Investment trends in the currency circle in 2020: the downgrading process of the public chain
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Tezos Status and Issues
Tezos Protocol 007 will be proposed this summer and activated in the fall. The content of the agreement includes: the integration of Sapling's private transaction function, state baking account, environment upgrade, security randomness, governance, meta-transaction and Michelson. Cyrptium Labs, as one of the developers and main bakers of Tezos, wrote two articles about the zero-knowledge technology Supersonic SNARK, which will be used for the next protocol upgrade of Tezos.
The privacy track led by zk zero-knowledge technology may be a hot spot this year. The doubling of the number of Zcash anonymous transactions in the last month may provide a glimpse. Including Ethereum's Layer 2 solution zk-Rollup, Zcash's Layer 2 solution zk-channel on Bitcoin, Ethereum's ecological privacy project Aztec's ZK^2 Rollup, Coda's zk-SNARK technology, MatterLabs' zk-sync, and Tezos The Supersonic SNARK.
Because the highlight of this protocol upgrade is the integration of private transaction functions, we can properly expect the secondary market price increase caused by the integration of this protocol.
It is hard to imagine that the infrastructure of the Web3.0 era will be a highly centralized PoS public chain with nodes in the hands of a few people. Tezos is currently the most decentralized PoS public chain, but the trend towards centralization of nodes is still unavoidable: the top three exchange nodes of Tezos, Coinbase/Binance/Kraken, account for a total of 19% of the voting rights of the Tezos network, And its weight ratio is increasing every month.
In contrast, the proportion of voting rights of independent node service providers led by Cryptium Labs is gradually decreasing. This shows that token holders are gradually re-pledging their tokens to exchanges. As the node service providers led by Cryptium Labs are one of the largest contributors to Tezos, the decrease in voting means the decrease in node income, which may also lead to a decrease in node confidence and loss of motivation to contribute to the ecology. In the long run, this is not conducive to the ecological development of Tezos.
Tezos was originally designed to make the network sufficiently decentralized, but will the result really be as desired?
Several recent controversies. Arthur, the male founder of Tezos, was kicked out of the technical committee of the Tezos Foundation and stated in the Reddit forum that he had received veiled threats. The female founder stated on the Reddit forum that she has not yet determined whether her card game Emergents is based on the Tezos platform. Although this card game is clearly based on the Tezos platform according to the announcement in the public media.
These two events sparked a debate in the Tezos community. Regarding Arthur's withdrawal from the Foundation's technical committee, I think the Foundation needs to give the community a reasonable explanation. This is actually a matter of openness and transparency for the Tezos Foundation. Regarding the platform issue of the female founder card game, I think the so-called community must do more based on the Tezos platform is a kind of moral kidnapping. It is naturally a good thing to be based on the Tezos platform, and it is not unacceptable if it is other platforms.
I personally think that Tezos is more important to deepen and improve the governance of the chain than to do anything else. Assets are on the chain, and NFT is just a backup development plan. In the NFT field, how can Ethereum fail to compete with Tezos? It’s all about giving investors some confidence. On-chain governance is the root of the positioning difference between Tezos and Ethereum.
The Ethereum Foundation spent only $6 million this year, while the Tezos Foundation spent $36 million in half a year. Among them, 13 Tezos global communities have been funded with 13 million US dollars, which means that each community has received an average of 1 million US dollars in funding awards. Although holding 600 million US dollars, is the burning rate of such funds too fast to support the long-term operation of the project in the end? We admit that the possibility of continuing to burn money to create an ecology is not small, but is this method of burning money reasonable? A lot of money is not the reason for the foundation to squander at will, otherwise it will only repeat the mistakes of EOS and Block.One. In addition, it also involves the issue of transparency of the foundation. How much is the monthly salary of the members of the foundation? Is it to fulfill one's own selfish desires under the guise of ecological funding? I hope that the fund will use the funds rationally and save some money to spend. After all, Tezos is aimed at the people of the next century, a decades-long social movement.
