Tether Takes Ethereum, Developers Flee
Editor's Note: This article comes fromNakamoto Shallot (ID: xcongapp), Author: Sister Xiaocong, published by Odaily with authorization.
Editor's Note: This article comes from
Nakamoto Shallot (ID: xcongapp)
In the five years since the first white paper of Ethereum came out, Ethereum, the second largest cryptocurrency by market value, has experienced the prosperity and decline of ICO, and the price of the currency has also dropped from four digits to double digits. But as V God, the co-founder of Ethereum, the most anxious thing now is: Ethereum is going to be fully occupied.
Ethereum congestion has recently been re-focused by public opinion. Before and after the ETHBerlin conference, the "Ethereum is full" talk was rampant. The most direct impact of the underutilization of the Ethereum network is the congestion of the blockchain network, just like a traffic jam, the speed of operation will drop sharply.
Currently, the Ethereum network is being clogged by Tether, the issuer of the stablecoin USDT. What's more deadly is that the congested Ethereum network is suffering from rising fees and being kept away by developers.
Is the Ethereum network congested again?
The Ethereum network has ushered in a new occupant this year - Tether, the issuer of the stablecoin USDT. According to data from the Ethereum block explorer Etherscan.io, the network utilization rate of Ethereum has been on the rise since the first half of 2017, and has repeatedly exceeded 90% since 2018. Currently (August 26, 2019), this value is 93.71%.
Along with the high utilization rate, the number of unconfirmed transactions on Ethereum has been around 40,000 in the last 7 days, and the network congestion has not been significantly alleviated.
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The culprit for this congestion: Tether could be
Over the past 30 days, Tether has paid $260,000 in transaction fees to process the ethereum digital ledger, according to data research firm Ethgasstation.info. It is about 17.5 times higher than CryptoKitties and six times higher than IDEX, the world's largest distributed exchange.
Tether usage has been growing as more cryptocurrencies have been issued. On August 27, Bloomberg quoted John Griffin, a finance professor at the University of Texas at Austin, as saying that at least 40% of Tether is running on the Ethereum network.
The more capacity Tether takes up, the less capacity other developers can use. This also causes congestion. In the past 24 hours, among the digital currencies traded on the Ethereum network, USDT came out on top, with more transactions than the number 2 to 15 combined.
It is worth mentioning that the USDT transaction volume of the address “0xdac…ec7” on the Ethereum network has increased significantly since July this year, and the number of transactions also surged in mid-August. And this address is the official issuance address of USDT.
In April of this year, Tether began migrating from the Omni blockchain to the Ethereum blockchain, and by July, almost 40% of USDT had migrated to the Ethereum blockchain.
Especially on July 4, 24 hours after Tether issued 100 million USDT to the tether treasure address on Ethereum, part of the funds were transferred to the exchange, of which: 3.1 million USDT were transferred to Huobi Exchange; 1.95 million USDT were transferred to Binance Exchange
According to Tokenview data, the demand for USDT on Ethereum has continued to rise since April this year. Since June, the issuance volume has surpassed that of other public chains, and it has become the most important public chain for issuing USDT since July.
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Evil Consequences of Ethereum Congestion: Increased Fees and Lost Developers
As Tether takes up more capacity, there is correspondingly less capacity available to other developers.
Ethereum co-founder Vitalik Buterin (V God) said in an interview with Canadian mainstream news media The Star last week that for large organizations interested in the Ethereum ecosystem, the obstacle they face is the reliability of the blockchain. scalability.
"Scalability is a big bottleneck for Ethereum because the Ethereum blockchain is almost full.
As the utilization rate increases, the transaction cost of Ethereum will also increase, which makes potential enterprise users hesitate to use Ethereum. "
Currently, some developers are staying away from ethereum, waiting for it to adjust the technology to increase network capacity. And ethereum is still trying to figure out how to realize its ambitious ethereum 2.0 vision, which will require a major overhaul of its technology.
NEST, a decentralized digital asset mortgage lending application, is developed based on Ethereum. Xiao Cong interviewed Han Shier, one of the early initiators of the NEST community. He said that after many exchanges with application layer developers, he found that NEST will not leave the Ethereum network at this stage.
"The main reasons are as follows: 1. As the king of the public chain, Ethereum has the highest degree of consensus, and the network is relatively safe and stable; 2. The ecology of Ethereum is richer, and many digital assets are issued based on the Ethereum network; 3. , The number of Ethereum users is the largest, which is what developers are more concerned about; 4, We believe that Ethereum will get better and better."
As a loyal fan of Ethereum, Han Shier basically opens the Etherscan browser every day to check the congestion status of the Ethereum network. In his opinion, the interaction process of Ethereum smart contracts has become obviously congested recently.
To sum up, in China, from about 10:00 p.m. to 2:00 a.m. the next day, the congestion will ease. "
"Network congestion is good for developers, but it will have a greater impact on users of DeFi products, which will directly increase users' usage costs." Han Shier said to Xiao Cong, taking the digital asset mortgage lending business on NEST as an example. For example, under normal circumstances, it only takes about 2 Gwei to deploy a mortgage loan contract, but it will cost several times when the network is congested.
"In today's congested state, I tried it just now. The transaction of deploying the contract requires 17.29 Gwei, about 0.023 ETH, which is very high!"
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Ethereum's Self-Help: Increasing Scalability
"The main problem with the current blockchain is that every computer has to verify every transaction," V God said when talking about the current congestion situation. "If you can create a network where each computer only verifies a small number of transactions , then we can do better.”
“If a large company joins, the blockchain space will be more full, and members need to compete for transaction space. Transactions are already expensive, and new members may increase the cost by five times. So this discourages people from joining Ethereum, but increases Scalability can improve this to a large extent."
According to the established route of Ethereum, it will fully switch to the PoS mechanism in 2020, and introduce sharding, zero-knowledge proof or side chain expansion protocol to achieve a significant improvement in performance and privacy. Improved scalability would reduce the cost by a factor of 100+, and while security would be sacrificed to some degree, the compromise is fairly modest.
Han Shier said to Xiaocong that the high utilization rate of the Ethereum network is an inevitable phenomenon. Although there have been no explosive products in the DeFi field, the overall development is not bad. DeFi pays more attention to the scale and ability to process digital assets. Most of the transactions are large and low-frequency, so they don’t care so much about TPS (transactions per second). Of course, if the Ethereum network can improve efficiency while reducing some transactions Cost, that's the icing on the cake.
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Ethereum network congestion is a historical problem...
Throughout the development of Ethereum, network congestion is not achieved overnight. In 2017, the blockchain game CryptoKitties was launched. As the world's first game and the first chain game on Ethereum, Ethercat became a phenomenon-level decentralized application at the time and spread virally.
It has gathered more than 1.5 million users in the circle within one month of its launch, contributing 30% of the transaction volume on Ethereum, and it was the source of the congestion of the entire Ethereum network in the first place.
From 2017 to 2018, the emergence of Ethereum smart contracts brought the financing method of ICO into the eyes of blockchain projects, creating a wave of bull market, and at the same time, it also allowed project parties to survive with financing.
Taking advantage of the booming ICO in the currency circle, the Ethereum network space is occupied by thousands of cryptocurrencies. ICO has also become the largest application scenario on Ethereum. In January 2018, the price of ETH reached an unprecedented historical high: $1422.
On the one hand, it is due to the prosperity and decline, and on the other hand, it is because of the bursting of the ICO bubble. After one ICO scam after another, most ICOs on Ethereum have also gone bankrupt. Correspondingly, in December 2018, the price of ETH reached a historical low: $81.
