adopt EIP-1559 and Eth2, Ethereum will also be a store of value asset 、 Consumptive assets and capital assets .
Original title ：《「 Have the Internet 」： The bullish side of Ethereum 》
writing ：Packy McCormick
edit ： The south wind
If I told you , One company has a strong network effect , Annual revenue growth 200 times , Plan to provide 25% A dividend of , And implement a permanent stock repurchase plan , Would you be interested in that ？
This is it. The etheric fang . It's the most attractive in the world 、 One of the most compelling assets , But its story is obscured by complexity and fear of cryptocurrency .
Ethereum contains so many things at the same time , They depend on each other . The etheric fang Blockchain is a world computer , It's the decentralized Internet (web3) My spine , It's also web3 The settlement layer of . Its native cryptocurrency ETH yes ：
Internet currency ;
Ownership of Ethereum network ;
One by CEOs、 The artist 、 researcher 、 Investors and the general public participate in large-scale online games most often used Token;
Generate revenue ;
The store of value (SoV);
Bet on more chain activities or Web3 The future of Internet ;
Because Ethereum contains too many things at the same time , Make it hard to understand . This article attempts to help readers understand Ethereum . For technology companies 、 For people interested in finance and strategy , It's more attractive than bitcoin , But there is a price . It's harder to understand than bitcoin , Because of that , It doesn't get mainstream or institutional attention like bitcoin .
Bitcoin is easy to understand . It's digital gold , It's a store of value (SoV). It just stays there and doesn't move .
This is the pillar of its value . It can't be tampered with 、 And the most decentralized asset in the world . It is OG ( Industry veteran ), It's also the hardest chain to attack . Based on this , Your bitcoin won't disappear overnight ( Despite the view that bitcoin and other cryptocurrencies ( Include ETH) Can be manipulated ). As long as others believe in its value , It will continue to be valuable . Technically speaking , In capital letters Bitcoin Refers to bitcoin blockchain , Lowercase initials bitcoin Refer to BTC This kind of cryptocurrency , But all in all , The two are interdependent and inseparable . Bitcoin blockchain (Bitcoin) It's there to cast and trace bitcoin (BTC). It's very good at its own work .
Ethereum is more than a cryptocurrency . It's a 「 World computer 」, It's the Internet 「 The value layer 」. It allows people to use the 「 currency 」 To develop Apps And the product . If you believe web3 Will continue to grow , Then you are likely to believe , as time goes on , Ethereum will become a The settlement layer of the new Internet . That is said , All types of transactions (transactions, Also translated 「 Business 」), Whether it's on Ethereum or another blockchain , Or even Visa On , All will Turn to Ethereum to exchange money , And keep it safe 、 Tamper proof records . A year ago. , I'm not going to say that .
Until last year , A lot of the value of Ethereum only exists in Theoretical state , In a decentralized global Internet _ Probably _ In the idea of what's going on . As far as I'm concerned , I used to think it was a more interesting thing , It's a bit like bitcoin , But the upside is smaller and may be higher ？ therefore , For fun in 2017 Buy in ETH after , I am here 2020 year 6 Month sold the rest of my 15 ETH, No loss, no gain . Lack of understanding = Played a weak hand .
As you know , I'm an idiot . Even after the recent decline , this 15 ETH It's worth more than 3 Thousands of dollars . I missed 10 Times the upside . But to be fair , You shouldn't invest in this kind of thing , Unless you know it , And I didn't know . I'm starting to understand it now .
From then on to now , Something happened , Let me change my curiosity about Ethereum from moderate to very curious and optimistic ：
The explosive growth of use cases ：DeFi、NFTs and DAOs Has become a real use case for Ethereum , And in the past year has been an amazing growth .
Super sound currency ： With the coming EIP-1559, Ethereum may appear Deflation , Eliminate its biggest currency weakness .
Eth2： Ethereum is currently running a ( Merge ) Test chain , Will be around 6 Two months later with Eth1 Chain merging . When the ,Eth1 The chain will move from PoW Switch to PoS, ETH The holder will capture more value .
narrative ： The narrative around Ethereum is gaining momentum , And from encrypted users to mainstream adoption . Last week, , American investors Patrick O'Shaughnessy ( It means Ethereum 「 Much more interesting than bitcoin 」)、ARK Investment analysts James Wang ( Clarify Ethereum 4 Transaction fees incurred in the month 「 And 2015 Year of AWS Quite a 」) as well as Bloomberg TV host Joe Weisenthal ( In his recent interview, he discussed that many people are optimistic about Ethereum and DeFi The content of , Like why DeFi It can attract financial professionals , Bitcoin can't do that ) And so on . This article is a little extra push .
at present , Ethereum is at a turning point in the narrative , This is particularly important for any blockchain .
I believe more and more in ETH It will be the future 5 One of the best assets of the year . Simply speaking , This is Ethereum's bull case( The bullish side )：
hold ETH It's like holding stocks on the Internet . With web3 The popularity of ,ETH There will be an increase in demand for , And the coming changes ( Include Eip-1559 The implementation and Eth2 The merger of ) There will be less ETH Supply of , Let the holder capture more value . It's like putting technology stocks 、 bond 、 A picture leading to web3 The existence of a combination of tickets and money .
