Ethereum Still Needs VCs — says Joseph Lubin

Why the Co‑Founder of Ethereum Thinks Value Extraction by Firms Like Paradigm Isn’t the End of the World

When you hear a founder of a major crypto network declare that “the main goal of VCs … is to suck as much value as possible from the ecosystem”, you might expect a blaze of criticism. But Joseph Lubin—co‑founder of Ethereum and the mind behind ConsenSys—says something different: yes, venture capital firms such as Paradigm may be extracting value, but they’re also needed as a bridge into the wider world of capital and infrastructure. According to Lubin’s post on X (formerly Twitter), they may not be perfect—but for now, they serve a vital role. This article explores what he said, why it matters, and how this dynamic may shape Ethereum’s future.

The Core Claim: “Value extraction” and necessity

Lubin doesn’t mince words—he writes that VCs like Paradigm aim to “suck as much value as possible from the Ethereum and broader ecosystem.” But he immediately adds that this is not a reason for panic. He argues that right now, the system still needs VCs. He frames them as the “comfortable bridge for the world’s capital to flow into our ecosystem.”

Why this framing matters: On one hand, there’s clear awareness within the Ethereum community (and crypto broadly) about tensions: decentralisation, fairness, access, and whether a few big firms dominate. On the other hand, the sheer scale of capital needed for infrastructure, research, global payments, etc., means that big money is hard to replicate purely from grassroots. Lubin’s view is that until “better, fairer, more broadly accessible on‑chain investment platforms with healthy tokenomics” emerge, these traditional VCs will continue playing a role.

What’s going on in the ecosystem

Some key developments underpin Lubin’s remarks. Notably, two Ethereum Foundation researchers left recently – one of them, Dankrad Feist, joined Tempo, a layer‑1 payments project backed by Stripe and Paradigm. The researcher movement sparked worries about centralised influence creeping into Ethereum’s open‑source, decentralised ethos.

At the same time, Paradigm’s growing presence—through hiring research staff, backing new chains, setting up new protocols—has drawn scrutiny: is it tilting the balance away from Ethereum, or influencing it disproportionately? Lubin acknowledges the concern but frames it as part of Ethereum’s “mainstreaming.” He sees this “gold‑rush of corpo‑chains” validating the idea that blockchain is entering the traditional economy.

The longer‑term vision: decentralised capital, tokenomics, infrastructure

A notable piece of Lubin’s argument is his forecast: “Very soon better, fairer, more broadly accessible on‑chain investment platforms with healthy tokenomics will mature sufficiently so that VCs will have no choice but to set up shop on these platforms.”

In other words: the present model—where big VCs lead, invest, steer—is an interim state. The future model may look more on‑chain, more distributed, with token‑based access, lower barriers. Ethereum’s broader ambition (and Lubin’s) is that infrastructure can be globally accessible, decentralised, but still tied into large pools of capital and corporate players. VCs aren’t the villain in this story—they’re part of the scaffolding while the architecture matures.

Why this matters for Ethereum and crypto strategy

For anyone tracking Ethereum, crypto governance, and capital flows, Lubin’s remarks signal a few strategic take‑aways.

Firstly, Ethereum’s path remains hybrid: a mix of decentralised protocol plus real‑world capital, corporate backing, infrastructure firms. This interplay will likely shape how upgrades, research, and ecosystem development proceed. If you’re a project builder, partner, or investor, understanding the roles of traditional VCs vs on‑chain models matters.

Secondly, tokenomics and platform economics will increasingly be battlegrounds. If different investment models are emerging—on‑chain investment platforms, tokens that give access, new funding mechanisms—then teams need to plan for those changes. It’s not just about raising VC money; it’s about how financing aligns with decentralised incentives, fair access, and governance.

Thirdly, decentralisation is still very much a goal, but the path to it may be less pure than the ideology suggests. Big firms, research talent, major capital flows—they’re part of the story. How Ethereum balances that with its decentralised ethos will determine how it evolves and how trust in the ecosystem holds up.

The risks: what to watch out for

Lubin acknowledges the concerns: centralised influence, talent drain to other chains, the potential for VCs to shape agenda or extract disproportionate value. For Ethereum and its backers, the following risks are prominent:

If VC firms become gatekeepers or insiders, they may undercut the open ethos of Ethereum. If talent flows to new chains backed by the same firms, Ethereum could lose its edge. If on‑chain investment platforms fail to materialise or scale, the reliance on VCs could entrench rather than transition.

Moreover, users and developers increasingly expect decentralisation not just in name but in practice—governance, node operation, choice of chains, interoperability. The tension between corporate‑friendly infrastructure and open protocol access will remain.

Final thoughts

Joseph Lubin’s message is a nuanced handshake between idealism and pragmatism. He accepts that VC firms aim to extract value, but he doesn’t consider that a fatal flaw—instead, he sees them as strategic partners in the current phase of development. The bigger story is the transition: toward investment models that are on‑chain, broad‑based, and aligned with decentralised token‑economics.

For the ecosystem around Ethereum, that means planning for a dual reality: today’s reality of VCs and major firms, tomorrow’s aspiration of distributed capital and more democratic access. Projects and stakeholders will need to map their strategies accordingly—leveraging current funding and infrastructure while positioning for the future shift.