Cardano founder Charles Hoskinson has once again voiced doubts about Ethereum’s long-term survival, this time in a detailed interview with CoinDesk. While recognizing Ethereum’s achievements in scaling and ecosystem growth, Hoskinson argued that the blockchain’s reliance on external scaling layers—particularly rollups—creates economic incentives that undermine its base layer.
According to him, Ethereum’s structure makes it vulnerable to being hollowed out by its own Layer 2 (L2) solutions, which could eventually drain transaction activity, liquidity, and value away from the main chain. “As a general-purpose, smart-contract ledger,” he said, Ethereum has built an ecosystem that “will slowly but surely eat it alive.”
The Problem of Misaligned Incentives
Hoskinson explained that Ethereum’s path to scaling is tied to rollups and other external networks. While these solutions help ease congestion and lower fees, they also weaken Ethereum’s core. Rollup teams, he noted, are not bound to Ethereum forever—they can migrate to other chains or go multi-chain if it benefits them economically.
“If they’re gobbling up the transaction volume and the token appreciation, they could simply migrate or go multi-chain,” Hoskinson warned. He pointed to examples such as LayerZero and Espresso, which already operate outside Ethereum’s immediate ecosystem. This shift, he believes, erodes Ethereum’s historical advantage of strong network effects.
Bitcoin DeFi as a “Sleeping Giant”
Hoskinson also highlighted external threats that could challenge Ethereum’s dominance. Chief among them is Bitcoin-based decentralized finance (DeFi). He called Bitcoin DeFi a “sleeping giant” that could attract hundreds of billions of dollars in value once core primitives like stablecoins, lending platforms, and decentralized exchanges are fully built with credible security.
“When Bitcoin wakes up… its TVL will be larger than the market cap of Ethereum,” Hoskinson predicted. He added that sovereign states and large asset managers may prefer Bitcoin as a base for financial infrastructure due to its strong security and neutrality.
Big Tech and Institutions May Bypass Ethereum
Beyond Bitcoin, Hoskinson expects traditional financial institutions and major technology platforms to build infrastructure that runs adjacent to blockchains, but not directly dependent on Ethereum. According to him, giants like Microsoft, Google, and Amazon have little incentive to boost Ethereum’s ecosystem when they can deploy proprietary solutions that remain independent.
This dynamic, he suggested, could weaken Ethereum’s long-term role as a central economic hub in the digital economy.
The Technological Shift Away From Shared-State Blockchains
Hoskinson further argued that advancements in cryptography may reduce the importance of shared-state blockchains like Ethereum. With zero-knowledge proofs and proof-carrying code becoming more advanced, much of the computation could eventually take place off-chain, with only succinct proofs verified on-chain.
“Why spend billions of dollars a year maintaining this very weak computer that’s shared and replicated,” he asked, “when you can distribute the computation everywhere?”
This evolution, he said, could push Ethereum toward a structural pivot, similar to how Microsoft moved from Windows dominance to a focus on Azure in the cloud era.
Not All Criticism, but a Structural Warning
Despite his harsh critique, Hoskinson did not dismiss Ethereum entirely. He acknowledged the network’s resilience, innovation in rollups, and commitment to zero-knowledge research. He credited Ethereum’s developers for navigating crises like the DAO hack and building one of the largest blockchain ecosystems in existence.
“They’ve done some really incredible things,” he admitted. However, he stressed that the challenge lies in the structure of incentives. In his view, the more successful Ethereum’s rollups become, the less vital the base layer is as the core of the ecosystem.
Cardano’s Alternative Path
Hoskinson’s criticism of Ethereum also ties into his broader vision for Cardano. He argued that the future of decentralized finance should lean toward Bitcoin-centric infrastructure. His vision includes designs where security is derived from Bitcoin, fees are paid in Bitcoin, and yields are distributed in Bitcoin.
To make this possible, he highlighted the importance of companion chains and trust-minimized bridges. Cardano’s extended-UTXO model and its privacy-focused Midnight sidechain, he said, are well-positioned to support this vision while offering compliance features that large institutions may require.
Ethereum’s Future: Pivot or Decline?
Hoskinson closed by suggesting that Ethereum could still pivot and adapt to new roles in the blockchain stack, but its current trajectory is risky. He predicted earlier this year that Ethereum may not survive more than 10 to 15 years if L2 networks continue to dominate transaction volume and innovation.
Ultimately, Hoskinson believes Ethereum’s success could paradoxically become its downfall, as rollups and external layers “suckle out all of the alpha” from the main chain. Whether Ethereum can reinvent itself—or whether other networks like Cardano and Bitcoin DeFi step into the gap—remains one of the biggest questions in crypto’s future.
Post Views: 44