In addition, there is still no practical application on Tezos. Of course, this is also a common feature of Ethereum killers. If there is any application, it will not be called Ethereum Killer, but "a public chain that can compete with Ethereum Killer". And some maximalists in the Ethereum community often attack Tezos with the fact that there are no applications on Tezos. It can only be said that it will take some time. Overall, Tezos has done a very good job.
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Cosmos Status and Issues
The Game Of Zones of Cosmos was officially launched. An episode was that the Twitter account of Game Of Zones initially blocked all members of the Tendermint team. Peng Zhong, the designer of Tendermint, tweeted that Zaki's blocking behavior violated the spirit of the Cosmos agreement. GoZ's official Twitter later apologized and unblocked it.
This event can be seen as a follow-up to the previous internal power struggle in Cosmos. The previous internal strife seemed to end with Zaki's resignation. However, Zaki and his supporters are still contributing to the Cosmos ecosystem. The conflict between the two parties has changed from internal conflicts to various frictions in the Cosmos network cooperation.
It is unacceptable that IBC, as the core and most important development component of Cosmos, is actually being developed by 2-3 people who were kicked out of the company by the power struggle. However, Tendermint has done nothing, either maintaining Tendermint and the cosmos-sdk system itself, or busy with a meaningless project like Vigro.
The so-called multi-entity coexistence system that makes rights more dispersed is nothing but excuses and excuses. Zaki claimed on Twitter that despite leaving Tendermint, he will still contribute to Cosmos, which is just a rhetoric for both parties.
So far I don't see this as a good model for collaboration. What I see is still a small group of people who are fighting for IBC alone, and are still the most loving universe lovers who have been kicked out of the company. Before the project is mature, it is better to say that it is evading work and responsibility to talk about the so-called decentralization of the project.
The good news is that although the development of IBC is slow, it is still making progress. Now that Game Of Zones is officially open, participating teams can sign up. Although I don't know how practical it will be after the IBC is developed, the good news is that the IBC will definitely be developed, it's just a matter of time.
After the development of IBC is completed, the most important thing is to attract people to use IBC, a cross-chain standard. This requires the team to take the initiative to promote and market. Instead of passively waiting for other projects to come to use IBC. But according to the current behavior of the team, it seems that they cannot be expected to take the initiative to promote.
The only explanation is that the team has achieved financial freedom through the Cosmos project, and has no other motivation to do things. As far as the project itself is concerned, Cosmos has done its best. After the IBC is completed, the technology promised in the original white paper will be realized. Let the empty talk become a reality, how many teams in the currency circle can do it. For private equity investors, a return of more than 30 times is already very remarkable. The project members, naturally, get the initial freedom of wealth because of the team's token incentive distribution.
Moreover, the project party did not give up the project, but said that there was a big delay in the development progress, and our expectations for Cosmos were too high, so there was a big psychological gap.
The team lacks cohesion, and core developers have left Tendermint one after another. Jae, as the CEO, has to bear a lot of responsibility for his inaction. Cosmos itself holds a pair of king bombs and has a first-mover advantage, but it plays a card that is not bad. Its series of confusing behaviors and operations are really regrettable.
But overall, the Cosmos project has done its best. It's just that investors in the secondary market didn't make any money.
Earlier this year, the Cosmos Governance Working Group was established to assist the Cosmos Hub in proposing governance and lowering the threshold for governance participation. Up to now, the parameter change document and the demonstration document of the community fund expenditure proposal have been released, and the governance community is being established.
The governance process of Cosmos is much shorter than that of Tezos. Tezos takes at least three months, while Cosmos takes less than one month. If the team is more aggressive, it should take the initiative to lead the Cosmos network to upgrade regularly. For example, update once a month. However, it has been 3 months since the last upgrade of Cosmos, but no one person or organization has come up with a new proposal. It's a bit disappointing indeed.
Cosmos also has advantages, that is, its underlying ecology. The DEX of mainstream exchanges such as Binance is issued based on cosmos-sdk, and there are also projects such as kava and IRISnet. In the short to medium term, these underlying ecological projects are less likely to be destroyed. Although the Cosmos team is struggling, the CEO's leadership is insufficient, and the development of IBC is seriously behind, but because of its rich underlying ecology, it has not yet reached the point of zeroing and dying. The first-mover advantage of Cosmos is enough to make it suffer for a long time.
