Ethereum Developer Warns of Centralization Risks Tied to Vitalik Buterin’s Influence

• Szilágyi claims a ‘one happy friend circle’ around Vitalik determines project success through influence, donations, and investments.

• The Ethereum Foundation is criticized for underpaying early contributors, leading to conflicts of interest and protocol capture risks.

• Meanwhile, Vitalik Buterin praised Polygon’s contributions to scalability, including ZK-EVM advancements and the AggLayer, amid ongoing testnet restructurings.

Ethereum centralization controversy: Developer Péter Szilágyi warns of insider control by Vitalik Buterin. Discover the criticisms, responses, and network changes. Stay informed on crypto’s future—read now!

What is the Ethereum Centralization Controversy?

Ethereum centralization controversy stems from accusations by core developer Péter Szilágyi that co-founder Vitalik Buterin and a tight-knit group of insiders exert undue influence over the network’s direction and project funding. In a candid letter to the Ethereum Foundation, Szilágyi described the ecosystem as dominated by a small circle backed by just 1-3 venture capital firms, arguing this setup contradicts Ethereum’s founding principles of equal opportunity. This has sparked debates on governance, fairness, and long-term sustainability as of October 2025.

How Has Péter Szilágyi Criticized Vitalik Buterin’s Influence?

Péter Szilágyi, who leads the Geth client team—a critical component for Ethereum’s execution layer—voiced his frustrations in a detailed open letter to the Ethereum Foundation. He asserted that Vitalik Buterin’s personal attention, research direction, donations, and investments are pivotal in deciding which projects thrive or falter within the ecosystem. According to Szilágyi, this dynamic has fostered a “ruling elite” where success hinges on proximity to Vitalik rather than merit alone.

Szilágyi pointed to systemic issues, including the Foundation’s failure to equitably compensate long-term contributors. He revealed his own earnings of just $625,000 over Ethereum’s first six years, calling it a pattern that has deprived early employees of substantial wealth. This underpayment, he argued, pushes developers toward external opportunities, breeding perverse incentives and conflicts of interest. For instance, he referenced Ethereum researchers assuming advisory roles in private ventures, which could lead to protocol capture—a scenario where a few entities unduly influence core protocol decisions.

Official data from the Ethereum Foundation underscores the scale: as of 2025, the network processes over 1.2 million transactions daily, yet governance remains opaque. Experts like blockchain analyst Laura Shin have echoed similar concerns in past analyses, noting that venture capital inflows—totaling billions since 2015—often concentrate power among a handful of players. Szilágyi warned that without reforms, Ethereum risks deviating from its decentralized roots, potentially eroding trust among the global community of over 200,000 validators.

Frequently Asked Questions

What sparked Péter Szilágyi’s letter to the Ethereum Foundation?

Péter Szilágyi’s letter, released in October 2025, was prompted by years of growing disillusionment with the Foundation’s internal dynamics. He highlighted power concentration in a small group tied to Vitalik Buterin and select VCs, unfair compensation for early contributors, and the risk of centralized control overshadowing Ethereum’s decentralized mission. This 40-word summary captures the core grievances driving his public critique.

Why is the Ethereum Foundation shutting down the Holešky testnet?

The Ethereum Foundation is winding down Holešky, launched in 2023, because it has fulfilled its role in testing major upgrades like Dencun, Pectra, and Fusaka. Starting October 2025, node operators are migrating to Hoodi and Sepolia for future staking and development. This transition ensures efficient resource allocation while maintaining robust testing for scalability features like PeerDAS, which reduces validator bandwidth by up to 50%.

Key Takeaways

• Centralization Risks in Ethereum: Szilágyi’s critique reveals how a small insider group, including Vitalik Buterin, influences project outcomes, potentially compromising decentralization.
• Financial Inequities Exposed: Early contributors like Szilágyi earned modest sums—$625,000 over six years—driving talent away and creating conflicts that threaten protocol integrity.
• Positive Ecosystem Moves: Vitalik praised Polygon’s ZK innovations and AggLayer; meanwhile, testnet shifts to Hoodi and Sepolia signal ongoing technical evolution for better scalability.

Conclusion

The Ethereum centralization controversy ignited by Péter Szilágyi’s bold critique of Vitalik Buterin’s influence underscores persistent challenges in balancing innovation with true decentralization. As the Foundation restructures test networks like Holešky and Vitalik highlights allies such as Polygon, Ethereum’s path forward hinges on addressing these power dynamics. Published by COINOTAG on October 22, 2025, and last updated October 23, 2025, this report draws from official statements and developer insights. Investors and developers should monitor governance reforms closely to ensure Ethereum sustains its leadership in the blockchain space—explore more on en.coinotag.com for the latest developments.