In order to understand this better , We need to understand why Ethereum will survive , Why its adoption will grow , hold ETH It's about how to generate revenue , as well as ETH And the difference between technology stocks . Below , We will discuss ：
Ethereum is in the blockchain Excel
How about holding Ethereum 「 To make money 」
Orthodoxy and Lindy effect
Ethereal bull case
risk 、 Precautions and conclusions
Want to let ETH valuable , Let it bull case Play a role , The premise is that Ethereum needs to survive and develop . It was faced with problems in the early days from some other proprietary L1 The challenge and competition of blockchain , The past week has been terrible .
To understand why Ethereum doesn't die , Let's start with an analogy .
Ethereum is in the blockchain Excel
If you want to watch Ethereum , The first thing you need to believe is , It will be there for a long time , And more and more people will continue to use it , And so do other people .
You will be glad that , Ethereum is like a blockchain Excel.
The analogy is not Completely correct , It doesn't work in some places . But for our purposes , That's enough . First, compare it with bitcoin .
The currency (Bitcoin) It's like a database . This is the essence of blockchain -- A distributed trading book . Bitcoin blockchain allows people to send each other bitcoin (BTC), And track who owns which at any given time BTC. It can also reward BTC For those who protect the database ( The miners ), Reward them for turning electricity into solutions to mathematical problems . It's very good at one thing ： track BTC The ownership of the .
Bitcoin is a bit like a The spreadsheet , Many people compare blockchains to spreadsheets , But I say Ethereum is like Excel That's not what I mean . Well, I mean , Push Excel It has developed nearly 40 The elements of the year also exist in Ethereum .
First of all flexibility (flexibility). Ethereum is a Turing complete 、 Programmable blockchain , Anyone can use smart contracts to build mature applications . People can build all kinds of decentralized applications on top of Ethereum (dApps), Connect the application to the blockchain and the surrounding ecosystem , Provide from security 、 All products from identity to payment . Decentralized Finance (DeFi) application 、NFT Trading market 、 Decentralized autonomous organization (DAOs)、 Games and virtual worlds can be built on Ethereum , It's all made of the native currency of the Ethereum blockchain ETH Pushing .
It's really hard to be flexible .
Ben Rollert And an article I wrote about Excel Persistence in the field of science and technology ——《Excel Never die 》(Excel Never Dies), Although new products often replace old ones every few years in this field . We wrote ：
If we say from Excel What core product design experience can we learn from this course , It's very difficult to combine usability with flexibility , But it's also very beneficial .... The design principle of developers is to make any software really good at a specific thing , Deliberately limiting its functions to specific areas , but Excel It's a really extraordinary exception to this rule ...
You can use it. 「 The etheric fang 」 In the above quotation 「Excel」, It makes sense . Ethereum's early usability challenges depended on its flexibility .
In addition to this product concept , Ethereum and Excel There are some specific similarities between the two ：
Turing completeness . If a thing is Turing complete , That means it can solve any reasonable computational problem . With Lambda The introduction of enables users to create their own formulas ,Excel It's Turing complete . Similarly , Through Ethereum , You can write smart contracts to solve any reasonable problem .
Composability . stay Excel in ,「 You can link functions , Passing the output of one function as input to another , This allows a large number of potential computational pipelines .Excel Every additional function ,Excel Your ability and flexibility will multiply , Because new features can be tied to a large number of existing features .」 This is related to composability on Ethereum or 「 Currency LEGO 」 The idea is very similar .
Turing completeness and composability means that you can build smart contracts on Ethereum to calculate anything , And chain them together , Building more and more complex things faster . It takes time to speed up the engine , But once it's started, it's able to move fast .
This is what is happening in Ethereum . these years , Ethereum was built in obscurity in the winter of cryptocurrency , Faced with questions about any practical use of these things , And by the 2020 Years and 2021 Beginning of the year , The actual use cases of the Ethereum ecosystem have exploded . analysts James Wang In its release 《 The etheric fang 2021 year Q1 performance 》(Ethereum Announces First Quarter 2021 Results) This article highlights the progress of Ethereum this year ：
Picture source ：James Wang,《Ethereum Announces First Quarter 2021 Results》
These are absolutely huge numbers , Across a wide range of Ethereum use cases . It's a sign of momentum and composability in the field , Improvement in one area will directly promote improvement in the other ：
Include Uniswap When we decentralize the exchange (DEXs) The volume of business has increased 76 times , from 2020 In the first quarter of 23 $billion to 2021 In the first quarter of 1770 Billion dollars .
pledge ( Lock cabin ) stay DeFi The total value of is from 8 Billion dollars increased 64 Times to 520 Billion dollars .
except DeFi outside ,NFT Art sales have increased 56.2 times , from 70 Ten thousand dollars to 3.96 Billion dollars .
