Ethereum: Freedom or Funeral?

ETH Killers vs. ETH Enhancers: The Lowdown

With Ethereum network gas prices spiralling recently, several new trends have appeared in the cryptosphere. Firstly, attracted by the low-cost fees of Binance's Bchain, Cryptonian's en masse having been 'getting out of the gwei'* as volume traffic floods to Uniswap competitors such as Pancake swap. Indeed, it has been a pretty great time all around in terms of growth for food-themed protocols. This trend has been rather prolific, despite the comparatively centralised nature of the BChain compared to ERC20 based DeFi.

In my own humble opinion, this new direction has largely been driven by newer entrants to the market who are more likely to find higher fees off-putting, in lieu of having extensive experience in the nature and benefits of DeFi. Also, it is worth noting that many new entrants to the market have done so out of inquisitive nature and a desire to make profits, rather than an inherent belief in the tech or eschewing the moral/ethical/principled benefits of DeFi per se.

Additionally, we have seen a lot of attention - nigh on shilling - of many projects that have for various reasons been touted as an 'ETH Killer'. These projects come in numerous scales of development, from Singapore's Zilliqa with it's sharding functionality, the march and rise of Cardano from a pie-in-the-sky idea to the brink of a working product roll-out and all the way through to to the mighty behemoth that is Polkadot.

Personally, I do not believe any such projects will replace Ethereum in the medium-to-long term. In fact, it is submitted herein that it is actually undesirable for them to do so. Rather, my perspective on the cryptosphere is that not only is there enough room for several major players in each asset class, but in actual fact having several major players in each asset class is essential for the longevity and vitality of the entire cryptosphere moving forwards.

Starting with Zilliqa, founded in Singapore with a reputed university team. It's sharding functionality is the reason why it is primarily touted as an 'ETH Killer' and it has seen rapid growth from less than tenths of a cent to a maximum of 15 cents in this bull market, with its ATH (All-Time High) reaching just short of 20 cents in June/July 2018. 

From my perspective, Zilliqa is certainly a strong project in terms of development team and fundamentals. However, it currently lacks enough diversification for me to see it as a true contender to Ethereum. For those not well-versed in crypto lingo, 'sharding' refers to a technique employed to break blocks on the chain down into fragmented pieces to be more widely distributed for processing. This equates to faster transaction speeds and lower transaction prices. 

Whilst Ethereum awaits an answer to its high transaction fees, projects such as Zilliqa will remain attractive. Especially, when they are priced so attractively in comparison. However, Ethereum has a number of potential solutions on the horizon from ETH 2.0 roll-out, to EIP55 (a new implementation designed to provide checksum solutions - more of that in a later post), to layer 2 solutions such as Matic, OMG and Loopring to name but a few.

This presents somewhat of a conundrum for Zilliqa because once one of these directions is focused upon and implemented, Ethereum should in principle have scalability solutions employed successfully. This somewhat negates Zilliqa's USP (unique selling point) as a sharding protocol. Therefore, the question is ultimately whether Zilliqa is likely to catch up and surpass Ethereum in terms of partnerships/projects on its launchpad and network effect before Ethereum is able to implement any of its solutions. It is submitted that this is unrealistic and improbable, and thus I do not foresee Zilliqa successfully usurping Ethereum any time soon.

Onwards then we move to Cardano, perhaps one of the most hyped projects at this moment in time. Cardano's price action on its native ADA token has exploded from being less than 8 cents to over a dollar in this bull market - some achievement for a project without an actual working product! This is the crux of the issue with Cardano for me - I feel it is possibly overvalued due to the fact that most top contenders in the current bull market are genuine concerns with adoption and revenue and even profitable. Cardano, for all its promise, is still a huge distance away from this objective at present.

Cardano is a perfect example of a project that is fuelled by sentiment. It taps into every moral, ethical and principled nuance that attracts people to Blockchain, Cryptocurrency and such technologies with one eye on a more altruistic, egalitarian and equal future global society.

However, this is not to say that the project is not delivering anything tangible. Smart contracts were recently triggered onto the test-net with the Mary hard fork and this is very much seen as a procedural matter prior to main-net launch. The beauty of Cardano is that whilst it has taken a long time to develop, it has not been rushed and all of its functionality are rigorously peer reviewed prior to implementation.

The Cardano team has also pushed forward with exciting news regarding developments on its Africa strategy, with reports suggesting they also have a specific strategy in place for Japan. Such developments put Cardano at the forefront as one of the largest global blockchain operating systems.

On the other hand, history tells us that nothing is straightforward with Africa and the continent is so incredibly diverse in opinion, sentiment and progression that it could be incredibly difficult for the Cardano team to find consensus amongst each of its partnerships with individual nations and combine that into one fluid strategy. Indeed, nations such as Nigeria have indicated they may potentially be seeking to join India and follow China down a route of introducing central bank stable coins (CBSC) and/or to introduce legislation to ban, limit or restrict the exchange and ownership of so-called 'private' cryptocurrencies. Thus, time will only tell whether Cardano is able to deliver on its much hyped promises in this regard.

Clearly, the Cardano team is very much playing 'catch-up' if it has any desire to dethrone Ethereum and whilst I am sure its Goguen smart contract network will be very successful on roll-out, Ethereum has not only been far quicker out of the blocks in terms of first-mover advantage, but has already established itself throughout consecutive bear markets and has developed that inherent trust as a mainstay for any portfolio. Further, and perhaps most crucially, development teams are now extremely experienced working on (and trusting) Ethereum's smart contracts and the sheer volume of value locked up in DeFi alone is formiddable in of itself. Then, there are also all the ERC20 based NFT projects, which personally I cannot see migrating from Ethereum at the very time NFTs are set to explode.

