Opinion: Has Ethereum Truly Succeeded Beyond Bitcoin?

WuBlockchain

Aug 31, 2023

Author：HSL

Source:

https://mp.weixin.qq.com/s/TORCg_mtYtKH675WvX1yyA

In the cryptocurrency field, the most significant issues over the long term have been:

1. Scalability.

2. Decentralization.

3. Energy Consumption — essentially, the PoW versus PoS debate.

4. Applicability across diverse scenarios.

Notably, Ethereum seems to have made substantial strides in addressing these four fundamental challenges.

The official launch of the Arbitrum One mainnet on August 31, 2021, means it has been two years since this date as of today (August 27, 2023).

The two-year span of secure operation unequivocally validates that Rollup stands as a proficient method for scaling blockchain networks.

Op-Rollup has already successfully elevated Ethereum’s TPS to 100 transactions per second, a figure that could further skyrocket with the upcoming Cancun upgrade, potentially extending to thousands of TPS as zk-rollup technology matures.

By strategically distributing transaction security requirements — placing high-security transactions on the high-gas L1 layer, followed by lower-gas L2-Rollup, and eventually lower-security L3-Rollup — the compression efficiency of transactions steadily improves, enabling even higher TPS rates.

Rollup seems to have effectively tackled Ethereum’s most pressing scalability issue, a challenge that originally emerged with Bitcoin.

Decentralization, an even more formidable challenge than scalability, has been a contentious topic in the blockchain world.

From its inception, Ethereum has faced criticism from Bitcoin enthusiasts who deemed it excessively centralized. However, with the passage of time, Ethereum’s centralization challenge has been progressively mitigated through pragmatic business-oriented approaches.

As someone who has maintained a fondness for Proof of Work (PoW), I’ve been somewhat skeptical about whether Proof of Stake (PoS) could genuinely achieve decentralization.

In terms of protocol development, I intuitively sense (alas, my ability to verify is limited) that Ethereum’s ecosystem could continue to function effectively even without the presence of the Ethereum Foundation, ConsenSys, and other entities. Additionally, the competitive landscape of application development indicates a thriving market that will always attract developers.

In terms of protocol operation, the PoS mining pool competition has turned fierce, with notable entities such as Lido, Binance, Coinbase, and FxS competently managing a plethora of Ethereum nodes. In instances where dissatisfaction arises with the operation of nodes by prominent companies, individuals are free to establish their private pools, thereby eliminating the risk of single point failures.

The days of nodes facing singular points of failure are unequivocally behind us.

Turning to the distribution of holdings, Ethereum’s expansive network of 240 million addresses with holdings is unparalleled.

Over the years, my inclination leaned toward Unspent Transaction Output (UTXO) and PoW as the most effective mediums for decentralized technology. From Ethereum’s real-world application, it’s evident that PoS combined with an account-based model achieves a higher level of decentralization.

Ethereum is now immune to catastrophic failure caused by a single point, even if Lido were to suddenly collapse, the worst-case scenario would likely be a 50% reduction in prices.

The energy consumption debate essentially encapsulates the PoW versus PoS narrative, and Ethereum’s trajectory provides definitive insights.

While I personally align with environmental concerns, I’ve always maintained that blockchain’s energy consumption is not a towering concern. Nonetheless, the industry’s consensus has swung towards minimizing energy usage. The tide has shifted, favoring PoS over PoW.

The launch of the Beacon Chain on December 1, 2020, heralded the dawn of PoS (only deposit), which has been operational for nearly three years.

The full transition to PoS commenced on September 15, 2022, almost a year ago. The Shanghai upgrade on April 12th of this year marked the final step, permitting PoS (coins can be staked and withdrawn), solidifying Ethereum’s decentralized operation as secure and stable over an extended period.

From my perspective, the resilience of software running securely and smoothly for a year is persuasive evidence. The prolonged decentralized operation of PoS Ethereum has fortified my belief in the viability of PoS.

As for whether PoS surpasses PoW, I find conclusive determinations unnecessary. What matters most is the conclusion that PoS is feasible.

The DApp running on Ethereum are now more diverse than ever.

From its outset, Ethereum embraced the core applications of Bitcoin, even encompassing less orthodox aspects like anonymous currencies that led to a proliferation of gambling and fraudulent schemes.

Ethereum’s assets have proven indispensable for cross-border trade and serve as crucial payment and settlement tools in numerous domestic and international trade scenarios, with Tether (USDT) as a standout example.

The EVM ecosystem and smart contract ecosystem have paved the way for a myriad of applications, with DeFi and NFTs being particularly successful. Gamefi is also gaining momentum.

In 2023, it could indeed be dubbed the “Year of Real-World Assets,” as tangible assets find a place on the blockchain. This year marked the introduction of stablecoins backed by government bonds, offering direct investment in US government bonds via the blockchain.

The trajectory suggests that an increasing number of application scenarios will continue to integrate with Ethereum, steadily infiltrating various aspects of our lives. This trend may very well be the new norm.

Wu Blockchain

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