ETH 2.0 Kicks The Can Down The Road

over 3 years ago

Hey Jessiethereum HODLR's

There has been a lot of talk about ETH 2.0 and its various scaling solutions over the years from roll-ups, ZK roll-ups, sharding, plasma and improving client-side and node software to help. We also see the evolution of side chains on ETH such as MATIC and Chainlink all trying to help in various ways take some of the strain of ETH in the meantime.

As the DE-FI space continues to grow bigger, lock more capital into ETH, as wrapped tokens start to become the norm and more tokens outside ETH want to use the chain, we see gas/gwei prices get out of control.

ETH Gas prices are around $5 - $10 and to me I'd rather use my bank or Paypal instead of ETH, it would be cheaper, which defeats the purpose of moving to crypto. The whole point was to be better than fiat.

Do I mind paying a premium for borderless transfers that are private or additional benefits such as tax-free payments? Sure I don't mind that, but if it's just a basic like for like, then ETH is losing big time.

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A factor of X

Many are excited about the potential of ETH 2 and the move to staking as I feel like they're pretty much a trailblazer for the industry and somewhat of an antithesis to Bitcoin which I like a lot. Bitcoin does what it does best; its strength lies in the fact that it's hard to change, and it's boring, it continues to do what it was programmed to do.

ETH is more of the move fast and break things a more tech company style looking find what is going to give it the best chance of succeeding.

However, even with the scaling solutions proposed there comes a factor of X, if they can scale to 1000 times transactions or 10 000 or 100 000 more transactions than they can do now all it means is that theirs now room for more people to come in and push the chain back to where we are now.

Trade-off between price and use

At the moment a user now needs to weigh up is what they are buying on ETH worth it, is it a one time purchase that brings more value than the transaction cost.

Are they going to earn more than the transaction cost with the trade, and this kind of mindset is going to slow down the use of the network as spam transactions along with smaller transactions are now useless.

Ditch the general-purpose blockchain narrative

The EMV was a fantastic achievement, and smart contracts are only at the beginning stages of safety and application. Still, as for ETH, I think they'll need to accept they are no longer a general-purpose blockchain as gas fees will always be a problem that reduces the chance for inevitable microtransactions to be viable like tipping or in-game purchases.

Some games and dapps are just not going to find ETH compatible with their business model, and that's okay. ETH needs to ditch trying to make everyone happy and make a specific type of use case, let's say DE-FI, the best it can be.

Scalability wall

ETH has a scalability wall, and while side chains will help, I think they need to realise that eventually, a mesh network is going to be the only way we can manage a more significant load.

We're going to have to see cross-chain transactions in a sort of lightning network-style where the transaction finds the cheapest and fastest way to complete and is chain agnostic.

I am keen to see how ETH. 2.0 works out, and I do hope it brings in more users.