This leaves us with the aforementioned crypto giant that is Polkadot, and this is where things get really interesting. Polkadot is Swiss made and oozes European class and distinction. Polkastarter is one of the most successful launchpads in the entire cryptosphere, with the recently launched Polkamarkets looking like it could be the most successful to date. With a huge budget at its disposal and massive revenue and adoption already, Polkadot is surely one of the primary contenders to deliver a knock-out punch to Ethereum's chin.

Anyone who has tried to get in on a Polkastarter pre-sale recently will know how incredibly difficult it is to secure a position on a project. This is in no small part due to the fact that many Polkastarter projects have been raising very small amounts in advance - entirely converse to the craziness of the 2017 ICO fiasco where projects without even a white paper were having millions thrown at them before exit scamming or otherwise failing to deliver and evolving into nothing more than ghost chains.

In the short-to-medium term, I could certainly see Polkadot rivalling Ethereum for the number 2 position by market cap. However, in the long-term, I just don't see anything being able to compete with the sheer dominance of Ethereum in every facet from network effect to adoption and development experience. Ethereum itself is not going to stand still, and I fully expect that the next scaling implementation,  whatever that may, is really going to sort the wheat from the chaff and cement Ethereum's place at the top of the table as the crypto project that is more than purely a store of value.

So then, if these projects are not 'ETH Killers' then how are they 'ETH enhancers'? It is submitted that in an almost perverse sense, the current 'bad' or 'negative' publicity for Ethereum is still very much publicity. Despite the volume traffic of BChain's CeFi at present, it will only take one small controversy regarding this to scare people back to the principled haven that is DeFi. Any publicity is good publicity, so it goes.

Furthermore, external pressures from supposedly 'competing' projects can only serve to motivate Ethereum developers to ensure that the scaling solution of choice is not only the right one, but will take Ethereum on a path that further extends its market dominance in the smart contract world.

The extent of the development of some projects and networks on Ethereum network should not be underestimated. Even relatively new start-ups such as PAID network (smart contract legal industry disruptor) are expanding at an impressively exponential rate, albeit the demand still far exceeding this expansion. Whilst we have seen some migrations to Bchain such as 1inch, it is my belief that most mass migrations  such as this will be to operate both in the CeFi and DeFi spaces, thus enhancing the exposure, adoption and traffic of these protocols rather than harming ERC20 DeFi per se.

Looking ahead to the distant future, it is no secret that everyone in the cryptosphere is clamouring for mass adoption. This is very much the holy grail of the entire endeavour. Mass adoption means billions of global citizens participating in these ecosystems. We are already experiencing fairly severe growing pains as projects struggle to scale in pace with demand, and I can only see this being an even bigger issue in the next bull cycle.

With such a huge disparity across the globe between the developmental progress, GDP outputs and relative stability of any given nations' fiat currency, it does not seem logical to me that everyone from every nation would be opting to use the same network for the same purposes. 

Indeed, we currently see some people happily continuing with Ethereum because the gas fees do not bother them, whilst others are immediately scared off. This kind of disparity in of itself is evidence to me that we need several big players in every asset category, whether that is smart contracts, yielding, stores of value, digital currency, in order to cope with the sheer demand that will be placed on  the cryptosphere in the years to come.

For example, whilst super low ETH gas fees may be entirely convenient and affordable for Europe, UK, USA and the 'West', they may still be prohibitively expensive for citizens of countries such as Bali, Cambodia or Laos in the 'East'. Since provisions in terms of such flexibility is not within the scope of smart contract networks, it is not only desirable, but essential, that other networks are operating and facilitating the same kinds of functionality and purpose with transaction and other associated fees that are affordable and attractive to people from different economic backgrounds.

This was something India was doing remarkably well to date, with crypto gateways facilitating purchases as little as 20 Rupees (INR), equivalent to approximately $0.25 (USD). It is clear that for some considerable time yet to come, cryptocurrencies and the projects that stem from them need to work efficiently, effectively and safely on every rung of the socio-economic ladder.

Therefore, I ultimately see a future whereby the likes of Bitcoin and Ethereum are still very much the market leaders in their asset category classes. However, they will be pushed forward, or 'enhanced' by other projects out of necessity borne from healthy competition in a globalised free market. Whether that competition stems from continued growth of those projects already in existence or from fundamental and/or technological innovations from a new generation of projects remains to be seen.

Given the ever-increasing global population size being partnered with rapidly developing standards of living worldwide, it appears inevitable that blockchain technology looks set to underpin a new way of living, providing foundational architecture for globalised digital economies, 'smart' urban development, Internet of Things (IoT), Web 3.0, Artificial Intelligence (A.I.) etc.

The World Economic Forum (WEF) vehemently eschews its 2030 Great Reset slogan 'Build Back Better'. It is submitted a future cryptosphere which continually innovates and evolves with a whole spectrum of strong players would go a considerable distance to achieving just that.

*Apologies for the irresistibly awful attempt at humour.

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A nomadic crypto hobo who meanders the planet seeking new adventure opportunities and spreading blockchain education en route.

Tales From The Cryptosphere
Tales From The Cryptosphere

This blog follows my personal journey through the cryptosphere, providing a reflection on the recent events, ground-breaking news and my perspectives and perceptions on how I see things developing in the short-to-medium term. Expect a summary view of the latest news, crypto reviews, on-and-off chain analysis, technical analysis and an acute focus on global developments.

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