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Decentralization has been an important idea for Ethereum, the second-largest blockchain network in the world, for a long time. But Péter Szilágyi, a former lead developer for Geth, made a shocking discovery that has started a new argument about whether Ethereum really is a decentralized network or if it’s run by a small group of people in the background.
In a scathing letter published in May 2024, Szilágyi accused the Ethereum Foundation of allowing a “ruling elite” of five to ten individuals to effectively control the ecosystem. He said that even though the project seems open source, the real power lies with people close to co-founder Vitalik Buterin, who he said has “complete indirect control” over Ethereum’s direction.
Szilágyi, who led development for Geth, Ethereum’s main execution client, described a deeply centralized structure masked under decentralization rhetoric. He said that Ethereum has evolved into a network where “success depends on proximity to the same handful of people” surrounding Buterin — those who dominate investments, research, and advisory roles across projects.
He characterized this environment as a “useful fool” dynamic, where developers dedicated to principles of decentralization are sidelined while insiders reap the financial rewards.
Szilágyi was angry that he wasn’t getting paid enough for his important job. He said that over six years, he made only $625,000 without any perks or pay raises. He called it “a bad financial decision” and described the structure as “a breeding ground for conflicts of interest and eventual protocol capture.”
According to him, the Ethereum Foundation’s compensation practices created “perverse incentives”, driving away contributors who cared deeply about the project but couldn’t sustain themselves financially.
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Szilágyi reflected that many within the community now view early contributors as expendable. As he put it, the sentiment could be summarized as:
“We’re happy you built an empire for us, now move aside and let the people who can make us money take the lead.”
He accused the ecosystem of abandoning its original values, writing:
“We set out to build something great, but we readily shed all our principles the moment there’s enough money on the table.”
His words echo a larger worry in the crypto industry: that early ideas of decentralization are being pushed aside by startup capital and the desire to make money.
Szilágyi’s letter painted a detailed picture of how influence allegedly circulates within Ethereum. Over time, he claimed, the community realized that “the key to success is Vitalik.” This gave rise to what he calls a small cabal of five to ten Ethereum thought leaders, who control much of the ecosystem through their collective reach and investment networks.
He explained that projects now seek validation or investment from this inner circle rather than relying on open community engagement. Securing the right endorsements — from Vitalik Buterin himself or his closest circle — determines a project’s visibility and acceptance.
As an example, Szilágyi noted that receiving Bankless investment ensures promotional coverage, while recruiting prominent Ethereum researchers as advisors both “solves technical problems and reduces friction with the mainnet.”
He observed that the same few names repeatedly appear behind new Ethereum projects and venture funds — all supporting one another, effectively consolidating control.
While acknowledging Buterin’s technical genius and leadership, Szilágyi argued that his indirect control shapes the entire Ethereum ecosystem.
“Ethereum’s direction always boiled down to your relationship with Vitalik,” he wrote, emphasizing that developers who align with him receive more lenient treatment.
He explained that within the community, the easiest path to approval is to convince Buterin that a proposal is “ok-ish.” This dynamic, Szilágyi suggested, grants the Ethereum co-founder an unofficial veto power over what is permitted within the ecosystem.
He called this “direct indirect control”, where Buterin’s personal views — often well-intentioned — define acceptable boundaries across projects, shaping Ethereum’s future more than formal governance structures.
Szilágyi also had problems with the Ethereum Foundation’s pay structure, saying that it allowed “protocol capture,” which is when key members leave because they weren’t paid enough, giving control to people who are motivated by money or power.
He alleged that leadership was “blinded by their infinite battle-chest and Vitalik by his own wealth,” ignoring that developers, too, seek financial stability.
“The Foundation took away life-changing money from every single one of their employees over the past decade,” Szilágyi stated.
He claimed that the Foundation’s lack of financial transparency further deepened inequality. Employees who stayed out of principle rather than money became easy to exploit, while opportunists filled the vacuum.
Szilágyi paraphrased Buterin’s philosophy on compensation as:
“If someone’s not complaining that they are paid too little, then they are paid too much.”
He suggested this mindset caused many early contributors to leave, as the only way to earn fairly was to exit and build elsewhere.
Szilágyi’s revelations have sparked intense discussion across the crypto community. While Ethereum publicly preaches decentralization, his account suggests that a small group effectively manages its key decisions — from research funding to project promotion.
His experience shows a rising paradox in the world of blockchain: systems that are supposed to be decentralized can move toward centralized control if a small group of people gain too much power.
Ethereum is still one of the best places to use smart contracts and decentralized apps, but Szilágyi’s story makes me wonder how decentralized its governance really is and if it can balance its goals with the realities of power and money.
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