Ethereum's usage is this year Q1 There was an explosive growth in the quarter , Although at present NFT Sales of the deal have slowed down , Part of the reason is high Gas cost , Part of the reason is that the initial craze has subsided , but DeFi Still strong ：
Upper figure ：2021 For years, Ethereum DeFi The growth trend of application transaction volume . Picture source ：DeFi Prime
As can be seen from the above figure , from 5 month 1 The day is coming 5 month 22 Japan , only Uniswap and Sushiswap The two largest ethereums DEX Just deal with it 780 Billion dollars of trading volume . This year, Q2 The quarter will be a complete victory Q1！
Although Ethereum's activity and trading volume have exploded , But problems remain ： This is right ETH What does it mean ？
How about holding Ethereum 「 To make money 」？
I've known Ethereum for a long time . I am here 2017 First time to buy ( Then sell ) ETH, But it was for speculative purposes , I didn't understand Ethereum at the time . My biggest question about Ethereum is how it makes money . How more activities on the Ethereum network translate into ETH Higher prices ？
In the near future , More online transactions will mean ETH Higher returns and ETH The decrease in Supply . But not yet .
Let's start with how Ethereum works , Take a look at the current challenges facing Ethereum Challenge , What have been raised Solution , as well as What will it look like in the future .
today , When you want to trade on Ethereum , You need Use ETH To pay for Gas Transaction fee . The current circulation is about 1.16 Billion ETH, Its price is affected by the loose relationship between supply and demand . Other things being equal , More transactions on the Ethereum network means that ETH More needs , It means higher ETH Price .
When you trade , If you will ETH Send it to another person , It's going to happen ：
You send 1 ETH, The other side receives 1 ETH
You need to pay Gas fee , such as 0.01 ETH
Your account balance on the chain has decreased 1.01 ETH, And the balance of the other party's account has increased 1 ETH.
To keep Ethereum running , It USES PoW Consensus mechanism Make nodes reach a consensus on the state of blockchain . Bitcoin also uses PoW, Then Ethereum inherited this mechanism , Although bitcoin mining has more than Ethereum 20 Four times as many miners , So it's more decentralized .
We know , When someone else gives you money through the bank , Your account balance will increase , The balance of the other party's account will decrease .PoW It's the same thing , It's just PoW There is no centralized banking institution in the mechanism , Instead, there is a distributed network of miners to agree on these transactions and balance updates , That is to say Maintain a distributed ledger .
To do this , Miners from all over the world compete to solve the increasingly difficult password problem , To create a new transaction on the blockchain New area block , So as to obtain block rewards and transaction fees . These password problems are usually hard to solve ( Calculation ) -- It takes a lot of energy -- But it's easy to verify . When a block is added to the blockchain , The transactions contained in the block officially become part of the blockchain ledger records . As far as Ethereum is concerned , Successfully created 1 The miners in the new area will get 2 ETH( From the beginning 5 ETH Down to the present 2 ETH) Block rewards and all transaction costs within the block .
These transaction costs are called Gas fee , It's the cost people pay miners to get their deals packaged into blocks . When a user sends a message to someone over Ethereum ETH, Or cast one NFT ( Heterogeneous token ), Or do anything that needs to be verified on the blockchain , They all need to pay Gas cost . these Gas The cost is to motivate the miners to spend the cost ( Buying mining machines 、 Power consumption, etc ) To solve password problems and create blocks .
So at present , Ethereum's price is based on the combination of supply and demand , And the cost that miners pay to protect the chain . To use Ethernet , You need ETH To pay for Gas cost ; The miners will be ETH Get block rewards for new supplies and your transaction fees . Miners use the income to pay for hardware 、 The cost of electricity and taxes , And keep their income about 5%. today , Most of the value goes to GPU Manufacturer 、 Power companies and the government , And the share of miners is close to 0.
The current Ethereum system has some challenges ：
It's slow . At present, the Ethereum blockchain processes about every second 19 transaction . by comparison ,Visa About dealing with 1700 pen .
It's expensive . The simplest transaction takes about 5 The dollar Gas fee , And when I spoke to Jack Butcher take 《The Great Online Game》 This article is cast into a NFT when , Its casting and auction cost nearly 1000 Cost in USD .
It's volatile .Gas The cost is based on 「 The highest price auction 」 The mechanism , And the cost changes according to the demand at any time . This makes transaction costs difficult to foresee .
It's inflationary . Unlike bitcoin , In theory, it can be cast ETH There is no hard upper limit on quantity , and PoW A lot of new ETH, This means that network growth will lead to existing ETH The value of the holder is diluted .
It's environmentally unfriendly . Mining requires a lot of electricity .
It's inefficient . Most of the money spent on transaction costs is out of the system -- Miners are forced to sell what they earn ETH To pay for electricity 、 Hardware and taxes .
Despite all these challenges , But Ethereum is still widely used , The fact is impressive , Although these are still real challenges . When I was there Twitter Ask others not to buy ETH The reason is , Many of the responses revolve around one of the above challenges , The most common is Gas Cost and ETH The inflationary nature of .
Besides , Based on Ethereum dApps The increase in demand -- added DeFi、 added NFTs、 added DAOs、 More games -- It means producing More transaction fees , But these costs don't really benefit ETH holder —— These costs leak out of the system , Used to pay for miners in PoW The actual legal cost in the process of mining .
therefore , Today's ETH The price is based on more ETH The needs of , Just like bitcoin and the dollar . It's not income related like a company , But soon it will be .
The proposed solution ：EIP-1559 and Eth2
One of the things bitcoin maximalists like best is , You can't really change it . One of the reasons they don't like Ethereum is , You can change it . Although it's not easy , But it's possible .
