Original title: Layer 2s as cultural extensions of Ethereum

Original author: Vitalik Buterin, founder of Ethereum

Original translation: Peng Sun, Foresight News

In my recent article about the differences between L1 and L2 scaling, I ultimately came to the conclusion that the most important difference between the two approaches is not technical, but organizational (using this word in a sense similar to the field of "industrial organization"): it is not about what can be built, but about what will be built, because of how the boundaries between different parts of the ecosystem are drawn, and how this affects people's incentives and ability to act. In particular, L2-centric ecosystems are inherently more diverse and more naturally promote more diverse different approaches to scaling, EVM design, and other technical features.

A key point I made in my last post was that:

Since Ethereum is an L2-centric ecosystem, you are free to independently build a sub-ecosystem with its own unique features while also being part of the larger Ethereum.

In this post, I argue that this is true not only in terms of technology, but also in terms of culture. Blockchains not only have unique technical trade-offs, they also have unique cultures.

The day after Ethereum and Ethereum Classic parted ways, the two chains were technically identical. But they were culturally very different, which helped shape their different focuses, user bases, and even technology stacks eight years later.

The same is true of Ethereum and Bitcoin: in the beginning, Ethereum was roughly "Bitcoin with smart contracts," but a decade later, the set of differences is much more profound.

Kevin Pham compares Bitcoin and Ethereum culture in 2017 in an old tweet. Both cultures continue to evolve: since 2017, we’ve seen the rise and fall of the “laser eye” movement (as well as the rise of movements like Ordinals), and Ethereum becoming L2-centric, and both cultures have become more mainstream. But there are still differences between the two, and it’s probably best to keep them that way.

What does culture affect?

Culture has a similar effect to incentives — in fact, culture is part of the incentives. It affects who is attracted to an ecosystem and who is repelled. It affects what actions people are motivated to take, and what actions people can take. It affects what is considered legitimate — both in protocol design and at the ecosystem and application layer.

Blockchain culture has a significant impact on a few particularly important areas, including:

1. Types of protocol changes — quantity, quality, and direction

2. Ability to remain open, censorship-resistant, and decentralized

3. Ability of the ecosystem to attract high-quality protocol developers and researchers

4. Ability of the ecosystem to attract high-quality application developers

5. Ability of the ecosystem to attract users — both in quantity and the right types

6. Public legitimacy of the ecosystem in the eyes of external communities and participants

If you truly value blockchain decentralization, even at the cost of inefficiency, then you need to focus not only on how well today’s technology achieves these goals, but also on how well the blockchain culture values these goals. If a blockchain’s culture does not value curiosity and openness to new technologies, then it is likely to fail on both decentralization and speed, as it will be unable to adopt new technologies like ZK-SNARKs that can be more decentralized and faster. If blockchain is understood by the public as a "casino chain" and nothing else, it will be difficult to get non-casino applications on board. Even non-commercial core protocol developers and researchers will become more difficult to attract. Culture is important because culture is, at least to some extent, upstream of almost everything else.

Culture of Ethereum

Ethereum Developer Meetup, Kenya, May 2024. Ethereum's core R&D ecosystem is one of Ethereum's subcultures, but it is also quite diverse and internally divided.

Researcher Paul Dylan-Ennis has spent a lot of time exploring and understanding Ethereum's subcultures. He believes that there are three main subcultures of Ethereum:

· Cypherpunks: Cypherpunks are committed to open source development and have a certain DIY or punk attitude. In the case of Ethereum, cypherpunks built infrastructure and tools, but did not interfere with how they were used and took a neutral approach. Historically, cypherpunks have explicitly emphasized privacy, but in Ethereum, privacy has not always been prioritized, although… a new cypherpunk movement called lunpunk has emerged that advocates for privacy to be prioritized.

· Regens: Many influential voices within Ethereum are committed to taking a regenerative or regenerative approach to building the technology. Building on Vitalik Buterin’s interest in politics and social science, many regenerators engage in governance experiments aimed at reinvigorating, improving, or even replacing contemporary institutions. This subculture is characterized by its experimental nature and interest in public goods. Degens: Users driven purely by speculation and the accumulation of wealth at all costs, i.e., Degens.

· Degens are financial nihilists who watch current trends and hype in the hope of hitting the jackpot and escaping the rat race of contemporary neoliberal capitalism. Degens tend to take extreme risks, but in an ironic, almost detached way.

There are more than just these three important groups, and you could even question the extent to which they are identical groups: the profit-oriented group and the people who buy monkey pictures are very different culturally. The term "cypherpunks" here includes both those interested in end uses such as protecting people's privacy and freedom, and those who are interested in using cutting-edge mathematics and cryptography without any strong ideology. But this classification is still interesting as a first approximation.

An important feature of these three groups in Ethereum is that, largely due to the flexibility of Ethereum as a developer platform (not just a currency), they each have access to a kind of arena where the subculture can take action rather than just talk. A rough approximation is: · Cypherpunks participate in core Ethereum development and write privacy software; · Regens do Gitcoin rounds, retroactive public goods funding, and various other non-financial applications; · Degens trade memecoins and NFTs and play games.

In my opinion, this cultural branch has served Ethereum well. Ethereum’s core development culture values high-quality thinking on topics such as advanced cryptography, game theory, and increasingly software engineering; values freedom and independence; values cypherpunk ideals and blockchainized versions of these principles (such as “immutability”); and an idealistic approach that values values and soft power over hard power. These values are important and good; judging by the cultural influences I listed in the previous section, they put Ethereum in a very good position with respect to (1), (2), (3), and to some extent (6). But they are incomplete: first, the above description barely emphasizes the appeal to application developers, and almost zero to the appeal to users: stability-oriented values help provide confidence to those who “use” Ethereum by holding ETH, but that’s about it. Cultural diversity is one way out of this dilemma, allowing one subculture to focus on core development while another focuses on developing the “edges” of the ecosystem. But this raises the question: are there ways we can further strengthen this cultural diversity?

