Debate over the feasibility of using Ethereum as a Swiss crypto army is now intensifying as DeFi, gaming, and NFT are experiencing a recent surge in popularity.
But the outlook is not very positive considering the current state of affairs. The impact of xcessive fees, long confirmation times, and slow updates is starting to worry retail users, techies, and large investors.
Ethereum developers should focus on L1
Faced with the challenges of delivering a satisfying user experience, Ethereum developers are starting to look to rival blockchains that have capitalized on this application migration to expand their reach and increase their own market capitalization.
Blockchains like Solana, Binance Smart Chain, and Avalanche have seen a significant rise during 2021, cementing themselves as more efficient alternatives to Ethereum and its upgrade to Proof of Stake that is not quite there yet.
According to Nicholas Merten, creator of YouTube channel DataDash, Ethereum’s advantage of being the blockchain everyone uses is losing ground over time.
In a Twitter thread, Merten explains that the arguments in favor of Ethereum may not hold up over time. He believes that ultimately L2s (scalability solutions built on the original blockchain) are impractical and generate few incentives for adoption.
For example, Merten claims that people would rather pay $0.01 in Solana fees instead of paying $0.04 to transact on Polygon —the cheapest L2 solution on Ethereum.
For Merten, Ethereum developers should focus on solutions to make L1s (chain transactions) more efficient and cheaper. As smart contracts get more complex, people have to pay more fees.
Merten believes that Ethereum needs better marketing. In addition to technical developments, there should be a team capable of keeping the community together and excited.
Three Arrows Capital abandons ETH and avalanche betting (AVAX)
Interestingly, this view seems to be spreading among institutional investors.
Within hours of Merten’s tweet, Zhu Su, CEO and CIO of Three Arrows Capital announced that he had abandoned Ethereum to focus on investments in rival blockchain Avalanche. In fact, his Twitter bio already describes him as an investor in “AVAX, crypto, DeFi, (and) NFTs.”
Zhu Su’s words weren’t exactly pretty:
Zhu Su explains that basically, under current conditions, Ethereum benefits OGs. But within a global adoption framework with new users experimenting with the technology, prohibitive network fees should not be something to deal with on a day-to-day basis.
And Zhu Su is not alone. Even Antonio Juliano, founder of dYdX – a DeFi protocol running on Ethereum – agreed with him (although the harshness of his remarks was painful).
Ethereum promises to solve these problems by implementing Ethereum 2.0, a new Proof-of-Stake blockchain that will have minimal fees and a very high level of scalability.
However, this solution takes time, and big investors can only hope that it won’t be too late once it gets launched.
