jakiro
Author: Revc, Bitchain Vision
Preface
Ethereum’s current development status is a microcosm of the entire crypto industry. As the most valuable asset in the industry, being taken to Fud at the end of the interest rate hike cycle is also a good thing to be considered internally audited.Ethereum also has profound problems leading to poor performance, that is, its control over L2 is weakened, and its influence on decentralized infrastructure cannot gather value economically.When the market is in an upward cycle, it can expand its influence through L2. After all, in 2021, the market mainly focuses on cross-chain and expansion, but now the market has changed.Here we think about two questions:
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The balance between decentralization and business interests:How can decentralized projects be commercialized without violating the decentralization principle?
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Drivers of ETH value growth:In addition to decentralization, what other factors can drive the growth of ETH value?
From the perspective of the development of the entire crypto industry, especially in the L2 economic system, the value of Ethereum is declining. There is no trend of ease at present. Ethereum may even be replaced one day.First replace it economically,It has happened now,Next is technology and security,Finally, decentralized political correctness.The main force driving all this is that the market is changing. This round of interest rate hike cycle is coming to an end. Most of the people who swimmers and bubble assets have been cleared. This cycle has a profound impact on the crypto industry, and for EthereumIn terms of this, the industry’s attention shifted from decentralized construction to short-term Meme hype profit. In the cycle of liquidity tightening, the market rarely gives positive feedback to builders.
The current construction of the entire crypto industry is centered around an expectation, that is, the Federal Reserve cuts interest rates. This strong inertia of this expectation is generated against the background of the release of US$3 trillion in liquidity in the new crown in 2021.Now the entire industry is running wildly in violation of business laws and common sense. Assuming that as long as the Federal Reserve releases money, the cost of crypto infrastructure can be distributed to users, and the VC tokens issued will soar. The same is true for the leeks and big investors.But is history really like this? Maybe it is like this at the latitude of the ten-year cycle, but if you use a microscope to observe carefully from the quarterly time or even shorter range, there are too many losers who are deeply involved in investing in this swamp.Back to this article,If the Fed cuts interest rates less than expected,Global liquidity continues to be tense,So dependent on God(Rate cut)Eating items will starve to death,Projects with endogenous motivation will gradually develop vitality to adapt to the environment,Get rid of the Federal Reserve’s monetary policy cycle,The endogenous driving force of crypto projects comes from the persistence of decentralized beliefs and the most basic business knowledge,Ethereum currently maintains its advantage in the former.
Summary and reflections on the AMA viewpoint of the Ethereum Foundation
The Ethereum Foundation recently held the AMA to deal with Fud, which has triggered industry discussions and feedback. We have extended our thinking on the foundation’s views.
1. As the L2 solution matures, will Ethereum continue to expand L1?What are the possible extension options?
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Justin Drake: In the long run, the Ethereum team plans to use SNARKs technology to significantly improve the processing power of L1 and achieve almost unlimited expansion.Through SNARKs, heavy computing tasks can be moved off-chain, thereby reducing the burden on nodes.
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Vitalik Buterin: In the short term, EIP-4444 is the most feasible solution, which can effectively increase Gas restrictions.In the long run, it is necessary to optimize the client from multiple aspects such as execution, state reading and writing, and data bandwidth.
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Dankrad Feist: L1 expansion and L2 development are parallel and do not conflict.The expansion of L1 is limited by data availability and single thread, but through zkEVM and parallelization, L1’s processing power can be greatly improved.
Extended thinking:The Ethereum Foundation currently adheres to the purest decentralized development route, but has insufficient business considerations. Although the host asked about technical issues in terms of expansion direction, the main problem of Ethereum is currently not expansion. If Gas is the revenue of providing services.Quantitative indicators, then the service has not had good bargaining and urgent demand performance in the recent past. We can briefly sort out the several links of Ethereum service output.Pos consensus maintenance,Safety base,Web3Developer Platform,middleware,Financial settlement layer,Application layer,If there is no developed application layer,Other service links can be replaced eventually,Restake may set an L1 because people’s beliefs or demands for decentralization are sufficient.In the face of L2, there are no strong means to upgrade technology and enhance value cohesion.The application layer is in the highest strategic position for all public chains,The application layer should be upstream of the public chain,It is the provider of traffic and users,Instead of becoming the recipient of public chain services downstream,To think about this issue clearly, we must redesign the token economic system of the public chain until there are enough application layers dApps to form a prosperous ecosystem and market, and then adjust the premium service methods.Neither Pumpfun nor Friendtech directly occurred on the Ethereum ecosystem. Compared with the infrastructure LEGO puzzles that the Ethereum ecosystem has been discussed, regardless of the evaluation of the two, they generate revenue and attract users.
If Layer2 is compared to providing users with more flexibility and composability middleware infrastructure, then any commercial service link that cannot be touched by the Ethereum mechanism may lead to the local infrastructure related to it being separated from the Ethereum ecosystem.Because the market law is to reduce infrastructure costs and seize profits from this sector. To put it bluntly, if you can issue coins, you will issue coins.
