tl;dr: Ethereum is booming. Can it last?
It’s difficult to not love and root for Ethereum.
It’s the #2 most valuable cryptocurrency in the world. It’s spawned, literally, billions and billions of dollars worth of innovative products. It’s ushered in an era of DeFi in a way that Bitcoin has not and it has a community of passionate believers that rivals any in the world.
All of this has manifested itself in the Total Value Locked, a measure of people voting with their money, in the ecosystem. Between those participating in DeFi and those committed to Ethereum 2.0, the amount now exceeds $13 billion.
Considering that number was 0 about 2.5 years ago, that’s ridiculously impressive.
And yet it’s fair to wonder if Ethereum will, at some point, end up as the equivalent of Compuserve, Prodigy, or AOL for one reason….scalability.
Gas prices, the cost of executing transactions on the network continue to skyrocket.
I tried to redeem some of my Nexus Mutual staking rewards the other day, about $150 worth and was faced with this dilemma.
Should I pay $37 to get $150? I mean, one part of the calculation is easy, and since I believe in NXM long term, it doesn’t really matter, but these types of costs are prohibitive. I saw a $100 gas charge to just vote on a governance issue on Nexus Mutual and a $75 gas fee to redeem some SNX from Synthetix.
The longer this continues, the more that Ethereum becomes a financial playground for the rich. Not quite the point.
Now, everyone knows this is an issue, which is why Ethereum 2.0, Optimistic Ethereum, zkRollups like Loopring, and Plasma networks like Matic are all trying to solve the scalability issue for Ethereum.
There are plenty of people who, appreciative though they may be for the innovation of smart contracts which Ethereum brought to the world, are beginning to wonder if it ever can or….if the architecture is just inherently unscalable.
Which is why the competition for “winning smart contract platform” is far from over.
I am not technical enough to know one way or the other, but I do know the status quo is untenable.
I also know that the innovation is here to stay and the ruthless and rapid innovation that takes place in the crypto world means that we’ll continue to see new entrants for the foreseeable future.
And then there’s always Bitcoin, the DeFi fast follower.
Google was the 16th search engine. There were plenty of .com companies that had the right idea at the wrong time or just couldn’t execute…or just couldn’t scale.
It’s tempting to call the game in the first quarter.