The Ethereum (ETH) network is not going through its most celebrated times. While its technological advances and developments are not accompanied by a bull market for its native token, Ether, new questions have arisen in recent hours.  

In addition to that initial issue, Charles Hoskinson, founder of Cardano (ADA) and a contributor to the creation of Ethereum, voiced a series of criticisms of the latter ecosystem during a broadcast on April 23. His comments, which include the assertion that “Ethereum won't survive more than 10 or 15 years," cover multiple technical, economic, and governance aspects of the network. 

Criticism of Ethereum's Proof-of-Stake model 

Hoskinson identifies Ethereum 's Proof-of-Stake (PoS) consensus mechanism as one of its major structural flaws .  

According to him, the chain's PoS design, implemented after the Proof of Work (PoW) transition in 2022 with The Merge , relies heavily on a penalty system known as ' slashing ' . This mechanism punishes validators who act maliciously or who do not comply with the protocol's rules by reducing their staked funds . 

Hoskinson argues that this approach creates an economy that introduces unnecessary friction and harms ecosystem participants. In his view, Ethereum's PoS fails to effectively balance incentives and punishments, which could discourage participation and weaken the network in the long run.

Hoskinson questioned the Ethereum model. Source: YouTube.

Alternatively, he proposes adopting a Delegated Proof of Stake (DPoS) model, used for example on the Sui (SUI) network, which he claims is more efficient and resilient. DPoS delegates validation to a small group of nodes chosen by the community, potentially reducing the complexity and risks associated with slashing.  

On the other hand, this small group of nodes selected by a network's community could jeopardize the centralization of consensus power if those nodes acted maliciously. 

Questioning the Ethereum Virtual Machine (EVM) 

Another critical point for Hoskinson is the Ethereum Virtual Machine (EVM), the environment that runs smart contracts on the network. The EVM is the backbone for developing decentralized applications ( dApps ) and decentralized finance (DeFi) on Ethereum. However, Hoskinson considers it obsolete due to its design and increasing complexity.

Hoskinson suggests that the EVM would introduce inefficiencies or vulnerabilities that could be exploited as the network grows, and that its lack of flexibility limits Ethereum's ability to adapt to new technologies and market needs. While he doesn't detail a specific alternative to the EVM, his commentary adds that Ethereum should consider a major restructuring of its technical infrastructure to remain competitive. 

In this sense, Vitalik Buterin himself, co-founder of Ethereum, recently proposed replacing the EVM with another virtual machine environment, which would reduce transaction processing times and costs for users. For his part, Hoskinson described this possible implementation as "a very good decision."

Layer 2 solutions as "parasitic" 

The Cardano co-founder devotes a significant portion of his criticism to Ethereum's second-layer (L2) networks, such as Arbitrum and Base, designed to improve scalability by processing transactions off the main chain while benefiting from its security.  

For Hoskinson, these solutions don't solve Ethereum's fundamental scalability problems, but rather act in a "parasitic" manner. He argues that L2s extract value from the mainnet contributing to a symbiotic relationship that benefits the ecosystem as a whole.  

Rather than addressing Ethereum's limitations, L2s "continue to suck up all the alpha (value)," diverting economic activity and users to these secondary layers. This, Hoskinson says, weakens Ethereum's economics and could accelerate its decline.  

At this point, the Cardano CEO uses an analogy with defunct tech companies like MySpace and Blackberry to reinforce his point. Just as these companies collapsed due to a failure to adapt to competition and structural issues, Ethereum could face a similar fate if L2s continue to "bleed" its mainnet. However, Hoskinson himself stated that he doesn't know if this problem could be "easily" solved. 

Ultimately, Hoskinson, though without elaborating or arguing, pointed out that Ethereum's economic decisions were flawed, pointing to a “bad accounting model,” and also stated that Ethereum “doesn't really have a good on-chain governance system.”