Can Ethereum Fulfill its Prophecy To Be The World’s Decentralized Supercomputer?
Ethereum is crazily popular right now. I mean, it has always been very popular since years ago, but it has been taking things to a whole new level in 2020. With the ongoing popularity of Decentralized Finance and NFT (non-fungible tokens), it looks like Ethereum has been doing the right thing to grow its massive popularity among the crypto community. But has it done everything right, or there are still things that need to be improved? Let’s find out together.
The Arguments For Ethereum
First, let’s talk about the positive points that Ethereum has achieved. In 2020, Ethereum has been expanding its use cases for the community. Unlike 2017-2018 where things like Initial Coin Offerings became the main use case of Ethereum, this year it’s been very different. Since the beginning of the year, some new traders have started to see the potential of Ethereum. They pumped the price from below $150 to above $350.
And then, the DeFi boom has definitely helped Ethereum to solidify its position as the smart contract king. It started with COMP then YFI then UNI, all DApps with their own native tokens were launched on top of the Ethereum blockchain. The rise of AMM DEX-es have helped Ethereum to keep going higher and become more mainstream than ever before. Metamask (the most popular Ethereum wallet) has grown by more than 300% in 2020 alone.
It doesn’t stop there. Ethereum is also the platform of choice when it comes to stablecoin offerings. USDT (Tether), TUSD (TrueUSD), USDC (USD Coin), and PAX (Paxos) all launch their stablecoins on top of Ethereum. The trading volume of Ethereum blockchain has been massively inflated thanks to these stablecoins as well as the DeFi community.
The Arguments Against Ethereum
Now if Ethereum is so great like what I have described above, will it become a guaranteed success? Unfortunately not. In order for Ethereum to achieve its own prophecy as the next decentralized supercomputer, it has to overcome some very critical technical challenges.
First and foremost, the problem with Ethereum is its gas fees. With Ethereum being very popular right now, most people always have to pay more than $1 for transaction fee if they want the transaction is confirmed within less than 1 minute. During the peak of DeFi trading (August 2020), people even had to pay more than $10 for each transaction on Uniswap. It was outrageous and still is.
Ethereum co-founder Vitalik Buterin has urged the Ethereum community to use the second layer solutions that are widely available on the market. However, most DeFi traders and project creators still attempt to build everything natively on layer 1, because they are just repeating and using proven mechanisms. They don’t want to confuse their users by using a random layer 2 solution. And thus, this creates a massive cycle problem “I don’t want to use it because nobody else use it”.
Another big problem of Ethereum is the fact that its progress is very slow. In 2020, it’s very important to stay ahead of your competitors. Ethereum core developers have promised its 2.0 upgrade since years ago and yet we haven’t seen anything on the mainnet. It might take them awhile before eventually we could see phase 0 and phase 1 of Ethereum 2.0 on the mainnet.
Ethereum is great and it has a massive first-mover advantage when it comes to smart contract adoptions. Its use cases have been expanding and it looks like no other platform will come close to Ethereum when it comes to stablecoin and DEX trading activities.
That being said, Ethereum is still suffering from massive gas fee problems and the fact that it takes forever for Ethereum to transition to PoS (Proof of Stake) might actually push its believers to look the other way as there are other blockchain platforms out there with more efficient consensus mechanism than Ethereum.