Welcome to Listing Sundays, CryptoSlate's latest weekly feature presenting comprehensive interviews, expert analysis, and thought-provoking opinion pieces that delve beyond the headlines to examine the concepts and perspectives shaping the future of cryptocurrency.
Alon Muroch is a man on a mission. As the founder of SSV Labs, which contributes to the second-largest Ethereum staking infrastructure provider, SSV Network, Alon has been passionately advocating for the industry's number-two blockchain since its early days. Long before Ethereum transitioned to Proof of Stake, Alon contributed to the original Ethereum clients. And Eth's stagnant price and community narrative are concerning him. Greatly.
So much so, in fact, that beyond speaking at the Staking Summit, it's one of the factors bringing Alon to Dubai today, raising awareness about the elephant in the room no Ethereum ecosystem representative wants to address. He explains:
“Most of the negative sentiment Ethereum is experiencing right now is due to the token, not necessarily the technology, and I believe Ethereum needs to recognize it. The Ethereum community needs to recognize it and then overcome it, because this gap will become very dangerous.”
With 100,000 Ethereum validators, SSV Network secures approximately 10% of all staked ETH, so Alon has significant interest in seeing the token narrative improve. And his sense of urgency is palpable.
“We're not focusing enough on the narrative and the reason for holding ETH. That's why ETH is like this.”
This is my first time meeting Alon, and I'm not familiar with his personality, but I can tell there's a lot on his mind. The price of Eth, for one, which is struggling below $1,800. It's at least 20 minutes past our scheduled meeting time, and he's already ordered his coffee when I arrive at the crowded venue.
After navigating the outdoor area between the conference hall and Madinat Souk in the scorching afternoon heat, my mind is more inclined toward a refreshing cold beer than a steaming hot cappuccino. I'm flustered and red-faced after wandering in circles, lost, deep in the souk's maze of perfumes, textiles, stuffed camels, dates, and countless other knick-knacks on sale. That Starbucks was harder to find than a drop of water in the Desert.
I assume Alon didn't have as much difficulty. After 10 years navigating his way through Ethereum's many twists, turns, and protocol changes, Google Maps was probably a walk in the park. I apologize for my poor navigation skills and ask what drew him to Ethereum in the first place.
“Ethereum is at the forefront of blockchain…” he answers, “I've been in Ethereum since the beginning.”
With Eth price languishing along like an injured animal, a divided community debate over its governance, and a number of competing smart contract platforms offering better, faster, cheaper alternatives, I ask Alon whether Ethereum still maintains that central role today. He pauses:
“Yes, and number Ethereum, the blockchain, I believe it is. The rollup-centric roadmap proved itself and continues to prove itself. In terms of the layer Ethereum is at, I believe the technology is very solid. They know how to take risks. Obviously, there are blockchains with riskier technology or more cutting-edge technology, but they're much smaller, so it's much easier to do. Ethereum is seeing all-time high usage, so that's great.”
He's mentioned the growing disparity between the Ethereum blockchain and its native token a couple of times. I ask him to elaborate.
“In terms of the token, it's lagging behind quite significantly, and there's a gap happening there, which is quite dangerous for Ethereum. I can argue until tomorrow the differences between Solana, Avalanche, Polkadot, and Ethereum, and why Bitcoin is lagging behind as a technology. I can argue, but that's not translating very well to the actual frontiers of adoption right now.”
Indeed. Still, if Ethereum's problem is only about crafting a better narrative, why do projects migrate to other ecosystems in search of more favorable token models, like Uniswap or dYdX? He's not phased:
“There will always be projects preferring other blockchains. I believe it's much more of a marketing opportunity than anything else. You can find very affordable transactions on Ethereum.”
He sips his coffee before continuing:
“The challenges Ethereum has right now are not fatal. It's mostly narrative and a straightforward question: 'Why would the average TradFi user, who doesn't really understand blockchain or TPS, and doesn't know how to differentiate between Solana and Avalanche, or Ethereum for that matter, hold Eth?' It's a very big question.”
He explains that traditionally, Ethereum didn't pay much attention to narratives, marketing, and PR, but times have changed, and it's becoming impossible to ignore.
“It used to be the case that institutions came to crypto to learn, and then directly went to Ethereum, because that was the only game in town. Today, if you look at Wall Street now, well, they might understand the concepts of blockchain and self-custody, but they don't care about it. That's where the narrative plays a major role. You can't have conferences on Wall Street where Solana and Avalanche and Polkadot are going on stage and explaining why people should use them, and nobody is speaking for Ethereum. It's coming up with a narrative that is compelling.”
Finding a new raison d'être for Ethereum in the hearts and minds of token holders is no small feat, particularly in an industry where not everyone is 'in it for the tech.' When DEFI stops working and prices drift steadily downward, Alon has his work cut out.
“When you buy Bitcoin, you hold one of 21 million. That's fine. That's a great narrative, and Wall Street and TradFi and everyone else really respond to that. The Solana narrative is 'we can beat Ethereum.' So the reason to hold SOL is that if there's a price difference between tokens and SOL wins, it's better to hold SOL than anything else. Why would you hold ETH?”
