Looking back at 2021: Ethereum Expansion and New Public Chain Explosion

特邀专栏作者

2021-12-22 11:37

This article is about 8260 words, reading the full article takes about 12 minutes

As of December 18, the price of Ethereum rose from $736 at the beginning of the year to $3960, an increase of 4.38 times, while BTC only increased by 63% during the year.

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As of December 18, the price of Ethereum rose from $736 at the beginning of the year to $3960, an increase of 4.38 times, while BTC only increased by 63% during the year.

Wu Shuo Author | Wu Zhuocheng

Editor of this issue | Colin Wu

ETH chain data review

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Source: https://www.coingecko.com/en/coins/ethereum

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Source: https://www.theblockcrypto.com/data/on-chain-metrics/ethereum

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Source: https://defillama.com/chain/Ethereum

analyzeanalyze, the conclusion is that it will not reduce the gas fee, but it can reduce its volatility and increase predictability. At present, the actual situation is basically consistent.

Source: https://studio.glassnode.com/metrics?a=ETH&category=&ema=0&m=fees.GasPriceMedian&mAvg=7&mMedian=0&s=1577505170&u=1639872000&zoom=

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Source: https://www.theblockcrypto.com/data/on-chain-metrics/ethereum

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Source: https://docs.ethhub.io/ethereum-basics/monetary-policy/

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Source: https://dune.xyz/hagaetc/eth2-0-deposits

ETH 2.0 Roadmap

At the World Blockchain Conference held in Hangzhou in July, Vitalik Buterin, the co-founder of Ethereum, published a speech titled "What will happen after Ethereum enters 2.0?" "Speech. Vitalik said that the merger of Ethereum 1.0 and Ethereum 2.0 will happen in half a year or more. In the early stage of the merger (phase 1), Ethereum will perform some minor upgrades, introduce sharding, and use Rollup to achieve 100,000 transactions per second under ideal conditions. In the middle and later stages (stage 2), Ethereum will tend to make improvements at the consensus algorithm level to make the protocol simpler, and at the same time deploy zero-knowledge proofs and anti-quantum computing and other cryptographic technologies. In the future of Ethereum, Layer 1 will focus on decentralization, and Layer 2 will carry out a lot of innovation.

analyzeanalyze, the merger should not be earlier than the opening time of the difficulty bomb, and with the launch of the Arrow Glacier upgrade (Arrow Glacier), the difficulty bomb has been clearly postponed to June next year, so we can basically determine that the merger time will most likely be in the third quarter of next year .

At present, the development direction of Ethereum is basically continuing the established route. Vitalik published an article on his personal webpage in early December, stating that the production of Ethereum blocks in the future should be centralized, but the verification of blocks is trustless and highly decentralized. This has always been the case in fact. Layer 2 does not have the concept of a block. We can also find that a batch on Layer 2 corresponds to a transaction rather than a block through the Arbitrum or Optimism browser. Vitalik repeating this point at this time seems to be emphasizing the previously designed Ethereum-centric roadmap, which inevitably makes people wonder whether it is related to recent rumors such as the interest dispute between the Ethereum team and the Layer2 team.

Layer2

In view of the current slow progress of Ethereum 2.0, some people believe that it will be difficult for Ethereum to start sharding next year, but this does not mean that Ethereum cannot achieve expansion next year. On the contrary, with the gradual maturity of Rollup technology, the hope of Ethereum's short-term expansion is pinned on the Layer 2 that adopts OP-rollup or ZK-rollup.

Regarding the technical progress and classification of Layer 2, it is recommended to read the long article analysis published by Vitalik on the personal homepage or the supplementary explanation of the same type (the article has been published for almost a year, and some data are somewhat outdated, but the advantages and disadvantages of each technology are grasped very accurately. , I have also benefited a lot from reading it now).

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Source: https://twitter.com/VitalikButerin

Plasma was proposed the earliest time, and its logic is also the simplest, and it was gradually abandoned due to many disadvantages. Matic used this technology in the early days, and it has been sinking for a long time. It was not until it was renamed Polygon and transformed the track into a Layer2 aggregator that it was reborn.

Rollup moves computation off-chain, but data remains on the main chain. Compared with other layer-2 expansion solutions, Rollup is versatile. For example, EVM can be run in Rollup, so that existing Ethereum applications can be migrated to Rollup without writing new code. The main difference between ZK-rollup and OP-rollup lies in the difference in data verification methods. OP-rollup is the same as Plasma, and uses fraud proof in the verification link: the main chain records the Merkle root calculated at each step off the chain. If a node finds that the new Merkle root corresponding to a batch of calculation results is wrong, they will The error proof can be published on the main chain, and if the verification is passed, all batch transactions after the batch will be rolled back. Therefore, it takes a week to wait for withdrawals on OP-rollup. Of course, some third-party cross-chain bridges can actually be used to achieve fast cash withdrawals at discounted prices. ZK-rollup uses validity proof to solve the above problems: each state return needs to provide a zero-knowledge proof (ZK-SNARK), which will be verified by the Rollup contract on the main chain to prove that these transactions do exist, and these transactions are Signed by the initiator, which prevents the operator from submitting an invalid state or tampering with the state.