To address these challenges , Ethereum blockchain will make Two changes ：
EIP-1559 The proposal will Gas The cost is divided into two parts —— Basic fee (Base Fee) and Gratuity (Tip). be based on EIP-1559, Every deal will The basic cost of destruction , And the miners ( Soon it will be the verifier ) take Keep the tip . It sounds boring , But the impact of this proposal is enormous , Because the destruction mechanism May make ETH Deflation ; Besides , Gratuity (Tips) It also allows those who value block space more to pay more ( To make your deal packaged faster ), for example , This may be very important to those who are trying to carry out arbitrage DeFi Participants are important . The proposal was launched this year 3 Approved monthly , And will 7 Effective month ( As part of the Ethereum London hard fork ).
Eth2 It's an upgrade to the Ethereum blockchain protocol , Will move the consensus mechanism from PoW Transferred to the PoS, And introduce fragmentation (sharding).Eth2 It is expected to make Ethereum more scalable 、 Security and Sustainability . The etheric fang PoS chain ( The beacon chain ) Now online , Is expected to be in 2021 Year-end or 2022 Some time at the beginning of the year and the current Eth1 Chain merging .
PoS It's about how to protect the Ethereum network 、 Who's going to get paid, etc . This shift means , There is no need for anyone to solve the number order problem to carry out block mining , It's anything ETH The holder can verify the block ( That is, through pledge ETH Become a verifier ). The verifier protects the network in exchange for Newly cast ETH Reward and Trade Tips( Gratuity ).PoS And it will be safer , Because the verifier needs to pledge ETH, If the verifier does something wrong, it will pledge ETH Will be confiscated . Although critics say , This pledge (staking) The mechanism will lead to more power being held by those who hold ( And pledge ) more ETH In the hands of , Make the network less decentralized , So it's even more insecure .
In terms of scalability , Fragmentation (sharding) Our goal is to create 64 Two fragmentation chains to verify transactions in parallel , So the throughput ( That is, the number of transactions processed per second ) Improve 100 times . Each fragmentation chain only needs to verify a part of the whole Ethereum chain , Instead of the current PoW Ethereum chain, so every miner needs to verify the whole chain ( notes ： That is to say, every mining node needs to verify every transaction ).
In addition, there are third-party The second floor (Layer 2) Solution , Such as Polygon and Optimism, Efforts have been made to speed up transactions and reduce transaction costs , They are mainly through processing transactions in batches under the chain ( That is to calculate and store state under the chain ), And regularly put a large number of transactions under the chain 「 Summary 」 Submit a transaction to the chain for settlement ( Although it's a little complicated , But it's close at hand ).L2 The solution can further increase throughput 100 times , If theory is applied in practice , that Eth2 and L2 The combination of solutions can increase throughput 10000 times .
in general ,EIP-1559 and Eth2 Yes ETH It could be revolutionary for the holder , Because they improve the performance of Ethereum networks , At the same time, it significantly changed the value capture in Ethereum ecosystem .
future ：「 Three point money 」 And super sound money
2019 year ,David Hoffman I wrote a piece called 《ETH： A new currency model 》 The article . If you want to know more , You should read the article . in an article , He quoted Robert Greer 1997 A paper published in 《 What is an asset class ？》(What is an Asset Class Anyway?), This paper describes three asset superclasses ：
Capital assets (Capital Assets) It's productive , Can generate value or cash flow . Examples include stocks 、 Bonds or rentable real estate .
Convertible / Consumable assets (Transformable/Consumable Assets) It can be consumed at one time , Into another asset , Its consumption can produce economic benefits . Like energy or commodities .
Value stores assets (Store-of-Value Assets), Can't consume , It can only be transferred , Their value will persist over time and space . For example, gold 、 currency 、 Art or bitcoin .
Hoffman Think ,ETH, As Turing's complete programmable currency , With the help of EIP-1559 and Eth2, You can be one of these three asset classes at the same time . He called it 「 Three point money 」(triple-point money). A three-phase point is a concept in thermodynamics , That is, at precise temperature and pressure , A substance can be solid at the same time 、 In the form of liquids and gases .
That is said , adopt EIP-1559 and Eth2,ETH Will be at the same time ：
Value stores assets ：ETH As collateral locked in DeFi in , To facilitate DeFi transaction . for example , You can go to DeFi Deposit in ETH To get a loan or to DEX Provide liquidity . at present , near 1000 ten thousand ETH Locked in DeFi in .
Picture source ：DeFi Pulse
Consumable assets ： adopt EIP-1559,Gas Fee works like gasoline in a car ： Whenever there is a transaction in Ethereum , Paid Gas The basic fee will be destroyed , Thereby reducing ETH Circulation of .
Capital assets ：ETH As a capital asset in several ways . Have ETH Represents the person who owns the Ethereum network 「 shares 」, It's like owning an equity interest in a company . Once pledged ,ETH Will give its holder the right to be the verifier to perform the verification work for the network , And have the right to charge for the network .
