Author: Mu Mu, Plain Language Blockchain
Since this round of market, Bitcoin has been singing all the way, and Ethereum and some old "value projects" have become increasingly weak. ETH/BTC once hit the bottom, which has become the strongest "unsatisfactory" for a group of senior crypto enthusiasts. Both bull and bear have come through, but they still can't let go of the slump of ETH. The crypto community's dissatisfaction with ETH seems to have reached its peak.
The crypto community began to circulate a large number of complaints about Ethereum
01 Has Ethereum's original intention changed?
Although ETH and BTC have different routes and there are not many direct conflicts, most people who have held ETH for a long time since the bear market hope that ETH can outperform BTC, that is, ETH/BTC can have a good return. Based on the experience before this round of bear market, ETH can still outperform BTC most of the time.
Similar to the mentality of the Ethereum community holding coins to outperform BTC, Ethereum's original intention may be a differentiated development strategy, taking a path that the Bitcoin community has not taken and thinks is difficult to take: a smart contract application platform based on blockchain, and plans to explore blockchain expansion to bring scalability and performance, and develop decentralized applications other than digital gold.
Similar to some "copycat" projects that had already appeared at the time, they all wanted to improve Bitcoin, and the differentiated strategy was to become a more successful Bitcoin.
Earlier screenshot of the official website of the Ethereum Foundation
If early crypto users paid attention, they must have seen the background picture of the official website of the Ethereum Foundation, which looks "big". It clearly has a slogan: blockchain application platform, which was also the most accurate positioning given to Ethereum by the Ethereum community at that time. Its background picture seems to be a high-rise building rising from the ground, which may indicate the expansion and construction of the blockchain.
Now, some people think that the original intention of Ethereum has changed. Since the Ethereum consensus mechanism was merged with POS, perhaps because the price could not rise, they attributed the decline of Ethereum to the POS formula mechanism, and believed that such a large-scale shift from POW to POS was a huge mistake. But in fact, the conversion of Ethereum to POS appeared in the early design roadmap from the beginning, and it was not a temporary change later. This is a choice and plan made under the needs of blockchain expansion and expansion of the account model of the smart contract public chain platform.
Recently, the biggest Bitcoin holder on social media released a trend chart of the inflation rate after the merger of Ethereum. The chart shows that the inflation rate of Ethereum has risen rapidly in the past six months, trying to illustrate the wrong path of the merger of Ethereum. But it was soon slapped in the face. The Ethereum community user released the full picture of this statistical trend chart, plus the comparison of Bitcoin's annual inflation rate (referring to the ratio of the number of new issuances to the number of circulation), which made it even clearer.
At the beginning, many people scoffed at the unlimited issuance of Ethereum, thinking that Ethereum would definitely issue unlimited additional issuances. The real situation now is that Ethereum has not affected security through the merger of EIP1559 through POS, and at the same time has controlled inflation, which is far lower than the current inflation rate of Bitcoin, and has even distanced itself from other well-known POS public chains.
Ethereum has firmly taken the second place in Crypto and has become the "differentiation object" of a number of new public chain projects. The goal of many projects is to become a better "Ethereum". It can be said that the Ethereum route has not changed much except for the adjustment of the implementation details, and the original vision has been gradually realized.
Recently, Vitalik responded to the Foundation's shipment doubts on social networks, and attached 9 pieces of information related to ETH fundamentals.
Vitalik:
The ETH Foundation is paying researchers and developers responsible for the following work
(1) Ethereum no longer loses 5 million ETH per year to the Proof of Work mechanism
(2) Your fees are now very low
(3) Your transaction will be packaged in <30 seconds, not 1-30 minutes (EIP-1559)
(4) ZK technology allows people to use ETH while maintaining privacy
(5) Account abstraction technology will let ordinary people use ETH safely without seed phrases or SBF-style central points of failure
(6) Local ETH activities around the world, many of which barely mention the Foundation
(7) ETH has never been down due to DoS attacks and consensus failures since 2016
(8) Various security efforts (internal development and grants) have prevented many fund losses
(9) Libraries in various codes you use (wallets, DeFi applications...)
From another perspective, the reason why Ethereum exists and is given a market value of more than 300 billion US dollars is not necessarily just from how much its gas fees capture, but more of it is the expansion and innovation of the encryption field, so as to continuously undertake the value overflow of Bitcoin. Therefore, in the first two bull markets (2018 and 2021), ETH/BTC was relatively high, which is one of the main underlying logics of Ethereum's long-term outperformance.
