Ethereum Developer Warns Paradigm’s Investment Influence May Undermine ETH Open-Source Ethos
An Ethereum core developer has raised issues concerning the rising affect of enterprise capital agency Paradigm inside the Ethereum ecosystem, warning that their affect “inside Ethereum might develop into a related tail threat for the ecosystem.”
The developer, referred to as “Fede’s intern” on X, highlighted Paradigm’s strategic positioning throughout a number of fronts, together with hiring high researchers, funding vital open-source libraries, and launching Tempo, a competing layer-1 blockchain with Stripe.
The issues intensified following the departure of longtime Ethereum Foundation researcher Dankrad Feist to Tempo, which raised $500 million at a $5 billion valuation from conventional finance corporations.
As of March this 12 months, Paradigm manages $12.7 billion in assets. It has emerged because the top-performing crypto enterprise capital agency over the previous 12 months with an 11.80% efficiency metric, based on Kaito AI.
The agency has invested closely in Ethereum infrastructure, together with main a $40 million funding round for Etherealize and backing Reth, a Rust-based execution shopper.
I’ve been saying for the previous two years that the affect of @paradigm inside Ethereum might develop into a related tail threat for the ecosystem. I consider this can develop into more and more clear to everybody within the months forward.
Some folks suppose I’ve a private problem with them. I… https://t.co/LH99Cvmbqo
— Fede’s intern
(@fede_intern) October 19, 2025
Paradigm co-founder Matt Huang was appointed CEO of Tempo whereas retaining his position on the agency, creating what some view as potential “conflicts of curiosity”.
The developer acknowledged Paradigm’s contributions to the group however emphasised “the only goal of enterprise funds is to maximise returns for his or her LPs.”
He famous that after Paradigm’s failed FTX funding, “they eliminated most references to crypto and pivoted closely towards AI,” as proof of company priorities doubtlessly misaligning with Ethereum’s long-term imaginative and prescient.
In response, his staff created Ethrex, another Rust execution shopper, to cut back dependency on Paradigm-controlled infrastructure.
Growing Open-Source Co-option Fears
Tempo has assembled a big staff of Ethereum expertise, together with Dankrad Feist, who contributed to the community for seven years as a researcher targeted on zero-knowledge proofs and scalability options.
The blockchain introduced its $500 million funding spherical from Greenoaks and Thrive on the identical day as Feist’s departure announcement.
Known fairness holders embody Stripe, Paradigm, Greenoaks, SV Angel, Thrive, Ribbit, and Sequoia, with no group possession stake disclosed.
Tempo positions itself as a high-performance layer-1 designed for stablecoin issuance and enormous bank-to-bank funds, able to working Ethereum-compatible code with out counting on Ethereum itself.
Team members declare that the mission will develop the marketplace for all cryptocurrencies and in the end profit Ethereum, though critics stay skeptical.
One analyst famous that Tempo exists to intercept trillions of {dollars} in predicted stablecoin flows onto a privately owned blockchain, slightly than Ethereum’s open infrastructure.
The recruitment wave follows Paradigm’s January call for Ethereum to accelerate protocol upgrades and undertake a extra agile innovation strategy.
The agency argued that Ethereum implements just one main protocol change per 12 months, regardless of having huge assets, and urged developments corresponding to native rollups and improved pockets infrastructure.
Ethereum layer-2 executives agreed to prioritize such enhancements on the identical day as Paradigm’s weblog put up was revealed.
Corporate Influence Raises Governance and Decentralization Questions
The Ethereum core developer expressed concern that “when firms achieve an excessive amount of legibility and affect over open supply initiatives, priorities begin to drift away from the group’s long run imaginative and prescient and towards company incentives.”
He emphasised that Bitcoin and Ethereum stay “distinctive as a result of they signify philosophical and political actions bigger than any company.”
The developer warned of “hidden prices and dangers of governance lock in disguised as freedom,” notably as Rust turns into dominant for vital infrastructure with zero-knowledge proofs getting into layer-1.
Paradigm has maintained board illustration at Stripe by Matt Huang whereas concurrently investing in competing infrastructure and hiring Ethereum’s high expertise.
The agency beforehand incubated initiatives like Foundry and Artemis, however Tempo represents a brand new degree of involvement with a significant fintech participant.
He argues that this creates governance lock-in dangers disguised as freedom, notably as Rust turns into dominant for vital infrastructure, with zero-knowledge proofs getting into layer 1.
@VitalikButerin introduces GKR protocol verifying 2M calculations per second lowering proof work from 100x to 10-15x as Ethereum launches 47-member Privacy Cluster.#Ethereum #Privacyhttps://t.co/Z5kIh35LQ8
— Cryptonews.com (@cryptonews) October 20, 2025
The issues emerge as Ethereum pursues better privateness and decentralization.
Co-founder Vitalik Buterin recently published research on GKR, a cryptographic approach that may speed up Ethereum verification.
Meanwhile, the Foundation also launched a 47-member Privacy Cluster aimed toward making the community personal by default.
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