Picture source ：David Hoffman
that ETH How to make money ？ That is, how to pass ETH Capture value ？
Use ETH There are many ways to capture value , For example, participation in pledge (staking)、 Income farming 、 Liquidity pool 、 Validation, etc. , But let's look at the easiest way , That is to say, just like holding stocks ETH.
once EIP-1559 The implementation of , And Eth2 merger ,ETH The holder will capture value in the following ways ：
Tips and distribution . Gratuity (Tips) And new releases of ETH Will no longer be used by miners to pay for hardware and electricity , It's kept in the system ( Tax deduction ), By participating in the pledge (staking) Of ETH The holder captures ;
Destroyed Gas Basic fee . Destroyed Gas Will be permanently removed from the ecosystem ETH Supply , And at a certain rate of trading ( That is, throughput growth ) Under the circumstances , It's going to decrease every year ETH The total supply of .
We'll discuss these two things later on for Ethereum Bull Case Influence , But before that , We need to understand why Ethereum has a defensive advantage , Why other L1 The public chain can't steal its traffic .
Orthodoxy and Lindy effect
Because Ethereum operates a bit like an enterprise , Plus its native currency ETH The extra benefits , We can analyze the strategic position of Ethereum just like enterprises . In short , Ethereum benefits from brand and network effects .
This year, 3 month , Co founder of Ethereum Vitalik Buterin I wrote an article entitled 《 Orthodoxy is the most important scarce resource 》(The Most Important rare Resource is Legitimacy) The article , He said in the article , The real value of any cryptocurrency asset does not come from the actual ownership of the asset , But from Orthodoxy (legitimacy). He defines orthodoxy in this way :
Orthodoxy is a higher order paradigm of acceptance . If people in a certain social context are widely accepted and play a role in formulating a certain result , And everyone does it because they want everyone else to do the same , So the result in this social context is orthodox .
If people believe others believe something , So it makes more sense that they believe in it and act accordingly . Popular podcasts at Ethereum Bankless On , host Ryan Sean Adams and David Hoffman Orthodoxy is called 「 The theory of everything in cryptocurrency 」. They list a series of questions that people often ask about this field ：
Why does the total market value of cryptocurrency exceed 2 Trillions of dollars ?
Why? NFTs valuable ？
Why can't you fork out your own bitcoin and make it valuable ？
Why do we believe that Ethereum's monetary policy will only change in the direction of reducing inflation ？
Adams and Hoffman Think , The answer to all these questions is Orthodoxy .
In his article ,Vitalik It emphasizes six ways to gain legitimacy . Two of them are particularly relevant ：
The orthodoxy of effectiveness ： If the output of a process produces satisfactory results , Then the process can gain legitimacy ( for example , Sometimes successful dictatorship is described in this way ).
The orthodoxy of continuity ： If something is in time T It's Orthodox , Then, by default, at time T + 1 It's also orthodox .
Effectiveness and continuity create Lindy effect (Lindy Effect), namely The longer something has been going on , The longer it is expected to last . Things that have been around for a year may be around for another year , But it already exists 100 It's probably going to be around again 100 year .
It's an observable phenomenon . Compared to a new start-up , Amazon is more likely to be in 30 It will continue to exist after five years ; Our kids are more likely to listen to the Beatles (Beatles) Song , Instead of listening to Olivia Rodrigo ( American Post-Zero singers ) Song ; The grandchildren of our grandchildren are more likely to read Socrates (Socrates), Instead of reading Dan Brown ( Contemporary American Writers ) The works of .
Orthodoxy helps to explain this Lindy effect . The longer a thing exists , The more people expect others to continue to use it . Besides , stay 《Excel Never die 》 In this article , We also describe several reasons that can also bring about this Lindy effect ：
quality . Some things are better than others , The quality that allows them to survive to the present will also allow them to survive in the future .
Network effect . As people realize the quality of something , And as it continues , More and more people are using it , So more and more people are building on it . This produces The network effect of bilateral platforms (Two-Sided Platform Network Effect). More users attract more developers , More developers attract more users , And so on .
about Excel Come on , This network effect comes from the fact that ： Developer ( That is to say Excel The person who created the model in ) Know that other people are using Excel, So they built their own models there , That means more people need to use Excel, Which in turn means that the next person to create the model is more likely to use Excel To create a model .
As far as Ethereum is concerned , There are more on Ethereum dApps It means that there are more users on Ethereum , And more users means more developers will build dApps, It makes sense .
iOS It is also an example of the network effect of bilateral platforms . Have iPhone More people , The more likely developers are to develop iPhone Applications , and iPhone The more applications , The more likely people are to buy iPhone. In the case of apple , This kind of network effect is very powerful , So much so that App Store Always extract revenue from third-party applications 30% As a commission . Although Apple has been doing this for years , But this model has begun to crack .《 Fort night 》 Game developers Epic Games Is in court with apple on the Commission issue , And just last week ,Twitter Also tweeted , Apple will come from Twitter forthcoming Twitter Spaces The function is better than Twitter It's going to be more profitable for itself . Monopoly or not , Apple's charges feel like a squeeze .
And let Ethereum's network effect become stronger 、 More durable Yes. , It's in a way that traditional software doesn't have Adjusted the incentive mechanism .