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Ethereum Status and Advantages
tBTC recently completed a $7.7 million financing led by Paradigm, trying to bring Bitcoin into the Ethereum ecosystem. The need for decentralized financial applications on Ethereum is clear, while Bitcoin is the world's largest cryptocurrency. Building a bridge for Bitcoin to interact with DeFi makes a lot of sense, and tBTC is a solid attempt to do just that.
Once tBTC takes shape, combined with the Uniswap exchange, transactions between Bitcoin and Erc20 tokens can be carried out within the Ethereum ecosystem, increasing the overall market value of DeFi by billions or even tens of billions of dollars.
There is also competition among AMM automated market maker exchanges like Uniswap. Recently, Balancer, a competitor of Uniswap, received a $3 million investment led by Placeholder, and achieved a liquidity of $190,000 three days after its launch. At the same time, Uniswap itself will be upgraded to version 2.0, adding functions such as flash loan, agreement fee mechanism, and Erc20 token swap. On the other hand, Uniswap and Balancer themselves may also be attacked by Uniswap competitors with a token economy.
The 3.12 market crash did not destroy the DeFi ecosystem of Ethereum. Instead, the trading volume of the two platforms Uniswap and Kyber broke new highs, reaching a daily volume of more than 30 million US dollars, which is comparable to centralized exchanges. The anti-fragility of the DeFi ecosystem has emerged.
In the past month, the global stablecoin market value has increased by US$1.5 billion. The stablecoin BUSD issued by Binance has grown from US$100 million on March 12 to US$200 million in just two weeks. Coinbase even injected one million USDC into Uniswap to increase liquidity. The total market capitalization of stablecoins reached $7 billion. Nearly 90% of them are issued based on Ethereum.
Currently USDT ranks 4th, USDC ranks 18th, PAX ranks 28th, BUSD ranks 35th, and TUSD ranks 37th. It can be predicted that stablecoins will account for an increasing proportion of the total market value in the future, and the market value of a single stablecoin will also move towards Top20 or even Top10.
What situation did this lead to? Take a look at the composition of the top 10 market capitalization rankings: currencies, stable coins, and platform coins. There are only two smart contract platforms left: ETH and EOS. And EOS will probably be squeezed out of the Top 10 in the future. Stable coins and platform coins, two centralized products, are gradually eroding the Top 10, which inevitably makes people feel a little magical.
Will Ethereum's new-generation Layer 2 technology Rollup repeat the mistakes of Plasma, or open up a new path. Why Layer2 has not been practically applied for many years. Will Rollup be falsified in the end?
The downgrading process of the public chain
In 2020, we can't help but re-examine those new public chains, the so-called Ethereum killers. What Haseeb said is true: We are already halfway through the war on the public chain, and every new public chain soldier who reaches the front line has been beheaded by Ethereum. We underestimated the network effect of Ethereum. We also finally understand how difficult it is to so-called beat Ethereum.
In 2020, we can't help but re-examine those new public chains, the so-called Ethereum killers. What Haseeb said is true: We are already halfway through the war on the public chain, and every new public chain soldier who reaches the front line has been beheaded by Ethereum. We underestimated the network effect of Ethereum. We also finally understand how difficult it is to so-called beat Ethereum.
When people in the Tezos community were saying that EOS is so fast now, Tezos is so slow, and they don’t rush to increase TPS, Arthur, the founder of Tezos, said something to the effect: Tezos’ top priority is to make Tezos sufficiently decentralized. Looking back, this sentence was extremely precious during the great leap forward of the public chain at that time.
The reason why Ethereum 2.0 is so slow is the same. The basic goal of the community is to increase TPS under the premise of sufficient decentralization, rather than reducing nodes. If Ethereum 2.0 is made, it will become the most decentralized PoS in the market. Each PoS node only needs to deposit 32ETH, and there will be hundreds of PoS nodes.
