The king of the public chain is surrounded and suppressed by many chains, can the down-and-out Ethereum return as the king?
Produced | Odaily (ID: o-daily)
Produced | Odaily (ID: o-daily)
As one of the earliest public chains, Ethereum (ETH) was once dubbed the "King of Public Chains".
After the ICO (Initial Coin Offering) frenzy subsided, project parties began to dump ETH aggressively, which also caused the price of ETH to plummet by 80% from its historical high (more than $1,400). In a sharp drop early this morning, Ethereum fell below the $200 pressure level, and then broke through the $190 mark, hovering at $188.
After entering the arena, many new leeks became receivers, scolding Ethereum as a sickle for cutting leeks. Even the bull market that started in April this year did not lead to a sharp recovery in the price of Ethereum. Looking at the K-line of Ethereum, the bottom-hunters want to ask: Is Ethereum still saved?
In addition to unsatisfactory currency prices, Ethereum has also been criticized on issues such as technology and community governance. Many developers have turned to new public chains for development.
Some people leave, others stick to it. Some developers believe that Ethereum is still the best public chain at present, no matter in terms of user base or infrastructure construction.
"Thanks to the collapse of the ICO, otherwise many people thought that Ethereum could only be used for financing." The developers said that the collapse of the ICO was an opportunity for Ethereum to transform from virtual to real.
Today, developers and investors are pinning their hopes on ETH 2.0.
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The project party sells, leek stud
"I studded ETH, but it kept lying on its stomach and couldn't go up." Bai Sheng, a retail investor, was a little helpless. "Later, I lost some money and exchanged them all for Bitcoin. I dare not take ETH anymore."
After the end of this year, cryptocurrencies ushered in a recovery. Bitcoin has repeatedly appeared in hot searches, attracting a large number of investors, and Bai Sheng is one of them.
At that time, Bitcoin was thriving, but as a new leek, Bai Sheng chose Ethereum as his investment target and got on the car at $300.
"The teacher in the group said that Ethereum used to be the mainstream currency second only to Bitcoin, and it didn't rise, and there was a chance to make up for it, so I bought Ethereum." Bai Sheng explained.
However, there is always a gap between reality and ideal. After Ethereum reached a peak of $360, it began to fall and did not usher in a compensatory increase.
Judging from the trend of Ethereum this year, it is obviously weaker than that of Bitcoin: the highest increase of Bitcoin is more than 270%, and the highest increase of Ethereum is only 170%. It is up less than 40% this year.
In addition, the growth rate of Ethereum this year is also significantly weaker than other mainstream currencies: EOS (+45%), LTC (+145%), and BCH (+95%).
"There are so many mainstream coins, but I chose the worst one, and I was cut off as a leek when I first entered the market." Bai Sheng was quite dissatisfied with the price performance of Ethereum, but he also had a doubt: why the price of Ethereum this year The trend is so bad?
Encryption analyst Zelda believes that the main reason is the decrease in the use of Ethereum and the selling of Ethereum by project parties, forming a selling pressure that makes it difficult for prices to rise.
1. Changes in financing channels and reduced buying
In 2017, the ICO wave was on the rise, and Ethereum was an important means of fundraising. The project party only accepted ETH when raising funds.
"The reason why we only accept ETH is because almost all tokens were issued based on the Ethereum blockchain at that time, and ETH can also serve as GAS." An anonymous project party explained.
At that time, many projects including EOS raised funds through ETH. The strong demand for fundraising has prompted an increase in the buying of Ethereum, pushing the price of Ethereum to continue to rise, reaching a maximum of more than 1,400 US dollars, and becoming the second largest cryptocurrency in market value.
Today, the ICO craze has receded, and ETH is no longer accepted for project fundraising. For example, Nervos, a recent public offering project, only accepts the stable currency USDT as a fundraising method.
A project party explained to Odaily: "The fundamentals of Ethereum are not optimistic now, and the price may fall again. If you want to sell (realize), there will be selling pressure, and the decline will be even worse. Simply use stable currency or legal currency to raise funds directly. Got it."