Both users and developers hold ETH, And benefit from its added value . With EIP-1559 The implementation and Eth2 The merger of ,ETH Of The more you use , ETH holder Capture The more valuable . Besides ,ETH The higher the value , The harder it is to attack Ethereum .
stay 《ETH： A new currency model 》 In the article ,Hoffman Express , Paid to Ethereum verifier cost It's like a wall protecting Ethereum ：「 The height of this wall is highly related to the total cost of the network , The height of the wall is also the cost of attacking Ethereum .」
When I am with Solana ( Public Chain Project ) The head of strategy for Ben Sparango In conversation , He further explained to me that , The value of the underlying blockchain is greater than that of any blockchain built on it dApps The value of , It's in the best interests of all the people involved . If that's not the case , The bad guys are motivated , Attack this blockchain at all costs , To drain these dApps The value of .
The implied meaning is ： Projects built on some blockchains are actually financially motivated , To support the value of the underlying blockchain , To ensure the safety of its projects . These apps won't be AWS Or pay for security software , The hosting and security of applications are provided by the underlying blockchain . This is a network effect different from other platforms . It's hard to imagine an app that would voluntarily pay to push up Apple's share price .
It is important to , Yes ETH The increase in demand will not only push up prices , Some of the security responsibilities will be transferred from the builders to the investors , To raise the wall , Make the network more secure , Increase the attraction of building applications on Ethereum , send ETH More valuable , And then raise the wall further , And so on .
By definition , Most of the value comes from Layer1 (L1) And hold L1 The token people capture . This makes the current Layer1 At the top of the value chain , Everything is built on L1 above .
Because of that , Also because of the shortcomings of Ethereum so far , Others L1 Chains of competition have sprung up , Trying to challenge Ethereum's dominance , Or at least try to capture some of its use cases .
When I first put Ethereum and Excel When you connect , I didn't realize there was such a deep similarity between the two . stay 《Excel Never die 》 In the article ,Ben And I wrote ：「 Excel This flexibility allows enterprises to build a variety of workflow and processes in a simple spreadsheet . This is B2B The software industry has created an emerging product roadmap .」 As a result, Excel The splitting of use cases creates total value 5000 Hundreds of millions of dollars in software companies ：
Similarly , Some blockchains /L1 It also plans to flourish where Ethereum is weak . Take a look back. , The etheric fang 、 Bitcoin and other blockchains are Web3 Technology stack L1 ( See the picture below ). For bitcoin , Except for the lightning network , Almost everything happens in L1. and For Ethereum , The most amazing thing is with L2 ( The application layer ) Interaction . See the diagram below ：
Upper figure ：Web 3 Different layers of the stack and corresponding examples . Picture source ：readthedocs.io
The second layer is that builders create protocols 「 Lego blocks 」 And smart contracts , These protocols and smart contracts can be integrated into countless combinations and products , Used to realize directly from casting artwork NFT Anything to trade cryptocurrency , Without the help of a third party . This is also L2 Scalability solutions ( Such as Polygon and Optimism) Where it exists .
When I was there Twitter When asked on the Internet for any convincing reason not to buy Ethereum , The most common ridiculous answers come from other L1 Chain maximizers , They believe in these other L1 Chain is the only solution .
To be fair , After a thorough study , I used to think that other L1 Chain is Ethereum's biggest risk . But after talking to some wise people in the field , And compare this situation with Excel Compare , In my submission The most reliable L1s It's complementary , And those trying to compete directly L1s Will be a complete failure .
( The etheric fang ) The main direct competitors are Cardano ($ADA). Many people respond to my tweets by cajoling Cardano. Then I looked at Cardano Website ：
「 Cardano It's a change oriented person 、 Blockchain platform for innovators and visionaries , Provide the tools and technologies needed to create possibilities for the majority and the minority , And bring about positive global change .」 I don't know what that means . The whole website has a strong Quibi ( A closed short video content platform ) atmosphere . Besides , It's trying to compete directly with Ethereum through smart contracts and faster speeds , And in some way based on peer-reviewed research ？ It won't work .
by comparison ,Avalanche and Hedera Others, such as L1 The chain seems to be built for the enterprise . It's an interesting way , But it does not pose a great threat to the future of Ethereum .
however , There are others that are more interesting 、 The competition is not so direct L1 project , The purpose is to serve the use cases that Ethereum cannot serve well . They optimize certain features , And may use Ethereum as the settlement layer . Two of them are in this way, and I'm most interested in L1 The public chain is Flow and Solana.
When Axiom Labs Launch the first NFT Use cases CryptoKitties ( Cryptocat ) when , Their huge trading volume makes Ethereum too congested , Make the transaction cost overburden the buyer . So , The team formed Dapper Labs, And built a Flow Blockchain .
Dapper Labs And its NBA TopShot It's recent NFT Favorite in the boom . They have recently 75 It's a round of financing with a valuation of 100 million dollars , from Coatue Management Lead investment , To continue building Flow, And expand the ecosystem on top of it . In the past few weeks , I'm with some NFT Start ups talk , They are Dapper Labs With the financial support of Flow Build applications on the Internet . It's a win-win situation for both sides ： Start ups from this company in NFT Companies that have been successful in this field have received funding and support ,Dapper Labs You can get more Flow Usage and users .