In this round of big market, although Ethereum has good fundamentals, the author found that many people only mentioned the problems of on-chain liquidity splitting of the Ethereum ecosystem and the competition faced by new public chains, but ignored the most important thing, that is, the Ethereum ecosystem's acceptance of Bitcoin's value overflow.
02 Is the unresolved problem of Bitcoin an opportunity for Ethereum?
In terms of design, Bitcoin is undoubtedly a "god-level" work, but such a system is not equal to "perfect". After all, many projects want everything and take everything into account in their designs. They seem perfect but are actually complex and full of loopholes, making it difficult to break through quickly.
Satoshi Nakamoto left some unsolved problems or regrets for Bitcoin, waiting for future generations to optimize. For example, the contradiction between the decreasing issuance and ecological development threatens the sustainability of the Bitcoin system.
Simply put, in the process of Bitcoin's continuous reduction in production until the upper limit, the decreasing inflation rate will promote the scarcity of Bitcoin to become a favorable factor for price increases, but this may not be the case for the Bitcoin system, because the reduction in production will inevitably lead to a reduction in the income of POW miners, which will also reduce the enthusiasm of miners, and may also affect the security and stability of the system.
Of course, the Bitcoin community has proposed another solution, which is to develop the Bitcoin ecosystem. When the future halving leads to insufficient income for miners, the prosperity of the Bitcoin ecosystem can make up for the reduction in system rewards and continue to motivate miners to provide strong system protection. This is also the experience learned from the blockchain expansion route of the Ethereum community. However, the high price and handling fees, as well as the low efficiency of the main network, make the Bitcoin ecosystem face a considerable sustainable development problem.
The problem of Bitcoin has always been on the "table". There is only one solution at present, that is, let Bitcoin continue to rise, and there will be no problem naturally, but this is obviously unlikely. So when capital pushes Bitcoin to the bottleneck, the value will overflow to other blockchains. At present, the only large-scale project that can carry most of the value overflow of Bitcoin in the future is Ethereum, and there is no other.
03 Bitcoin L2 and Ethereum L2 are already on the same boat
The current Bitcoin ecosystem development is in full swing, and many teams have brought many expansion solutions, especially the Layer2 solution borrowed from Ethereum. It can be said that the leading exploration of Ethereum Layer2 leads the expansion solutions of Bitcoin Layer2. Bitcoin Layer2 and Ethereum Layer2 have the same goal, and some people say that Ethereum is the largest test network of Bitcoin.
Of course, there are still some problems with Bitcoin Layer2, such as the difficulty in inheriting Bitcoin's security, Bitcoin's own slow block speed affects the settlement efficiency of Layer2 transactions, etc. Therefore, if idle BTC wants to participate in DeFi, it will still choose to cross to the Ethereum chain to obtain reliability and security.
Image source: CryptoFlows
According to CryptoFlows data, Bitcoin has exported about 3.8 billion US dollars of assets to Ethereum mainly through stablecoin bridging, which does not include Layer2. The inflow of Ethereum mainnet accounts for the vast majority of Bitcoin cross-chain output, which shows that the funds on the chain recognize Ethereum. In the future, with the continuous development of BitcoinFi, the Ethereum ecosystem is bound to gain more inflow shares.
In fact, let's change the angle. In the era of multi-chain interconnection and chain abstraction where Web3 applications are widely implemented, the crypto ecosystem is interconnected and interoperable seamlessly. Isn't Ethereum currently on the road to becoming the largest side chain or generalized Layer2 of Bitcoin? The best DeFi protocol in the Ethereum ecosystem is helping to activate dormant Bitcoin funds.
Whether it is a capacity expansion solution on the same ship or the cross-chain flow of funds, the future of Bitcoin and Ethereum seems to be getting more and more deeply tied.
04 Summary
From the current point of view, Ethereum's original intention has not changed, and what should be achieved has been achieved. It has changed only because the "flirtatious" holders can't resist the temptation. Against the background of the depletion of liquidity in the macro environment, the crypto narrative has shrunk, and it is understandable to chase Meme (the economy is bad, and people gather at the entrance of the village to try their luck), but the next global interest rate cut cycle will lead to the gradual release of liquidity or bring about changes. Don't forget that the adoption of crypto assets and the landing value of Web3 applications will eventually return.
As the first and second largest crypto assets, Bitcoin and Ethereum, which are bound to each other in the future, are not hostile to each other, nor are they black and white. No matter which camp the crypto community stands in, it should stop internal friction and "eating and smashing the pot" behavior, and move towards the next generation of the Internet with wider mass adoption. I hope that other ETH will not disappoint us in the future.
Joy
