For the first time, people are saying the unsayable: Ethereum may be beyond saving. Is it actually true?
The fact that Ethereum is painfully slow and cripplingly expensive to use is no great secret. Spending more in gas fees than you did on an actual transaction has become a shared in-joke of the crypto community, the kind of thing you toss in the “that’s crypto!” basket along with altcoins you’ve never heard of going 50x and the knowledge that the literal second you buy everything’s going to dump by 50%.
But then on Sunday legendary crypto analyst and investor Zhu Su announced that he was giving up on Ethereum.
In crypto circles this is akin to saying ‘That Gandhi guy? Bit of a dick’. But as soon as the words were out there it gave people licence to start asking some piercing questions: is Ethereum actually any good? Or is it an increasingly unfit-for-purpose dinosaur that only serves the needs of cryptocurrency’s 0.1%? And if so, is it time to finally anoint a successor?
People talk a lot about cryptocurrency’s adoption mirroring the adoption of the internet, but less attention is paid to the innumerable up-and-coming-but-now-very-much-dead companies on which the modern internet is built.
Back in 1994, Netscape was synonymous with the internet. By 1998 it was a dead man walking, haemorrhaging users to better, newer entrants like, uh, Internet Explorer, which itself later dropped from representing 95% of the browser market to not even existing.
The point is that first mover advantage only works for so long, especially when it comes to the digital realm, where loyalties can literally be switched at the click of a button. Is there any reason to think that crypto will be different?
Ladies and gentlemen, your contenders
If you haven’t checked out the Coinmarketcap rankings for a while, it’s worth looking at which chains are dominating the top 20: Solana, Cardano, Polkadot, Avalanche, Terra, Algorand. All Layer 1 chains, all direct competitors to Ethereum, all faster and easier to use.
To be sure, Ethereum’s market cap is still far bigger than all of them put together, but it shows a very concrete realisation by the broader market that something is amiss with the status quo.
DeFi and NFTs were supposed to be the innovations that brought in the next wave of crypto enthusiasts. Yet Ethereum’s US$100+ transaction fees are rendering them inaccessible to all but those with tens of thousands of dollars to play with. Is this the decentralised future we were promised?
The end of Ethereum
To be sure, you’d still be a brave person to bet against Ethereum (and even Zhu Su softened his remarks a bit later). Scaling solutions – the so-called layer-2s – are arriving at pace and the launch of ETH 2.0 early next year promises to bring Ethereum’s glacial transaction speed up to a more respectable (if still middling) 10,000 transactions per second. And the majority of the DeFi and NFT markets are still happening on the Ethereum network; being first mover does count for a lot.
However, one gets the feeling that we’re approaching a delicate point for the original smart contract network. If there are further development delays or if the ETH 2.0 upgrade doesn’t drop costs dramatically, it’s hard to believe that everyone will stay around waiting for the next fix. After all, Vitalik and co have been trying to fix Ethereum for half a decade now. How much longer can we wait?
Well, perhaps a few more months yet. But Ethereum is running out of time to prove that it’s not the Netscape of web3. Here’s hoping they can pull it off.