll out tokenised versions of Google, Tesla, and Meta stocks on Arbitrum, one of the largest Layer 2 networks on Ethereum.
Incoming revenue
Stańczak leans forward in his seat and says revenue is coming in, and he’s optimistic this is just the beginning.
If stablecoins are adopted as many expect, followed by tokenised securities, Ethereum’s long foretold destiny as an alternative financial system may finally start to crystallise.
“Suddenly you have 10% or 20% of the whole economy onchain,” he tells me.
“It may happen faster than people think.”