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Source: https://l2beat.com/

Regarding the internal competition between ZK-rollup and OP-rollup, I recommend two in-depth and concise explanations:Layer2 Notesand "The best comparison on zkRollups today"

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Source: https://pro.nansen.ai/multichain/polygon

Polygon claims to be an aggregator of expansion solutions, but StarkWare co-founder Uri Kolodny emphasized that Polygon is a side chain rather than Layer2, implying that the security of Polygon does not depend on Ethereum. Judging from the actual situation, Polygon did not help Ethereum to expand its capacity (obviously, Polygon is expanding its own capacity). It is similar to BSC and is a completely independent clone of Ethereum based on the PoS mechanism. It just uses the ready-made Geth , removed the consensus code, increased the gas limit, and used multisignature (multisig) to bridge back to Ethereum.

However, is this security risk important to users? Haseeb Qureshi brilliantly elaborated on this phenomenon in the article "I'm Worried Nobody Will Care About Rollups": "Rollup's scaling narrative makes sense to everyone, and decentralized maximalists tell a story about not being The big story of scaling Ethereum requires trade-offs. Traders draw lines on price charts about how Rollup will push ETH to $10K. Regular users are frantically farming AAVE-MATIC gains using Polygon While participating in digital horse racing betting, I also nodded curiously to the narrative of Rollups." Looking at the skyrocketing public chain track today, there is BSC in the front, Polygon in the middle, and Avalanche in the back. It seems that they only need to complete EVM compatibility first. , and then fork the project on Ethereum, and finally spend money to pull a wave of disks to become faster and cheaper than Rollup. Comparing them, Rollup is not even EVM compatible yet.

In the article, the author mentioned two ways to make users abandon the side chain and vote for Rollup. One is that these non-Rollup sidechains have failed catastrophically, not just the "nodes cannot be synchronized" that often occur in BSC, but the major security incidents such as "funds are gone". This will make people deeply aware of the importance of decentralization, but this is unlikely. The second way is that Rollup can accomplish what other sidechains cannot do. Not only is decentralization an advantage that users cannot deeply appreciate, but it also requires cryptography such as ZK-SNARKs to achieve large-scale computing compression and privacy protection intelligence. Contracts, provable MEV resistance, and more.

Coincidentally, a month after Haseeb Qureshi published this article, Polygon announced a $1 billion investment in work related to ZK-rollup. Two $650 million acquisitions have since been announced: Hermez and Mir. More recently announced Polygon Miden, a STARK-based Ethereum-compatible rollup, and Polygon Nightfall, a privacy-focused rollup built in partnership with EY. Unlike BSC or Avalanche, which just copy the ecology on Ethereum, Polygon's imitation of Ethereum can be described as similar in form and spirit.

At present, the gas fee of Polygon is less than 0.01% of that of Ethereum (Ethereum cannot reduce the gas fee to such an extent even if it completes sharding and Rollup), and its speed is comparable to that of BSC. If ZK-SNARKs can be realized, it will be compatible with EVM public The most powerful contender for the second spot in the chain (represents personal opinion only).

Solana

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Source: https://solanabeach.io/

The skyrocketing price of Solana reflects the underlying logic behind the outbreak of new public chain tracks this year. First of all, it is naturally because the congestion of Ethereum has given the peers the opportunity to catch up. The first to seize this opportunity is BSC. The method is as mentioned above, just copy it, and the subsequent compatible EVM public chains will follow this routine. However, Solana took a different approach and chose not to be compatible with EVM. Its expansion strategy is different from that of Ethereum. It adopts a proof-of-time (PoH) consensus mechanism. For specific technical features, please refer to "Solana Summer".

The second logic is: the competition of public chains can start from ecology instead of technology. This is not to say that technology is not important, but it is indeed worth thinking about some old-school public chains that are entangled in technology but the currency price has not improved. In order to make the ecology prosperous, the Solana team and its investors have adopted a series of incentives to motivate users to experience their platform, such as introducing liquidity mining, providing subsidies for developers, holding hackathons, providing donation funds, etc. In all these examples, the public chain does not need advanced technology, but only money, and the most important thing Solana lacks is money. This is not to say that Solana has low technical content, but compared to other public chains, when we mention it, the founders are the first thing we think of, but Solana is the first thing that people associate with investors.