Subcultures and L2

Here’s what I’d say is perhaps the most underappreciated feature of L2: for subcultures, L2 is the ultimate arena of action. L2 allows subcultures to emerge, and these subcultures have a lot of resources and feedback loops that force them to learn and adapt in order to play a role in the real world: attracting users and application developers, developing technology, and building global communities.

Perhaps the key characteristic of L2s here is that they are simultaneously (i) ecosystems, and (ii) organized around building something. Local meetup groups can form their own ecosystems, and often have their own distinct culture, but they are relatively limited in resources and execution. Applications can have massive resources and execution, but they are just applications: you can use them, but you can’t build on them. Uniswap is great, but the concept of “building on Unsiwap” is not nearly as strong as “building on Polygon.”

Some specific ways that L2s can and do end up professionalizing their culture include:

· A greater willingness to engage in user development or “business development”: a conscious effort to attract specific external actors (including individuals, businesses, and communities) to participate in the ecosystem.

· An emphasis on diversity of values. Does your community focus more on “public goods”, “quality technology”, “Ethereum neutrality”, “financial inclusion”, “diversity”, “scalability”, or something else? Different L2s will give different answers.

· Diversity of participants: What kind of people does the community attract? Does it emphasize certain demographic groups? Personality types? Languages? Continents?

Here are a few examples:

Optimism

zkSync

MegaETH

Starknet

Polygon has achieved success through partnerships with mainstream companies and an increasingly high-quality ZK ecosystem. Optimism owns Base and World Chain, and has a strong cultural interest in ideas such as retroactive fundraising and token-based unjust governance. Metis focuses on DAOs. Arbitrum has built a brand around high-quality developer tools and technologies. Scroll focuses on "preserving the essence of Ethereum - trust-minimized, secure, and open source." Taiko emphasizes "seamless user experience," "alignment with the community," "security first," and "people-oriented." In general, each Ethereum L2 has a unique "soul": Ethereum culture combined with its own unique style.

How can an L2-centric approach succeed?

The core value proposition of this L2-centric cultural approach is that it attempts to balance the benefits of diversity and cooperation, creating a range of different subcultures that still share some common values and work together to implement those values on key common infrastructure.

Ethereum is trying to go the diversified route

Similar two-tier approaches have been tried before. The most notable example I can think of is EOS's DPoS system in 2017. EOS's DPoS uses token holders to vote on which representatives will run the chain. These representatives will be responsible for building blocks and reaching consensus on other people's blocks, and they will also receive a large number of tokens from the EOS issuance. In order to attract votes, the representatives ended up doing a lot of community building, and many of these "nodes" (such as EOS New York, EOS Hong Kong) eventually became well-known brands.

This ended up being an unstable system, as token voting is inherently volatile, and some powerful people in the EOS ecosystem turned out to be greedy assholes who embezzled large amounts of funds raised on behalf of the community for personal gain. But while it worked, it also displayed an amazing property: it created strong, highly autonomous sub-communities that were still working towards a common goal.

EOS New York One of the top block producers on EOS, it even wrote quite a bit of open source infrastructure code

When this approach works successfully, it also creates a kind of healthy competition. By default, communities like Ethereum naturally tend to rally around those who have been in the community for a long time. The benefit of this is that as the community grows rapidly, it can help maintain the community's values - even if there are adverse external winds, and reduce the possibility that Ethereum no longer cares about free speech or open source. However, it also risks shifting attention away from technical ability and toward social play, allowing those “OG” veterans to maintain a entrenched position even if they perform poorly, and limiting the ability of the culture to renew and evolve itself. With a healthy “subculture”, these problems can be mitigated: entire new subcommunities can rise and fall, and those who succeed in a subcommunity can even begin to contribute to other aspects of Ethereum. In short, less legitimacy comes from continuity and more legitimacy comes from performance.

We can also examine the above stories to identify possible weak spots. Here are a few that come to mind:

· Trapped in an echo chamber: Essentially, the same failure mode I talked about in my last post, but cultural. L2s start to feel like separate universes with little cross-penetration between them.

· Trapped in a monoculture: Whether due to shared human biases or shared economic motivations (or an overly uniform Ethereum culture), everyone ends up looking in similar places for applications to build, and perhaps even technical choices to make, which are ultimately wrong. Another scenario is that a single L2 or a small number of L2s become so entrenched that there are no longer effective mechanisms for newcomers and sub-communities to rise.

· Competition gravitates toward the wrong vector: Secondaries that focus on use cases that succeed in some narrow economic sense, but at the expense of other goals, appear to be successful, and over time more and more communities move in that direction.

These questions hardly have perfect answers; Ethereum is an ongoing experiment, and part of what excites me about the ecosystem is its willingness to confront difficult problems. Many of the challenges stem from misaligned incentives; the natural way to address this is to create better incentives for the entire ecosystem to collaborate. The idea I mentioned in my last post to create a “Basic Infrastructure Guild” to complement the Protocol Guild is one option. Another option is to explicitly subsidize multiple L2 projects that choose to collaborate (i.e., similar to quadratic funding, but with a focus on connecting ecosystems rather than individuals). There is a lot of value in trying to expand on these ideas and continuing to work to fully leverage Ethereum’s unique strengths as a diverse ecosystem.

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