BRAND ANALYSIS: E IS FOR ETHEREUM

Ethereum is loved because it represents an island of idealism in a sea of grift.

Ethereum is hated because its price refuses to go up.

And from this tension emerges a complicated brand.

Ethereum is the brand the largest number of crypto natives are invested in: both literally, because they own Ether (Ethereum’s currency) and emotionally, because they care (or used to care) about the core values the project is aligned with, namely decentralization, immutability, and open source.

Vitalik Buterin

But first, a quick Ethereum primer:

Ethereum was conceptualized in 2013 by Vitalik Buterin, a young programmer working as a writer for Bitcoin Magazine. Bitcoin’s conception is immaculate with its unknown pseudonymous founder, but Ethereum has some great lore too. While playing the online game World of Warcraft, Buterin's character had a spell he frequently used suddenly removed by the game developers. This incident in 2010 profoundly impacted young Vitalik, as he felt powerless over the arbitrary decision. Reflecting on this, he realized the potential of using blockchain technology, the central innovation of Bitcoin, to give users more control and create decentralized applications that could run exactly as programmed without any possibility of third-party interference (on the blockchain, your spell becomes immutable).

Ethereum went live in 2015. Unlike Bitcoin, Ethereum includes a programming language that allows developers to write more complex smart contracts—self-executing contracts with the terms directly written into code—enabling a vast range of applications from gaming to electronic voting to decentralized finance to digital assets to collectables and beyond.

The Ethereum team in Berlin after its launch in 2015

If Bitcoin was proof of concept for digital currency, then Ethereum's introduction of smart contracts really created crypto as we know it. Idealistically, it laid the foundation for a shared imaginary, a frontier of decentralized applications and digital sovereignty. And practically, as the most deployed smart contracts on Ethereum are those for creating ever new tokens and NFTs, unlocking an unforeseen world of speculation on digital assets.

However, this digital frontier as imagined by early Ethereans has persistently remained around the corner for 10 years now. To this date the things that have found real product-market-fit via Ethereum are limited: stablecoins (most of which actually happens outside Ethereum), some DeFi (most notably borrowing/lending), and trading of tokens (this is also mostly on rival chain Solana now). That’s really about it.

In crypto, the majority of brand equity is literal equity. Bad price = bad brand, and vice versa (with minor exceptions). Relative to other major cryptos, most notably Bitcoin and Solana, the price of Ethereum has seen only a modest appreciation over the past two years. Consequently, one of Ethereum’s biggest brand problems in recent times is its failure to produce a bubble at a magnitude crypto participants have come to expect. As one of our clients said recently: the bubble is crypto’s true product.

The price of Ether refusing to go up is weighing on the brand. But Ethereum today also has a distinct vibe problem. The animating early vision of Ethereum was that of a “world computer”; a utopian idea of a world of abundance, decentralizing financial and social systems through applications used by millions, running on a digital substrate distributed across hundreds of thousands of machines around the globe. This vision, and by extension, version of the brand isn’t dead. In a survey we distributed to some of our Ethereum-aligned friends, Ethereum was described as:

“A noble attempt to give crypto a purpose”

“The Burning Man of money, or the 4chan of finance”

“a romanticized … future characterized by an infinite digital substrate, where a self-governing technical elite can remake society”

But within the same survey – or anywhere else where Ethereum’s brand is being discussed today – much more common were descriptions such as “World Economic Forum crypto,” “Microsoft but worse,” “EU of crypto,” “beta,” “soy,” etc.

Some of this sentiment can be attributed to the actions and public perception of the Ethereum Foundation (EF), the non-profit structure set up to fund protocol development, support ecosystem growth and general advocacy. In an ultra-competitive and adversarial space, the EF appears to have positioned itself outside the real life dynamics and pace of crypto. While competitors focus on shipping product and ruthless commercialization, the EF waxes lyrical about infinite gardens in a way that suggests Ethereum has reached an end-of-history style readiness, rather than being in an all out cryptoeconomic war with other blockchains for users, capital and elusive mainstream adoption. Coupled with dated aesthetics and notoriously slow execution timelines for protocol upgrades, comparisons between the blockchain the EF stewards and crumbling liberal world order institutions don’t come as a surprise.

Infinite Garden illustration

This hasn’t gone unnoticed by key Ethereum figureheads, most notably Vitalik Buterin himself, who recently staged an intervention. (A summary on the current EF drama.) Interestingly enough, in the linked tweet Vitalik mentions as a specific non-goal of his intervention: “Execute some kind of ideological / vibez pivot from feminized wef soyboy mentality to bronze age mindset” Presumably, what he is referring to is refusing a brand pivot similar to Mark Zuckerberg; from low T android to Trump-aligned manosphere life coach.

But what in fact is the “soy” in Ethereum’s brand?

On one level it has to do with the aura of certain key personalities and KOLs in the ecosystem. On another, it has to do with the architecture of Ethereum itself. As mentioned earlier, most of the brand equity in crypto is simply a derivative of the price of the associated token. If the price of Ether was $10k today (about 3x from what it actually is at the time of writing), the mishaps and politics of the Ethereum Foundation would be of little concern to the wider crypto public. The cringe would be offset by the chad of the price.

So what makes it appear weak? Without going too much into technical detail, unlike its competitor Solana (for example), Ethereum has chosen to scale its capacity and throughput via “Layer 2s”. What this means is instead of all activity happening on the Ethereum blockchain itself, the “Layer 1”, lighter, faster and less secure blockchains can use Ethereum for their security (i.e. settle on Ethereum L1). One practical consequence of this architecture is that Ethereum leaks economic value to these Layer 2 blockchains, hampering the appreciation of its own token, Ether (ETH). This happens both because Ethereum earns less fees as most of the activity now happens on Layer 2s and because of brand dilution: the Ethereum ecosystem now has dozens of base tokens representing different Layer 2s for a user / investor / speculator to choose from, rather than a singular focus on ETH. This dynamic is well illustrated in this slide by Ameen Soleimani.

Ok, we’ve outlined Ethereum’s most pressing brand problems. But it wasn’t always like this.