As a Bitcoiner first, I admit I've been asking the same question for several years, but I don't mention that to Alon. Instead, I await his answer:
“ETH has nobody to beat and compete with. They're already the huge smart contract platform, so there has to be another narrative. Historically, there were very good reasons to hold ETH. With ICOs, you had to hold ETH in order to get into ICOs. With DeFi, you had to hold ETH to provide liquidity or to trade. There were very good reasons.
What is the reason today? On my end, the reason is to make Ethereum the trust and security layer for the entire internet of value. If we can make that and draw value back to Eth, the token, then there's a very good reason to hold it.”
What makes Ethereum a great security layer compared to other blockchains? Bitcoin's security is widely renowned, I point out. Alon scoffs:
“Bitcoin has limited capabilities of smart contracting, and so developers essentially hacked ways to secure things on Bitcoin. Ethereum has smart contracts, so a lot of those types of use cases only became possible on Ethereum. What I'm saying is somewhere in that capability. I believe that the Ethereum validator set has superpowers. It's the largest, most diverse, and decentralized validator set on the planet.
Those validators know how to run high-stakes code for a very long time. It has on-chain entities with staking and all of that, plus you see a lot more off-chain components responsible for very important security services, and so on. If you can have all of those services run using validators on Ethereum and paying them rewards, then you have this stream of income and rewards going back to ETH holders.”
Alon doesn't miss a chance to share his views on Bitcoin as legacy technology, but what are his thoughts on Solana, which seems to be the institutional investors' favorite toy? He replies that Ethereum's 'last great competitors' were EOS, but they failed because 'their founders did other things.' He says Solana is 'essentially what EOS should have been if they'd had serious founders,' but:
“In terms of technical capabilities, Solana is taking way more trade-offs than Ethereum. It's not technically as good as Ethereum, especially from the blockchain, censorship-resistant, and stability point of view. Nonetheless, they're doing a lot of other very good work, engaging with developers, promoting themselves, explaining why Solana, et cetera, et cetera, et cetera. Ethereum needs to take some of that into what they're doing.”
I mention the POV I've heard that Ethereum should never have switched to Proof of Stake. Given the nature of Alon's work, I'm not surprised when he immediately dismisses that. He interjects:
“It was one of the best decisions. The amount of resources required today to secure Bitcoin is crazy. It's crazy. It's like saying, let's keep having coal-powered plants and cars and not switch to gas or electric. Why? Because coal is very robust. Fine, but it's not a very good solution to anything. There are a lot of things that are robust. It doesn't mean you don't need to add technology. I don't believe Bitcoin will ever add to Proof of Stake because Bitcoin is stuck in the past in terms of technological development… Of course, we should have switched. There's no doubt about it.”
Beyond alerting everyone to the problems Ethereum faces, what else is Alon doing to turn the Ethereum ship around? He corrects me:
“Look, there is a challenge here. It's not a problem. It's not systemic. It's a challenge we need to face because times have changed, and we have competition.”
What are the restaked applications that SSV is pioneering?
“Restaked applications are the name for types of services, protocols, and applications that run on Ethereum validators. It's essentially SSV 2.0. We coined the term restaked apps. They're applications that are restaked in their security on Ethereum validators. That's why they're called restaked.
It's a type of decentralized service that runs on Ethereum validators and gets functionality and security from them. It can be oracles or bridges, data availability, zk-proofs, AI agents, or any type of service you have that is run in a distributed way. Instead of reinventing the wheel and building your own validator set, you can simply tap into the Ethereum and get much better security, much cheaper, and also much closer to Ethereum in a much better way.”
Where do restaked applications fit into the broader security landscape, and how do they compare to, say, Eigenlayer? He explains:
“Eigenlayer is similar in the sense that it provides security. The main difference is, Eigenlayer uses staking. We're using validators from Ethereum. So, in Eigenlayer, you take a bunch of staking, you lock it into a smart contract, and then you have secured operators. The problem with that is that it's not scalable, and it's very expensive because staking is very expensive.
What we decided to do is to go and use the validators themselves, which are 95% cheaper and provide properties that staking doesn't because they directly represent a portion of the value of Ethereum.”
Finally, it's all starting to make sense. Restaked applications benefit from the high level of security the base layer provides, and Ethereum receives compensation, instead of the value being extracted. What's more, it's 'around 95% cheaper,' Alon says.
“That's really significant because security is the most expensive component of a decentralized network, and restaked applications are very aligned with Ethereum because, as I said before, it comes from the point of creating more value back to the holders, so it has that additional advantage… We need to present a way forward, which I believe is by prioritizing a way to draw more value back to the token.”
I wish him luck, and we end the interview. Despite criticizing Ethereum with as much frequency as Alon criticizes Bitcoin, I can't imagine the crypto space without it, and I'd be sorry to see it unravel. The bright side? When you're ~60% off your all-time highs, the only way you can go is up.