"ICO is an important usage scenario for ETH. When the ICO collapses, there will be fewer people buying ETH." Zelda explained.
2. The project party sells, forming a selling pressure
Due to the need for funds for operation and development, the project party will also choose to sell the ETH in their hands in exchange for legal currency.
An Ethereum-based project party told Odaily that its company sold a total of 30,000 ETH in batches in May and September last year, clearing out the stock tokens in its hands.
According to The Block research, the amount of ETH held by projects raising funds through ICOs has been steadily declining over the past year.
The data shows that in the past 12 months, 57 token financing projects, each project liquidated or transferred an average of 2,500 ETH (about 530,000 US dollars) per month. These projects raised a total of 8.2 million ETH, of which 5.9 million ETH (72%) have been transferred or liquidated since the token financing.
A large number of selling pressure not only makes it difficult for the price of ETH to recover, but also suppresses the price to the bottom.
According to Santiment data, ICO project parties sold ETH intensively in December last year, and the sales volume reached a record 45,000 on December 14. At that time, the price of ETH hit a nearly one-year low of $82.
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Project development, constantly questioning
In addition to the poor price performance, under the siege of emerging public chains one after another, Ethereum has also been questioned: technical bottlenecks, developer loss, governance chaos, and the centralization of V God.
1. Technical bottleneck
As the earliest distributed general-purpose computing platform, the processing speed of Ethereum is now slightly insufficient, that is, the TPS (Transaction Per Secound, transaction throughput) is not high.
Etherchain.org data shows that the current TPS of Ethereum is only 8.4, and it has been constant around this value. In the past week, the number of unconfirmed transactions on the entire Ethereum network has remained above 30,000.
In contrast, Ethereum’s competitors are far ahead: EOS and TRON (wave field) can generally reach more than 50, and sometimes even reach hundreds.
"Slow TPS speed will indeed have a great impact," said Yang Zhen, the translator of the Ethereum Yellow Book. "For example, in a game, if you punch the opponent, you can't wait 15 seconds for the data to be packed. It must be unplayable." gone."
The congested Ethereum can only increase the gas fee in order to package transactions. According to data from coinmetrics.io, the current Ethereum gas fee is $0.04, showing an upward trend. Last year's peak reached 2.1 US dollars.
2. Lost developers
Since last year, some developers have turned to other public chains, partly because of the above-mentioned TPS and unresolved technical bottlenecks.
But developer Chen Jing told Odaily that the more important reason for developers to switch to other public chains is the policy support of public chains.
"Although the user base of some public chains is not as deep as that of Ethereum. But for us, survival is the first priority. Wherever the support is strong, we will go there." Chen Jing explained that the public chain he belongs to will give DAPP Project developers will receive financial support ranging from 100,000 to 500,000 yuan, and contact the media for publicity.
Previously, in order to encourage developers to use its blockchain, Tron gave project developers a financial support of 100,000 US dollars. The wave field shrimp farmer who became popular on Tron in December last year was affected by this and migrated from Ethereum to the wave field blockchain.
In contrast, Ethereum can be said to be relatively harsh for developers, and has not issued a specific reward policy.
"The Ethereum Foundation will also fund some projects, but the support standards are not public, and it is difficult for ordinary developers to obtain it. It is far from being able to quench their thirst." The developer Zeng Zhuang once wrote to the Ethereum Foundation to seek funding, but Did not get a reply.
Lane Rettig, a core technical member of Ethereum, once wrote that the governance of Ethereum has failed.
Lane Rettig, a core technical member of Ethereum, once wrote that the governance of Ethereum has failed.
"We are actually technocracy: a small group of technologists (core developers) have the final say on protocol updates." Lane Rettig explained that Ethereum is now facing more and more challenges in non-technical fields , but no one can stand up and make decisions on behalf of Ethereum.
"The core developers don't want to make these decisions because they think they are not capable enough, they are afraid of taking legal risks, or they are used to avoiding conflicts and only like to write code. The Ethereum Foundation will not make decisions because they are afraid. For the better It's a fear of taking sides, at worst it's a fear of taking sides," Lane Rettig said.