Ethereum developer Péter Szilágyi criticizes Vitalik Buterin’s influence, warned of rising centralization and internal power struggles.

Ethereum is facing controversy after one of its key developers, Péter Szilágyi, claimed that Vitalik Buterin and a small group of insiders have too much control over how the network runs.

In a detailed letter to Ethereum Foundation, Szilágyi said Ethereum has evolved into a network controlled by a small group of people and venture capital firms. He claimed that “most successful projects are directly backed by the same 5-10 people, behind who you can find the same 1-3 VCs,” forming what he called a “one happy friend circle of Vitalik.”

Szilágyi, who leads the Geth client team, said he wrote the letter after feeling growing disillusionment with the Foundation. According to him, Vitalik’s influence determines which projects succeed or fail. “His attention, direction of researcher brain-power, donations and investments absolutely define which projects succeed,” he stated. Moreover, he argued that the Foundation failed to reward long-term contributors fairly, creating incentives that allow power consolidation and protocol capture.

Power Concentration and Internal Frustrations

Szilágyi criticized the Foundation for promoting “perceived leadership role” while maintaining control behind closed doors. He described his position as “a useful fool for the Foundation in a lose-lose situation.” He also highlighted long-standing financial inequality, noting that his total compensation during Ethereum’s first six years was only $625,000. “The Foundation took away life changing money from every single one of their employees over the past decade,” he added.

Additionally, Szilágyi said this underpayment forced many early contributors to seek financial opportunities elsewhere. This, he warned, created conditions for “perverse incentives, conflicts of interests, and eventual protocol capture.” He cited recent cases of Ethereum researchers taking advisory roles with private projects as examples of systemic risks.

According to Szilágyi, Ethereum now revolves around a “ruling elite” of influential figures and investors. “All the most successful projects are directly backed by the same 5–10 people,” he said, suggesting that personal ties to Vitalik determine ecosystem success. He concluded that Ethereum “set out to create a world of equal opportunity,” but instead became a network where influence drives outcomes.

Vitalik Buterin Praises Polygon

In a response though indirectly, Ethereum co-founder praised Polygon and its co-founder Sandeep Nailwal for their strong contributions to the Ethereum ecosystem. He highlighted Polygon’s early push into ZK-EVM development and Jordi Baylina’s team for advancing ZK technology.

I really appreciate both @sandeepnailwal’s personal contributions and @0xPolygon’s immensely valuable role in the ethereum ecosystem.
To recap:
* Polygon hosts @Polymarket, which is probably the single most successful example of a “not just boring finance” app that has actually…

— vitalik.eth (@VitalikButerin) October 21, 2025

Buterin also commended the creation of AggLayer, calling it a major step for Ethereum scalability. Beyond technology, he applauded Sandeep’s work with CryptoRelief and his decision to return $190 million in SHIB donations, which later funded the Balvi open-source pandemic project. Buterin added that he hopes Polygon adopts mature ZK solutions to bring “full security guarantees” to its PoS chain.

Foundation Restructures Test Networks

Besides internal criticism, the Ethereum Foundation is preparing major changes to its testing infrastructure. The organization has begun winding down Holešky, a testnet launched in 2023 to support large-scale validator and upgrade testing.

According to a post on X, Holešky will undergo planned node shutdowns two weeks after the Fusaka upgrade finalizes. Operators must migrate to the new Hoodi and Sepolia networks, now the main testnets for staking and application development.

Holešky degradation will begin this week. The network has served its purpose for Fusaka testing and operators will start shutting down their nodes at various points over the next 10 days.
Please refer to this post for further details. https://t.co/o4faEhPyuV

— Ethereum Foundation (@ethereumfndn) October 20, 2025

Holešky played a role in testing major Ethereum upgrades like Dencun, Pectra, and Fusaka. The Fusaka update added PeerDAS, a feature that helps validators work faster while using less bandwidth. Now that Holešky has completed its job, it’s being shut down and will no longer get technical support.

According to CoinMarketCap, Ethereum is currently priced at $3,850.09, down about 4.86% in the past 24 hours, with a trading volume of $37.9 billion.

Szilágyi’s comments and the recent network changes show that Ethereum is still trying to stay true to its decentralized roots while facing growing control from a few powerful players and technical hurdles along the way.

Also Read: Solana Co-Founder Is Building Perpetual DEX “Percolator”

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