While there will always be competition between various protocols and the SEC's opinion on them, the most dangerous threat to Ethereum is its overwhelming amount of complexity. It has gotten to a point where only those with advanced educational backgrounds (PhDs) and intimate knowledge of cryptography are able to fully comprehend what is happening on Ethereum. As Vitalik Buterin states: "true decentralisation requires far more than a few thousand nodes or even Byzantine Fault Tolerance (the consensus mechanism behind Ethereum): it requires a well-defined and simple protocol." When a blockchain becomes so complex that it requires these "high priests" to explain how the code works, the blockchain ceases to be "trustless" (no need to trust) and instead becomes a production (show).
There are over 800,000 different Validators on Ethereum working together to facilitate billions of dollars worth of transactions each day. When looking at accepted definitions of decentralization, Ethereum is the most decentralized Smart Contract platform in all of Crypto. However, Vitalik Buterin believes that simplicity and trust in the protocol should be the primary focus, instead of people being forced into learning what many developers and node operators are required to know. As a Blockchain was built to eliminate the complexity, reliance and hierarchy that occurs as a result of things becoming overly complicated, Buterin has identified a major flaw in the current system's architecture through the Walkaway Test.
Buterin argues that if the main Ethereum Development Team were to disappear tomorrow, it is highly unlikely that any independent teams would be able to create a well-functioning Client from scratch, as well as being confident that all Validator nodes are following consensus rules, without relying on an existing Client. Buterin's answer continues to be in the negative, as the complexity of Ethereum requires a minimum of 5 different PhD-level Cryptographers, and hundreds of thousands of lines of code just to operate. As a result, every single user must rely on experts, rather than the protocol itself, to confirm that the system is functioning properly, which is not a truly decentralized system, but rather an Oligarchy through multiple levels of Oligarchal control.
Ethereum's development process can be characterized as additive, where new features are constantly added to solve issues while maintaining backward compatibility, which leads to the proliferation of "legacy" code and an eventual decline in overall performance. As the "layers" on top of the underlying protocol of Ethereum accumulate, maintaining security has become increasingly challenging, according to Vitalik Buterin's concept of technical debt. Ethereum is currently the second largest blockchain in all of cryptocurrencies and has an extreme amount of protocol bloat.
While the recent switch to proof-of-stake improved the speed at which consensus could be achieved on Ethereum, the large majority of all post-proof-of-stake upgrades have introduced additional complexity without removing older components. In particular, the introduction of zero-knowledge proofs, state expiry, account abstraction, and blob transactions have made it virtually impossible for anyone to independently verify the integrity of the Ethereum blockchain.
While competitors can take a share of a company's market, competition also has the effect of improving the whole industry. Regulatory hostility to adopting new technologies slows the process of doing so, however, regulations serve to provide a compromise between public interest and investor security. Each of the different types of protocols is uniquely complicated; structural rot in the protocol causes the protocols to fall apart, finding a relatively innocent appearance, while the risks involved increase without warning. Eventually the risks of waiting to develop protocols in the same way as other protocols will become a reality, requiring developers and stewards to remain alert to replace those waters.
Vitalik Buterin states that structural rot is an existential threat to Ethereum because it undermines Ethereum's value proposition.
If Ethereum's only option for consumers is to trust the developers of Ethereum and the experts in cryptography, and if crypto was to completely eliminate the need
for consumers to trust any third-party companies or individuals, then the protocol would have failed. Additionally, as the degree of complexity in a protocol increases, so too, do the chances of introducing bugs into the protocol. Each additional level in the chain represents a potential security vulnerability. Ethereum secures hundreds of billions of dollars of value. Errors could lead to serious losses, and the level of complexity in Ethereum would most likely ensure that errors will be present.
The simple but difficult suggestion of garbage collection has been put forth by Buterin. Garbage collection is used in the realm of software, as it allows for a more organized presentation of all of the available resources in an application, since garbage collection enables the programmer to remove all of the unused resources. In the context of blockchain technology, garbage collection is similar to removing all of the unnecessary components from the design. Buterin's goal is to streamline code, reduce criminal ties and therefore increase the strength of the invariants, all of which are fundamental principles that must always hold true.
The overall goal of Buterin's proposal is threefold. First, reduce the amount of code in the specifications so that the specifications are easier to read. Second, eliminate as much of the complexity from cryptographic processes as possible so that the average person will be able to easily understand them. Third, create increased use of invariants in relation to the development of client applications. Fewer moving parts equal a more understandable, less fragile system and therefore, this will lead to a higher level of usability. It is not a matter of optimising, but instead it is a case of fundamentally restructuring an architecture in order to prevent it from collapsing under its own weight.
The complexity crisis is an ongoing, long-term issue for Ethereum as demonstrated by Vitalik's recent post where he stated "The next major step in development is probably going to be making Ethereum easier for people to use".
A reminder that while there are some short-term challenges such as scaling, cost, and performance associated with using Ethereum, there are many more challenges (e.g., technical debt) that aren't apparent now but will need to be addressed in the future.
The complexity crisis is a long-term problem for Ethereum as Vitalik is aware of this, and therefore his warning should give users some confidence that he is aware of the complexity crisis, and will work towards addressing it, even if the solutions may take longer than expected to achieve.
Vitalik's post indicates he recognizes the importance of finding ways to reduce complexity when developing new features for Ethereum; therefore he is likely to spend time considering how best to achieve this, which may result in Ethereum Improvement Proposals taking longer than expected to be completed.
Vitalik's transparency regarding his plans for Ethereum will allow users to manage their expectations around the speed of Ethereum development as they will be aware that he is focused on creating an easier-to-use platform. Users should allow themselves to have faith in the future development of Ethereum based on Vitalik's vision and ability to communicate effectively about what he intends to do with Ethereum in the future.
For people who think deeply and keep ETH for a long time, the message is clear: the biggest threat to Ethereum isn't competition from outside sources or uncertainty about regulations. The internal complexity is what is ruining the trustlessness that makes decentralised systems useful in the first place. If average developers and node operators can't understand and verify Ethereum on their own, it will just be another trusted system with better marketing. Buterin's proposal for garbage collection shows that the most important infrastructure project in crypto is in danger of becoming useless because of too much complexity. The question isn't whether it's essential to simplify things; it's whether the Ethereum community can do it before the technical debt gets too high.
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