Odaily observed in the Ethereum core developer community that this is indeed the case. For some technical posts, the response rate is generally high; but for issues involving reward mechanisms and management, there are generally very few follow-up posts. This may make it difficult for development teams to collect opinions from the community even if they want to improve governance.
The impact of this kind of anarchism is the community governance of Ethereum, which has always been chaotic. Behind the seemingly decentralization, there is a lack of forming mechanism, which leads to low efficiency and is not conducive to project advancement.
The previous Constantinople hard fork was originally scheduled for November 2018. However, it was postponed to the beginning of this year because the community has not reached a consensus.
Even so, on the day before the official hard fork, a system loophole appeared. Afterwards, the core developers repeatedly studied the problem of bug fixes, and the project was postponed for another two months. It was not until early March this year that the fork was successfully completed.
"Ethereum is more like a group of geeks. They don't listen to the world's affairs, and they only focus on technology development." Ethereum researcher Du Siyu said bluntly, "Whether the Istanbul fork this fall will be carried out on time or not? An unknown.” According to the project plan, the Istanbul fork will take place on October 16 this year.
4. Centralization of V God
Unlike Satoshi Nakamoto who "evaporated", Vitalik Buterin (V God), who is the soul and core of Ethereum, has always played an active role in the development of the Ethereum community.
In the Ethereum community, theoretically everyone can initiate proposals, but V God's proposals are more likely to be valued.
"It has a great influence, because he is the founder, and community users, including fans, may deify him with some personality cults." Yang Zhen explained, "This is human nature, and human nature is normal."
V God also seems to realize that his influence is too great, starting from the front of the stage to research behind the scenes.
"He is now slowly fading out to reduce his influence on the Ethereum community," Yang Zhen said, "We can see that he is working on some papers (papers) to explore some directions. He produces papers, and finally the community Vote."
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Set sail, there's still hope
Despite Ethereum's current problems, some developers and investors are still hopeful.
On the one hand, developers are still nostalgic for the current Ethereum, thinking it is the best public chain; on the other hand, everyone has high hopes for ETH2.0. Many investors have also begun to actively hoard coins, and they believe that ETH2.0 will become a new round of good news for Ethereum.
1. The reluctant developer
"Thanks to the collapse of ICO, otherwise many people thought that Ethereum could only be used for financing." Bowen, the founder of DDEX, said that the value of Ethereum before was in ICO, but now the value is miners' computing power and on-chain transaction scenarios.
Etherchain.org data shows that since mid-February this year, the number of transactions on the Ethereum chain has continued to rise, with a maximum increase of more than 130%, which is close to the historical high.
Bowen explained that DAPPs have increased the usage of the Ethereum network, leading to a surge in the number of transactions. "At the same time, the exchanges are not active, which shows that these transactions are really used by people. The fastest growing scene is the Defi scene (represented by MakerDao), staking, borrowing and other basic financial needs."
But Bowen also pointed out that the number of real users of ETH has not increased by an order of magnitude in the past year. "After overdrafting the valuation of Ethereum in the ixo era, it will take some time to return to natural growth."
For development teams like DDEX, Ethereum has always been their favorite object. "Whether Ethereum is the best public chain, it is indeed right now. It has relatively mature developer facilities and the total amount of tradable assets."
Bowen explained that for developers, there are development support tools such as Truffle, Infura, and OpenZeppelin, and developers can get started relatively easily. In addition, there are now more than 1.5 billion USD in USDT, 400 million USD in USDC, 200 million USD in TUSD, and 80 million USD in DAI are all issued based on Ethereum. More assets have been ported to Ethereum, and there are different stablecoins to choose from and different on-chain liquidity, which is unmatched by other new public chains.
Even the previous processing speed problem is not a big problem in his eyes.
"How high the TPS needs to be depends on its usage scenario, and many of them can be solved through off-chain matching." Bowen said.
Yang Zhen agrees with this. He believes that some operations can be carried out off-chain without increasing TPS, and only the results are packaged on-chain.