A rule gradually emerges in the world of blockchain,Decentralized public chains focusing only on infrastructure,Due to lack of market fit,That is, the official application layer,Right to speak in a short time,Will be closer to the user,Snatch away middleware infrastructure with commercial rationality,The latter will build its own ecosystem in the long run,Migrating dydx from Ethereum gives industry inspiration.Who is closer to the user,Who has the strongest voice.
2. Max Resnick believes that the relationship between L2 and L1 is a parasitic relationship, and L2 is unwilling to decentralize the sorter.What does the Ethereum Foundation think about this?
Justin Drake:L2 does not want to get more profits through a centralized sorter.The concept of “sorting fee” is misleading in itself.L2’s main revenue comes from execution congestion fees, not sorting.L2 actually has power to decentralize the sorter because this helps maximize expense income.Shared sorters help improve composability across L2, but implementing shared sorters requires the joint efforts of the community.Sequencer decentralization faces challenges in security, MEV and performance.
Extended thinking:At present, L2’s solution has problems such as sorter centralization, user and fund division. In essence, the early development of L2 may be a parasitic relationship with Ethereum, but strive for more independence in the later stage. If L2 is strong enough to get rid of EthereumBinding power is mainly the political correctness of self-built decentralization, and the reduction in the value contribution of L2 to ETH is also a natural trend.
3. If a prosperous Rollup ecosystem develops on Ethereum L1, but the value growth of ETH is limited, does it mean that Ethereum’s roadmap fails?
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Dankrad Feist:The success of the Ethereum ecosystem should not be measured only by the growth of ETH’s value.If Ethereum can provide diversified applications and bring value to users, it can be considered a success even if the value growth of ETH is limited.L1 and L2 are symbiotic, L1 provides infrastructure, and L2 provides diversified applications to jointly expand the ecological scale.
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Justin Drake:The accumulation of value of ETH depends on transaction volume and use as collateral assets.Even if the fees per transaction are low, the transaction volume is large enough to bring considerable revenue.The more ETH is used as a collateral asset, the more stable its value will be.
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Anders Elowsson:The value accumulation of ETH is closely related to the long-term sustainable development of the Ethereum ecosystem.Excessive focus on short-term value accumulation may affect the long-term development of the ecology.While the growth in value of ETH may not be the primary measure, it is still an important indicator.
Extended thinking:As Dankrad Feist said, Ethereum is building a financial platform that will be the most neutral platform to date, allowing the issuance and trading of financial assets, and also allowing the creation of new financial products, such as derivatives, on its basis..Ethereum’s current construction core,It is necessary to make the crypto-original people realize,Ethereum is the purest decentralized smart contract platform,Infrastructure built on it and applications,Inherit its related features.So it’s a long-term process,Focus not only on short-term value allocations related to L2.
“L1 provides infrastructure, L2 provides diversified applications”, this positioning has flaws. First of all, how to bind value and prevent it from changing in a direction that is unfavorable to L1, how to ensure that L1 has the right to speak and binding force over L2,Decentralized political correctness alone is not enough, and technical dependence is also fragile.L2 began to require Ethereum’s political correctness to attract TVL and issue coins, and its dependence became lower and lower after that.
Factors required for the Ethereum outbreak
Let’s briefly analyze the factors needed for the Ethereum explosion. Like the clip of a cool article, Ethereum is still held in many industry hopes.
1. With sufficient liquidity under the Fed’s interest rate cut cycle, it is best to have a wave of liquidity flooding. The crypto market can enjoy the flood and the traditional currency of Fud.
2. Strengthen centralized means other than decentralized political correctness. Specifically for the means of condensing value in technical links, the official can refuse to recognize the packaging assets that VCs are not subject to restraint on each L2.
3. Give the application layer enough respect and attention, especially the SocialFi track, instead of just supporting Farcaster and ENS, put down the high attitude of decentralized developers, listen more to the opinions of product managers and demand analysts, and speak from the right to speakIn decentralized governance and development, part of the application layer is allocated to the construction, and efforts are made to fit the market.
summary
Economic relations between market organizations are easy to establish,Political correctness is difficult to establish and maintain for a long time.Therefore, Ethereum is still the most valuable asset in the blockchain industry, and with the efforts of the foundation and ecosystem, it maintains its industry status as the Holy Grail of Decentralization.
However, decentralization does not mean that there is reasonable business logic in the market to capture cash flow. Non-financial users do not have such high decentralized beliefs and service needs, especially in the context of the large-scale popularization of Web3., This discomfort is very obvious. Decentralized construction is not as sexy as Meme’s story of making money, and is not as strong as the wealth effect of the application layer. This is a problem we see in the short term.The application layer’s developer incentives involve adjustments to the execution layer, consensus layer and economic system. Whether Ethereum can maintain its leading position in the future, we hope to see more innovations besides decentralization.
In addition, from the perspective of liquidity, Ethereum ecological funds are also over-diluted by VC coins. Only the top ten product agreements in the ecosystem with market value will be unlocked in the next six months. The author can’t help but think of a photo, V GodOn the way back to the hotel after the meeting, he was wearing a Uniqlo suit worth 200 yuan, followed by a group of traditional VC elites in suits and ties.Decentralization is a battle, and we need this holy grail to resist the hunting of traditional elites who are exquisite and selfish.
