Stacked Insights Newsletter, 11.23.21 Should you abandon E | Stacked

Stacked Insights Newsletter, 11.23.21

Should you abandon Ethereum?

Last week, Three Arrows Capital CEO Zhu Su kicked the hornet’s nest when he stated he was walking away from Ethereum. In his opinion, Ethereum gas fees have priced out the majority of retail users because developers have acted too slowly in upgrading the network’s capacity.

Ethereum 2.0 represents the long-awaited switch from proof of work consensus to proof of stake. The move will make Ethereum orders of magnitude more energy-efficient while increasing network throughput several hundred times using sharding technology.

However, the move to ETH 2.0 has been dogged by factional infighting between key Ethereum developer teams causing perpetually delayed milestones. In the here and now, demand for Ethereum is at all-time highs — a fact evidenced by the $300+ transaction fees that show no sign of abating.

That’s why Su — along with other influencers — are coming out of the woodwork to claim they’ve left the Ethereum ecosystem for good and are now all in on other Layer 1 blockchains.

The L1 space heats up

The chains generating the most support at the moment are Solana, Polkadot, Avalanche, and Tezos, but several lesser-known networks are waiting in the wings. Those include Oasis, Kadena, Near Protocol, and even the interoperable ICON network.

Of those names, only Solana, Polkadot, Avalanche, and Oasis have fully deployed mainnets along with decentralized exchanges, EVM compatible tools, and vibrant DeFi + NFT markets. However, the question ultimately boils down to whether that’s enough to walk away from Ethereum, the world’s most liquid, adopted, and asset-rich blockchain.

But L2s can save Ethereum

What Zhu Su and others forget when they throw mud at Ethereum is that effective Layer 2 scaling solutions already exist with fully deployed applications + billions of dollars worth in TVL. For examples, look no further than Polygon, Loopring, Arbitrum, Optimism, and Immutable X.

Because of L2s, it’s simply too hasty to walk away from Ethereum, especially when one can also bridge Ethereum assets to other more scalable chains like Fantom. Heck, you can bridge Ethereum assets to Solana and Avalanche too.

Instead of abandoning Ethereum, we advocate experimenting with other blockchains to see how they work and what’s available on them. On Tezos, you’ll find an incredible wealth of fine art NFTs while on Solana there’s DeFi and gaming. The future is multichain, so it makes perfect sense to get adjusted now.

But it’s likely that Ethereum will always sit at the head of the table when it comes to L1s — especially when ETH 2.0 rolls around. So, don’t walk away just yet.