This expansion scheme is also called a layered structure (Layer 2), that is, to separate unnecessary transactions from the bottom-level main chain to the subsidiary structure. Bitcoin's Lightning Network is also based on this idea.
Today, Ethereum is still extremely attractive to developers, as can be seen from the data: the number of developers in Ethereum is 40 times that of competitors; the number of ETH DAPPs is twice that of EOS and TRON combined .
2. ETH 2.0 Brings New Hope
Ethereum is currently in the metropolis phase, and Serenity is ETH 2.0. Different from the ETH 1.X stage, ETH 2.0 will have two important changes: one is the conversion from PoW (proof of work) to PoS (proof of equity); the other is the expansion of Ethereum performance.
At the beginning of its birth, Ethereum set four stages: Frontier (frontier), Homestead (homestead), Metropolis (metropolis) and Serenity (tranquility).
Ethereum is currently in the metropolis phase, and Serenity is ETH 2.0. Different from the ETH 1.X stage, ETH 2.0 will have two important changes: one is the conversion from PoW (proof of work) to PoS (proof of equity); the other is the expansion of Ethereum performance.
Li Zongcheng, CEO of Timestamp Capital, said that ETH 2.0 will lead the development of public chain technology from three aspects.
The first is Plasma, the time is to be determined. The main idea of Plasma is to provide a model capable of performing off-chain transactions while relying on the Ethereum main chain for its security. Allows the creation of "sub" blockchains attached to the "main" Ethereum blockchain, which is equivalent to doing technical exploration on the second layer network.
The second is Casper, which is expected to be implemented in early 2020 to realize the transition from PoW to more efficient PoS.
The third is Sharding (sharding). The sharding roadmap lists seven phases, only phase 0 has a clear specification and is regularly updated. Phase 1 specifications are much less stringent and precise. After Phase 1, the roadmap is transformed into a list of goals, not a technical document.
"At present, most public chain projects are innovating in these three directions. Compared with other projects, Ethereum has invested more manpower and funds in these three directions, and has advantages in manpower and funds." Li Zongcheng explain.
At the fourth developer conference of the Ethereum community on October 31 last year, founder Vitalik Buterin said, "The transaction volume that Ethereum 2.0 can handle is 1,000 times higher than the existing version, which will make Ethereum a A real world computer."
It is worth noting that ETH 2.0 is not just talking on paper. There are currently 9 teams working on the ETH 2.0 client. Although the core developers have been questioned before, the related work is still progressing.
According to the official ETH 2.0 research team, both the Nimbus client and the Prysm client testnet have been launched. In addition, after a full year of intensive development, the ETH 2.0 beacon chain specification was frozen on June 30, and the relevant research and design have been completed, but the final launch time has not been determined.
On the surface, today is the darkest hour of Ethereum, and the darkest is often before the dawn. There are indications that ETH 2.0 may become the next explosive point of Ethereum.
3. The old leek hoards ETH
"At present, ETH accounts for 50% of all my encrypted assets, and the other half is Bitcoin." Bowen told us his asset allocation, and is still optimistic about the future price trend of ETH, "The head effect, the strong will always be strong."
Bowen is by no means the only one who is optimistic about the future trend of ETH, and investor Da Liu is also one of them.
Although he did not participate in the private placement of ETH, Da Liu was still one of the early investors of ETH. "In the early days, my purchase cost was relatively low, only a few tens of dollars. Now I have tens of thousands of ETH in hand, and some of them were bought at a low point in December last year."
In Da Liu’s view, the future ETH2.0 will be the next hype hotspot of Ethereum, and the price of the currency will also make a big leap, so it is necessary to stockpile the currency in advance.
"What will be the next hot spot? I don't know, but I believe that only Ethereum can compete with Bitcoin, and the others are imaginary." Da Liu said.
Li Zongcheng believes, "If the market value of the public chain that has been launched exceeds BTC in the future, the most likely one is Ethereum. The public chain that can carry more people and support a larger number of transactions will have a larger market value."
(Note: Some interviewees are pseudonyms.)