In attendance 《Invest Like the Best》 When blogging ,a16z Partners of Chris Dixon Explained Flow How it might interoperate with Ethereum ：
Imagine a world in which you are playing games , There are virtual goods in the game , These virtual goods and Flow Chain interaction . But then some of your virtual goods will become very valuable . And then you say 「 Do you know? ？ If you can take these ( Virtual goods ) Just deposit it in the bank .」 So you use a cross chain bridge that you don't need to trust (bridge) Will they Moved to Ethereum , This is a NFTs And cryptocurrency as a way to move between blockchains . Maybe I pay more for Ethereum , Because Ethereum makes different trade-offs . It's at the cost of performance in exchange for Higher security .
With Flow Bring more non cryptocurrency users into Web3,Flow And Ethereum will benefit from it .
Except Ethereum , What I'm most excited about is L1 The public chain is Solana( Disclosure ： I hold some SOL).
Solana It's probably the fastest running 、 The lowest cost blockchain , Can process per second 5 Million transactions (TPS), Transaction costs are less than 0.1 cents , In contrast, Ethereum's current trading speed is 19 TPS.
I and Solana Founder and CEO Anatoly Yakovenko Had a conversation , He told me Solana What's trying to optimize is In a very short time of immediate anti censorship , So as to create fair and open market data access . He wants to build an executive layer for Finance , You don't have to compete with Ethereum , It's about competing with the New York Stock Exchange . As for where these transactions are settled , Where people put their money , It doesn't matter to him .
and Eth2 equally ,Solana Use a PoS Consensus mechanism , But it's different from Eth2 Or most other scalability solutions ,Solana yes Single slice Of . Everything happens on the same chain . They use a method called historical proof (Proof of History, namely PoH) To achieve this ,PoH It's not a consensus mechanism , It's a source of time , Or like Anatoly As explained , It is 「 The realization of time arrow in mathematics .」PoH Use an encrypted timestamp to Solana Order every transaction that happens on , To provide verifiable sorting , Without all nodes reaching a consensus at the same time .
Solana Building compatibility with Ethereum , This will allow Solana Like an Ethereum L2 The network works like that , But with L1 The function of , This includes doing it directly at a very low cost USD deposit . More on ramps are positive for the whole ecosystem , And Ethereum is at the center of this ecosystem .
It's like nothing can kill Excel The core use case of , And many multibillion dollar companies have built businesses by focusing on specific use cases , The so-called Ethereum killer can't kill Ethereum . contrary , in consideration of web3 The nature of the ecosystem and the early degree of the ecosystem , More complementary chains bring more demand, which has a positive impact .
Ethereal Bull Case
More demand and less supply will lead to higher prices . The more the network generates and destroys ,ETH The less we can supply .
up to now , I've coded a lot of words , But if you believe in something , So the reason to be optimistic about Ethereum is so simple ：
Web3 Will continue to grow . There are too many smart people who create too many fascinating things , Without this technology , These things are impossible .
EIP-1559 and Eth2 It will be successful . There are risks, of course , But people seem to be optimistic .
Ethereum will still be web3 The main L1. At this point , Ethereum's network effect is so powerful , Hard to conquer . Developer 、 Users and even others L1s All are built on or compatible with Ethereum .
Demand will continue to grow
from 2020 year Q1 C to 2021 year Q1, All application categories on Ethereum ( from DeFi To NFTs And then to the virtual world ) There's been a huge increase in demand for both . Transaction costs have increased 200 times ！
All this happened at a time when Ethereum's usability was rough and its cost was too high . from now on , Things will only get better , There are several reasons .
First , hypothesis EIP-1559 and Eth2 Everything in the merger goes according to plan , Ethereum's trading speed will increase ,Gas The costs will be lower and more predictable . It's going to be faster 、 Cheaper . Lower transaction costs and faster transaction time should lead to more transaction volume .
secondly , Even though we just experienced a bubble , Short term bubbles are useful in the long run They attract money and talent into the field , Money and talent will be combined , Create new products that attract new users and more demands . Only in the past few months , I've seen a lot of powerful teams leave traditional startups to create web3 product , Many of them are on Ethereum . More products and better experience will attract more users .ETH It's an exponential bet on this growth , Instead of betting on the success of any single project .
A strong trend 、 Lower costs 、 Better experiences and new products = Growing demand .
For many people ETH For people who , This is the crux of the argument ：EIP-1559 signify ETH It's going to be deflationary .
The maximum circulation of bitcoin is 2100 over , This is bitcoin's most powerful Bull Case. You can't print more bitcoin like the central bank , Its circulation is capped . So , Many call it sound money (sound money).
therefore , Ethereum's unlimited supply is often criticized . In theory , Enough Ethereum users may continue to issue additional shares ETH, So as to increase the supply . If you want to have an inflationary asset , Why not use legal money directly , Right ？
however EIP-1559 and Eth2 There's a big reversal in this . With the help of Eth2, And PoW Compared to rewards , For the verifier ETH New issues are expected to fall sharply . At the same time, with the help of EIP-1559, By destroying in every transaction ETH, Suppose you destroy it every day 70% Of Gas cost ,30% As a tip (Tips) Send to verifier , So what's destroyed every day ETH It will surpass the newly released ETH Number . stay EIP-1559 Implementation and Eth2 After the merger ,ETH We're actually going to start to reduce the supply of .
