Consecration is an often controversial topic in “Ethereum Land” that seems to be in vogue again, said Michael Ippolito, co-founder of Blockworks.
The embedding debate focuses on whether more elements should be embedded or pushed to the limits of the Ethereum network protocol, he explains. Ippolito notes that the many attempts to enshrine accounting abstraction “demonstrate how difficult it is to write things into the protocol, even if you can decide as a community that it makes sense.”
On the Bell Curve podcast (Spotify/Apple), Myles O'Neil, a partner at the consulting and investment firm Reverie, illustrates the consecration dilemma with an analogy. Comparing blockchain to how a government should treat its country, O'Neil says one could argue that “it's not great to let everything go to the private market.” Some services lead to natural monopolies.
If private companies take full ownership of things like utilities, “that wouldn't be healthy for the underlying ecosystem,” O'Neil says by way of example. The idea applies to Ethereum in the sense that certain public services should be “regulated” or “nationalized” for “better health of the ecosystem”, he says.
Learn more: Account Abstraction: Finding a Balance Between On-Chain and Off-Chain Activities
It looks like communism!
The pushback O'Neil hears is “That sounds like communism to me!” » Such a controlled system may not be healthy for attracting future entrepreneurs and innovators, he says.
Another way to imagine the situation is to think of Ethereum as an operating system, O'Neil explains. Operating systems built by Apple and Microsoft bundle many proprietary applications into their systems, O'Neil says, citing examples such as browsers, email clients, calendars and email services.
Proprietary apps serve to protect consumers in a way, he says, “because ceding that control to the private market could lead to a worse user experience,” but, he adds, “it's also effective for deter competition.
Enshrining is, in a sense, about creating “proprietary applications” that improve the rest of the ecosystem, O'Neil explains. But it is important, he says, to leave “enough room for third parties to come and innovate, create and generate value”.
Winners emerge
Whether imagining Ethereum as a government or an operating system, O'Neil says the “big question” is “can we maintain this value of credible neutrality which attracts entrepreneurs and reduces the risks associated with the platform?
“Winners have started to emerge,” O'Neil says, which may not be healthy for the rest of the ecosystem. ” Whether it be Pool today or Eigenlayer tomorrow,” O’Neil wonders whether mechanisms operating “very close to the metal” should be more directly controlled by the chain.
Learn more: EigenLayer Endgame: “Dissolving into Ethereum Itself”
“And if we do that, will that actually deter future entrepreneurs from coming in and building third-party apps? he asks.
The unifying principle should be “good user experience,” Ippolito says, whether from the perspective of a citizen's access to a healthy banking and public services system, or a user's interactions with a good operating system.
If the basic utilities of an operating system work well, Ippolito says, “then that will lead to all these other profitable activities.”
“Same thing with a country,” he continues. Countries provide “public goods” such as roads through taxation and enforce regulations to protect against monopolistic behavior, he says.
“THE A happy medium, here is a form of regulation.”
“Governance has to match your proximity to the metal,” says Ippolito. At its core, Ethereum is decentralized, with staking services like Lido in operation just “a level above”. Therefore, the service should be “almost as flat and decentralized as Ethereum itself,” he says.
“The crucial point is,” Ippolito asks, “what is so close to the metal that it needs to be directly controlled by Ethereum?”
“And that’s why I have a less solid answer.”
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