Taking Lens and dYdX as examples, why is it not a good idea to bet 100% on Ethereum?

Original Author: Ann

Compilation of the original text: Bai Ze Research Institute

The crypto community has been weird the last few days, with the Ethereum maxi (maxi) exhibiting a righteous to self-righteous attitude rivaled only in annoying terms by the Bitcoin maxi.

I see. This situation started with the Multichain vulnerability, which unfortunately affected the Fantom blockchain the most. I don't know why this makes ethereum maxi feel better than others, since similar bugs can basically happen to ethereum as well.

Say Goodbye to Web 3 Social

Yes, Zach is eating up the social media pie.

But what exactly does that mean? How will Meta CEO Mark Zuckerberg's "Twitter competitor" Threads affect the cryptocurrency industry (especially Ethereum)? Will the impact be more pronounced than on Elon Musk's Twitter?

The real victim is not Twitter, but Lens Protocol - the champion of our Web 3 social media future.

I've been following the development of Lens. It's been over a year now and it's frustrating that they're still restricting their service to invitees only, with gatekeeping access.

Musk has screwed up Twitter several times, and competitors have taken the opportunity to jump in. First Mastodon, Nostr, and then Threads. Opportunities came up again and again, and each time Lens Protocol missed them. This time is no exception.

To add insult to injury, Meta also plans to make Threads what crypto enthusiasts envision: you can move your profile and data to any other service or platform.

If Meta can really solve this problem, then we can say goodbye to the slow Lens Protocol completely.

I have a theory as to why Lens development isn't moving as fast as we'd like, which I'll explore later in this article.

dYdX launches a Cosmos-based application chain

It also coincided recently that dYdX finally released the Cosmos-based v4 application chain test network. It just so happens that some Ethereum maxi label Cosmos, saying that there are no applications on Cosmos.

It's easy for these people to forget the fact that dYdX's decision to transition from L2 solution StarkWare to Cosmos is considered one of Ethereum's biggest backlashes. What’s so bad about Ethereum that a mature protocol like dYdX has decided to go its separate ways?

dYdX chose to forego the L2 solution for the same reason you shouldn't bet 100% on Ethereum.

Also ironically for the other L1s, one of the biggest problems with Ethereum right now is that it's too focused on infrastructure (do we need more new dApps to crash and ramp up when Ethereum mainnet traffic is high? Gas fees?), so, in reality, Ethereum has not built much that makes sense for mass adoption (gas fees are still high).

Some people think that consumer facing applications will be built on L 2, rollups, but the latter are mostly in continuous development.

So it’s safe to say that any progress towards mass adoption has stalled if looking at cryptocurrencies as a whole. Ethereum seems to have built a lot of new dApps, but if you look closely, it may just be a new derivatives trading platform, NFT, etc. - many are not the applications that we need to facilitate mass adoption.

"A smart contract platform with the largest number of dApps" is certainly a good reason in some cases, but certainly not a reason to disparage rival Ethereum maxi.

Ethereum is probably the best bet for investing in or developing applications right now. It is relatively stable to some extent because it is a native asset (no bridging risk) and the pledge rate is high (stable liquidity), and it also provides a good rate of return for stakers. Staking is currently at an all-time high, and a new narrative “re-staking” is gaining momentum.

But is it really wise to bet 100% on Ethereum?

Cutting out complexity - UX is the key to mass adoption

In DeFi user experience, "simple" is always preferred, especially from the perspective of Web 2 users and non-developers. Users must contend with the capital inefficiency of spreading ETH across various L2 solutions just to save on Gas fees.

We often think from the perspective of old DeFi users, and personally, I have fallen into this bias myself. As a DeFi veteran, I completely forgot that I complained that Ethereum is complicated to use. As a Crypto researcher, it's my job to explore various blockchain ecosystems, and only slight discomfort doesn't matter to me.

But most people — the potential new users the crypto industry is trying to attract — aren’t like that. Complexity remains a huge hurdle.

It's a lot less hassle to deploy dApps in one big L1 chain, or just hang around in one Ethereum L2. Users of DeFi, SocialFi, GameFi, and NFT projects can all experience it seamlessly and affordably with "Single Deposit". There is never a need to bridge other chains.

The developer's entry threshold is more important

We can say that one day, when the user experience is smoother and people cannot tell whether they are using L1 vs. L2, L3 vs. Rollup, then concerns about the above point will become obsolete.

For example, dYdX V 4 does a good job of supporting ETH wallets despite being a Cosmos-based protocol.

At the same time, user experience seamlessness is also the goal of account abstraction. With some encryption, the wallet will manage everything for the user. Deposit once, and you can do anything, anywhere without worrying about what's going on behind the scenes (on-chain).

However, I think it is still difficult to realize the account abstraction wallet. Similar to creating a button for a traditional application front end is never simple, developers must build wallets for the various ecosystems (different languages, tools and standards) they intend to support.

For example, Starkware uses a programming language called Cairo, whereas if you build on the privacy-focused Aztec, you have to use Noir. Some developers started advocating the use of Rust to provide safer code.

This is especially frustrating for an industry where the total number of developers is only one-third of Meta's workforce.

While EVM-compatible solutions like Optimism, Arbitrum, or zkSync might reposition themselves as "if a dApp can be built on Ethereum, it can also be plugged directly onto L2 at a fraction of the cost of Ethereum" or " Deploy without making too many changes to your code", but more complex workflows can take you further away from reliability.

Exactly how to choose L 1 and L 2 is itself confusing. If you are building a dApp, what are your reasons for choosing one blockchain over another? With the rapid advancement of blockchain technology and the continuous development of market needs, which blockchain is not only the best at present, but also future-proof?

This decision is very important.

Now let's talk about Lens Protocol again.

I have my own hypotheses as to why they always miss being a Twitter competitor. This is because they are built on top of Polygon. I don't know what their reasons were (besides having Polygon Ventures' VC funding), but it turned out to be a poor choice.

Polygon is notoriously slow. I don't think it's capable of supporting a social media application with millions of potential users. Also, recently it is planning to upgrade to Polygon 2.0, which leaves existing dApps built on it in limbo. Will they be able to migrate seamlessly? Is it still worth staying at Polygon when there are better blockchains?

Building dApps in the rapidly iterating crypto industry is a risky business in itself, as one wrong move can cause real financial damage.

Developers need to choose the best place to build. Some serious developers with strict technical requirements usually end up on the Ethereum mainnet. Especially when they know their target market is DeFi whales. This is what happened with Blur (professional NFT trading platform) and the recently launched EigenLayer. Any hyped project ends up on the Ethereum mainnet for a reason. I wouldn't say it's "full of innovation", more like "full of closed innovation", since very few users have the ability to play regularly on the Ethereum mainnet. We can't just cater to the needs of the whales.

Conclusion

Complexity alone is reason enough to look for alternatives, and dYdX leaving Ethereum L2 is a good example of this. After all, the "never put all your eggs in one basket" approach is wise.

Whether you are an investor or a developer, if you are still undecided about this, rest assured that even the most ardent Ethereum supporters are secretly funding other L1 solutions, if you read my previous articles Get this (the author is alluding to Ethereum maximalist Cobie investing in the new L 1 Monad this year). I bet there are many such people.

risk warning:

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