It's better than a sound currency , It is Super sound currency .
To understand the numbers , Please check out Justin Drake Two models created ：「ETH Peak Supply」 (ETH Peak supply ) and 「The Road To 100M ETH」 ( Leading to 1 Billion ETH The road of circulation ). Directly speaking , It means ETH The decrease in Supply , In line with growing or accelerating demand , This should lead to an increase in value .
What's even crazier is , If people and institutions hold bitcoin as a non inflationary store of value , So if this argument for super sound money works , Will they turn to holding Ethereum ？ Can Ethereum reverse bitcoin into the most valuable cryptocurrency ？
but ETH It doesn't stop here , because ETH It's not just a store of value .
ETH The value that the holder captures
ETH Ownership is also granted to ETH The holder becomes Verifier The right to work for Ethereum and earn a share of the cost .
stay PoW in , Miners need to sell what they earn ETH To make up for the cost . according to Justin Drake Another model of  ( See the picture below ), This causes Ethereum miners to 22,300 ETH The pressure of selling -- It means that every day there are 22,300 This is a new issue ETH Being thrown into the market , Value contract 5000 Thousands of dollars . And in the PoS in , The only cost for the verifier is tax ,Drake The hypothetical tax is 50%, And new issues every day ETH From the current PoW Medium 13,500 ETH drop to PoS Medium 2,100 ETH ( be based on 2000 ten thousand ETH Be pledged into the network ). This will bring PoS A reduction in the net selling pressure of the verifier , From daily 22,300 ETH Reduced to 2,600 ETH.
Besides , These values don't leak out of the system , It's captured by the verifier .Justin Drake In another model  ( See the picture below ) expect , pledge ETH Users of may get 25% Of APR( Annual interest rate ), Including new releases of ETH and Tips cost .
Ethereum has powerful Network effect , As it continues to grow , Will continue to be in web3 The center of the ecosystem , Generate more transactions and more fees ;
As for ETH The demand for , It will become a kind of Deflationary assets ;
ETH It will become a way to earn high profits for the holder APR Of Capital assets .
risk 、 Notes and summary
I'm so optimistic about ETH Part of the reason for assets is , I'm excited by the potential and technology of Ethereum .ETH yes web3 A ticket for , But it also pushes us deeper into this rabbit hole . What I pursue in investment ( Return + Participate in + education + fun ) It may be totally different from what you are pursuing .
The past weekend has shown the volatility of cryptocurrencies , And the extent to which everything is still tied to bitcoin . If you want to use ETH Short term trading , The past week may be disgusting for you . And if you want to understand and explore Web3, So it's a half price buy more Tokens And a good time to play this game .
Although I'm generally optimistic about Ethereum , But Ethereum is still faced with macro and specific problems risk .
On the macro side , If Tether (USDT) What happens when it collapses ？ What if governments generally crack down on cryptocurrency ？ If Elon · What if musk tweets again ？ In last weekend's sell-off , One of the most terrible things is that there is no clear and obvious catalyst . The encryption market can be crazy .
There is also a problem between micro and macro ： What if people other than early adopters don't really care about decentralization ？ If it's like coin on smart chain (BSC) Such a more centralized solution is enough to decentralize , Perform better , What will happen ？ After all, the coin security smart chain has built in millions of user bases for transactions in coin security .
At the micro level , Ethereum faces some real challenges . If EIP-1559 What if it's not implemented as planned ？ If Eth2 The merger is delayed ？ If fragmentation doesn't work as planned , And there are more problems than improvement ？ A very real possibility is , Fragmentation makes Lego blocks built on Ethereum less composable , Weakens one of the most exciting aspects of the network ( That is, combination ).
Maybe ETH The biggest problem is a lot of Fragmented L2 Scalability solutions Adoption of . although L2 The scheme has the potential to significantly improve the performance of Ethereum network , But they pose two major challenges , One is the challenge to Ethereum , The other is right ETH The challenge of ：
The etheric fang ： Using fragmented L2 The solution might be Make composability more difficult , Because execution is L2 Occur in the , stay L1 On the settlement , And then go back to another L2 Complete the other part of the deal on . Ideally , One or two L2 The solution wins , But using multiple L2s It may enhance the network effect of Ethereum , It also weakens the product experience .
ETH：L2 Solution Rollups Will aggregate multiple transactions into a single transaction and L1 On the settlement , Perhaps in L2 It happened on 100 transaction , And this set of deals is L1 It is only shown as 1 transaction . This will reduce transaction costs 100 times , But the premise is L2 Better performance and lower price increase transaction volume 100 times , perhaps L2 Dealing with the current L1 New transaction demands that cannot be realized by speed and cost .
There is no denying it , I don't know enough about this topic , Not enough to form a strong point of view . This is an area that needs more exploration . But I hope this article will change the way you think about Ethereum , It makes you want to continue to explore . That's the fun .
The narrative of Ethereum is changing ,ETH Of bull case Will be understood .
thank Anatoly Yakovenko、Ben Sparango、Jon Wu and Ryan Sean Adams The input of , as well as Dan McCormick The editor of