Polkadot

On December 17, Polkadot's first batch of five bidding parachains were launched and successfully joined the network, followed by Acala, Moonbeam, Astar, Parallel Finance and Clover. The next batch of Polkadot auctions will start at height 8263710 (approximately December 23, 2021), with a total of 6 auctions, of which 6 winning parachains will be launched at height 9388800 (approximately March 11, 2022).

Polkadot's major events in 2021 may only be summarized in the above two sentences. It has no gorgeous story and progress is still slow, but we can never ignore it when discussing which public chain can challenge Ethereum. Especially with the rise of new public chains, the picture of "multi-chain coexistence" described by Gavin Wood is becoming clearer. I won’t go into details about its technology here, because it doesn’t have an endless stream of modification protocols like Ethereum. If you want to know more, you can read Blue Fox NotesPolkadot series。

Terra

Terra is the most interesting public chain in my opinion. First, it is the first public chain built around a stablecoin protocol. Second, it is the public chain most closely connected with traditional finance. Finally, it is the public chain that gets along best with government regulators. Regarding its stablecoin business, Mint Ventures ina research reportdescribed in detail.

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Source: https://defillama.com/chain/Terra

Terra has raised multiple funding rounds this year. In January, Terra received US$25 million in financing, mainly for Synthetic Asset Protocol Mirror and Savings Protocol Anchor. In March, Anchor completed 20 million US dollars in financing and launched the V1 version. In July, Terra launched a USD 150 million ecological fund to support ecological applications. At present, the team is focusing on the development of the latest version of the main network, Columbus-5. Columbus-5 is a very important main network upgrade, including treasury fund allocation and destruction mechanism updates.

There are three main problems Terra currently faces. First of all, Terra's stablecoin UST is an unsecured stablecoin, and its price is riveted by Luna's market value. If Luna plummets, UST will experience price decoupling. From May 19th to May 25th, UST experienced a negative premium of about 10% for the second time, and it lasted for 2-3 days.

The second is how to deal with the supervision of other countries. Terra's second largest protocol, Mirror, has synthesized some US stock assets, and users are free to go long and short and carry out Farming, which obviously cannot pass the supervision of the US SEC. In March of this year, the Bank of Thailand announced that it would consider any activity involving the Thai baht’s digital stablecoin (THT) illegal.

The third major problem is that the degree of decentralization is seriously insufficient. At present, most of the nodes are concentrated in South Korea and controlled by chaebols, and the information transparency is low.

Thinking about Public Chain Valuation

The valuation of the public chain has always been a difficult problem. It is not like the DeFi protocol can calculate the value through the ratio of earnings such as PE and PS. The biggest problem is that it is difficult for us to calculate the network value captured by the token of the public chain. TaschaLabs gave such an idea that is worthy of reference: compare the public chain to a country, then the token is the currency of this country. According to the monetary equation: M × V = P × Y (respectively representing money supply, circulation velocity, price, and actual GDP), it is finally calculated that the token price is directly proportional to the GDP of the public chain, and inversely proportional to the token issuance and circulation velocity. Of course, how to measure the GDP of a public chain and the circulation speed of its tokens requires further analysis of the data on the chain, but we can roughly verify the formula through simple chart observation: the price of the public chain is positively correlated with the number of active addresses or the number of new addresses trend.

However, the current valuation method popular in the blockchain field is still a simple analogy. For example, people like to compare Bitcoin to digital gold or US dollar M0. Under this assumption, the target price can be predicted by dividing the market value of gold or M0 value by the number of Bitcoins. But this is only a target price, and it is unknown when this target will be reached. Similarly, people have begun to compare public chains to Internet companies, and the top public chains are naturally compared to FAMGA. The total market value of these five companies is about 10 trillion US dollars, with an average of 2 trillion each. The current market value of Ethereum is about 450 billion US dollars, which is 3-4 times away from the average market value of FAMGA. Considering the changes that Ethereum 2.0 will bring to the network, this estimated increase is not an exaggeration.

Replenish

The ecology on the chain was mentioned here and there, so here is a summary. In addition to the substantial increase in the amount of locked positions on the DeFi track this year, the three biggest changes are: the launch of V3 AMM, the birth of perpetual options, and the emergence of DeFi 2.0. The rest of the DeFi rules basically continue last year. As of December 19, the total lock-up volume of DeFi was 236.6 billion US dollars, and the top ten public chains were: Ethereum (63%), BSC (7%), Terra (6%), Avalanche (5%), Solana (5%), Tron (2%), Polygon (2%), Fantom (2%), Arbitrum (1%) and Cronos (1%).

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Source: https://www.theblockcrypto.com/data/decentralized-finance/dex-non-custodial

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Source: https://www.theblockcrypto.com/data/decentralized-finance/dex-non-custodial

analyzeanalyze。

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