Ethereum co-founder Vitalik Buterin recently addressed several controversies, including allegations of selling ETH for personal profit, claims that layer-2 blockchains could steal user funds, and criticisms about Ethereum's focus on decentralized finance. Buterin clarified that his ETH sales have been to support Web3 projects and philanthropy, not personal gain, and also reassured the crypto community about the security of layer-2 solutions. Additionally, Buterin shared his vision for future cities blending democracy, capitalism, and decentralization, while Ethereum's developer and researcher community continues to grow.
Vitalik Buterin Defends ETH Sales
Ethereum co-founder Vitalik Buterin recently responded to allegations that he sold millions of dollars worth of Ethereum (ETH) for personal profit. The controversy started when a crypto community member on X accused Buterin of dumping more than $2 million worth of ETH shortly after making a bullish tweet. The on-chain analytics firm Lookonchain also shared that the same wallet address received 3,000 ETH from Buterin on Aug. 9.
In response, Buterin clarified that he has not sold any ETH for personal profit since 2018. He explained that any sales of ETH have been made to support various Web3 projects and philanthropic initiatives, including contributions to the Ethereum ecosystem as well as biomedical research and development. Buterin stated that his actions are only driven by a desire to fund projects he considers to be valuable rather than to profit from his holdings.
The response from the Ethereum founder attracted a lot of support from many in the crypto community. Some even encouraged Buterin to sell ETH for profit if he decides to do so. Additionally, some people believe that he deserved to enjoy the financial rewards of his contributions to the blockchain space.
In addition to addressing these allegations, Buterin also recently defended Ethereum against claims that the blockchain does not prioritize decentralized finance (DeFi). Kain Warwick, the inventor of yield farming, critiqued Buterin's stance on DeFi, and argued that he underestimated its importance over the past five years.
Buterin responded by reaffirming his commitment to developing useful and sustainable applications in the Ethereum network while still maintaining its core principles of permissionlessness and decentralization. He also reiterated his lack of respect for projects that rely on temporary, unsustainable sources of attractiveness.
Buterin Debunks Layer-2 Fund Theft Fears
Mert Mumtaz, co-founder and CEO of Helius, also recently sparked a debate on X by suggesting that every major layer-2 blockchain could "technically steal user funds." This claim was met with a response from Vitalik Buterin, who clarified that this would require an extraordinarily high level of consensus, making it unlikely that any layer-2 solution could unilaterally steal funds.
Buterin explained that a security council oversees governance execution on these chains, and this council is required to have at least a 75% vote threshold to make decisions. Additionally, a big portion of the council members, at least 26%, must be independent from the company behind the layer-2 solution.
In the case of Arbitrum, a quorum-blocking group includes members from outside Offchain Labs, the company behind the solution, ensuring a level of decentralization. Both Arbitrum and Optimism meet these requirements, according to Buterin, which makes the notion of layer-2s stealing user funds appear very far-fetched.
Despite these assurances from Buterin, some users are still a bit skeptical about whether the quorum-blocking subset will truly act independently from the company. Buterin addressed these concerns by pointing to the current members of Arbitrum's security council.
Crypto analyst Adam Cochran added to the discussion by talking about the importance of considering the multiplicative impact of a council, including the individual trust levels associated with its members and their respective goals and values. Cochran argued that the likelihood of user funds being stolen is much more reduced in councils composed of diverse stakeholders with public reputations and track records, as the potential for collusion is minimized.
Vitalik Buterin on Future Cities
Meanwhile, Vitalik Buterin recently proposed a visionary blueprint for a city that would blend the principles of democracy, capitalism, and decentralization. His ideas were shared in response to a discussion on Farcaster about the concept of “for-profit cities.” These cities sound like corporate dystopias, but would instead treat city governance as an extension of enterprise.
Buterin advocated for a hybrid model, where cities would serve both public good and profit motives. He believes there is a need for public infrastructure that benefits all income levels and it is important for cities to contribute positively to the nation and the world. Buterin also criticized the idea of solving homelessness with superficial measures like relocating people to other cities, and instead proposed a more inclusive and sustainable approach.
In his ideal city, citizens will gain greater access to assets that provide governance privileges, while landowners would face higher taxes but reduced stakes in land ownership. This, he argued, will align incentives with the overall success of the city.
Specifically, Buterin pointed out some of the benefits of land value taxes, which will encourage governments to focus on improving local public goods that boost land value, while still allowing local owners to retain the full value of their developments.
Buterin’s vision is very similar to a decentralized autonomous organization (DAO) model, integrated with taxation and profit incentives. This approach, according to political theory, could effectively socialize the democratic process while maintaining a capitalist framework.
Ethereum Researcher Growth Surges
The development team behind Ethereum has seen some impressive growth. In fact, the number of researchers contributing to the network increased by more than 2,100% in the past five years.
This surge, from approximately 25 researchers in early 2019 to around 550 at its peak in the first quarter of 2024, signals that there is still strong momentum for the world’s second-largest blockchain network. However, by the second quarter of 2024, the number of researchers slightly declined to about 450.
Number of Ethereum researchers (Source: X)
This growth in the Ethereum research community was pointed out in an X post by Emre Caliskan, who is an engineer at Electric Capital. The increase in developers is closely tied to Ethereum’s innovation pace, which has kept it at the forefront of blockchain technology.
As of July 1, Ethereum is still ranked as the leading blockchain in terms of monthly active developers. It boasts 2,788 full-time developers and over 8,865 total developers, according to data from the Developer Report.
Coinbase’s Base blockchain ranks second, with 889 full-time developers and 3,991 total developers. While Ethereum experienced a 10% decline in yearly developers, Base saw a 14% increase. In the realm of contract deployers, Ethereum ranks sixth, with 127,702 monthly deployers, whereas Base leads with over 862,000.
Contract deployers (Source: Token Terminal)
In terms of market performance, ETH has seen a price increase of over 1,245% in the past five years. The price of the altcoin rose from $168 in August of 2019 to over $2,450 in August of 2024. Some analysts are also optimistic about further gains, and predict a potential rally above $3,000, though they suggest it may take until October for a bullish breakout to happen.