From this perspective, these new public chains have lost from the very beginning. Because they focus on high performance. They don't realize that the degree of decentralization is irreversible, but performance can be improved iteratively. In other words, for a public chain, the priority of decentralization is higher than performance. So can it be said that in this war of the public chain, the killers of Ethereum lost before they fought, and Ethereum won directly?
In the new year, we should also re-examine the cross-chain duo Polkadot and Cosmos. Their advantage is not that great. Because each public chain can create its own set of cross-chain communication guidelines, each public chain can have its own cross-chain characteristics. In other words, the cross-chain can be used as a track alone, or it can only exist as one of the characteristics of the public chain.
Recently, VB called on the Ethereum community on Twitter to quickly develop the cross-chain function of Ethereum. Summa quickly responded to VB's cross-chain call and open sourced several cross-chain bridges of Ethereum. In addition, projects such as Nervos and Solana also have their own cross-chain development plans. Everything can't help but make me look down on the cross-chain duo Polkadot and Cosmos. I think there will be a war between public chains in the future: the battle of cross-chain communication guidelines.
Each public chain can be equipped with a set of cross-chain guidelines: Polkadot's XPCM, Cosmos' IBC, Nervos' cross-chain guidelines, Ethereum's cross-chain guidelines, etc. Competition will be fierce. But the competition is worth it. Competition between principles is the highest level of competition.
So who will win this cross-chain communication battle? There is no doubt that the possibility of Ethereum winning is still the greatest. Because Ethereum is increasingly dominating the DeFi space. Not engaging with Ethereum would greatly reduce the utility of these Ethereum competitors. Therefore, competitors of Ethereum will increasingly need to interoperate with Ethereum, that is, cross-chain.
In order to interact with Ethereum, Ethereum competitors will need to follow some kind of interoperability standard. And this cross-chain standard was formulated by Ethereum. And isn't that what Polkadot and Cosmos want to do. Couldn't it be made by Ethereum in the end?
Instead of pursuing Polkadot-style winner-take-all and big and comprehensive, the Ethereum killers should retreat to pursue use cases in a certain field and direction. A sensible public chain should optimize a single use case, and this use case will be the key to DeFi and Web3.0. A typical example is Chainlink. As an Oracle public chain, it cleverly avoids the frontal battlefield of public chain competition, and instead becomes a partner with all public chains. Because Oracle is just needed for all public chains.
Trying to focus on a broad range of use cases is difficult. Because often times the solutions are small improvements across a wide variety of use cases, but not enough to solve any one use case. It’s better to be the biggest and best in a certain use case or industry, and form your own positioning without being eroded by Ethereum.
Imagine a situation where different application types are on different chains in the future:
Ethereum becomes a DeFi chain. All financial related transactions will happen on Ethereum. Tezos becomes an STO chain. Transactions related to securities haircuts happen on Tezos. Cosmos becomes an interoperability chain, and the interoperability of all chains must go through Cosmos. Chainlink becomes an oracle chain dedicated to providing authentic and credible data sources for major projects. Nervos has become a Layer2 chain, providing a Layer2 development framework for the public chain, and releasing Layer2 with one click. Filecoin becomes a storage chain, providing file transmission and storage. Solana becomes a DEX chain, and transactions of high-performance DEXs all take place on Solana. Coda becomes a compression chain, which is specially used to compress transactions with a large amount of data. Near becomes a sharding chain to solve applications suitable for sharding types.
It is worth mentioning the application customization chain idea advocated by Polkadot and Cosmos. Application custom chain, that is, send a chain as an application. It can also be considered as the application of public chain. At present, there is not much demand for the application of customized chains. On the contrary, there are signs that the public chain will be downgraded to an application chain. From the application of the public chain to the public chain downgraded to the application chain, what happened in the middle?
Deliberately pursuing all-round use cases, the result may be that each use case is not professional enough. If the public chain cannot be large and comprehensive, there is no need to struggle hard, and it is not a shame to settle for the second best. If you are alone in seeking failure in a certain use case, can't it be famous in history?
