Has the “noble chain” Ethereum really abandoned its users?

The rise of high-performance public chains such as Solana and Avalanche has triggered a KOL debate between the "emerging school" and the "classical school".

On November 20, Kain Warwick, founder of Synthetix, tweeted that many people he previously respected lost their reputations for speculation, and once Ethereum L2 becomes an inevitable trend, they will all flock to Ethereum. This tweet accurately touched the nerves of Suzhu, founder of Three Arrows Capital, who ridiculed Kain in the comment section for choosing the worst expansion solution for users (referring to Ethereum and L2).

It should be noted that Three Arrows Capital had made a lot of wealth by investing in Ethereum projects in the early days, and also invested in Synthetix in 2020. However, recently, the investment institution has turned to investing in new public chains and on-chain projects such as Avalanche, reducing its attention to the Ethereum ecosystem. Suzhu believes that Kain, who is still sticking to Ethereum, is slow.

On November 21, Suzhu continued to express his views, saying that he had given up on Ethereum because Ethereum had given up on its users, and "newcomers can no longer afford to use this chain." As soon as this tweet came out, the Ethereum community couldn't sit still, and the founders of Uniswap and Balancer joined the debate, accusing Suzhu of inappropriate remarks. In the end, the dispute was settled with Suzhu's apology.

It can be seen that with the implementation of more high-performance public chains, Ethereum is becoming a "classical" in the eyes of some people.

However, judging from the recent progress of Ethereum, Suzhu's remarks about "abandoning users" are not objective. The total locked value of the Ethereum L2 network has exceeded 6 billion US dollars, setting a new record. Among them, Arbitrum has reduced the transaction gas fee to about 5 US dollars on the basis of performance improvement, and another side chain dYdX does not need to consume gas fees.

The L2 solution is making up for Ethereum's shortcomings of inefficiency and high fees. At the same time, the development of ETH 2.0 is also underway. Ethereum does not intend to give up the crown of the king of public chains easily.

The view that "ETH abandons users" sparked heated debate among crypto KOLs

The rise of high-performance public chains such as Solana and Avalanche has set off a new round of public chain wars. Ethereum, which has been the public chain king for many years, has once again become a hot topic due to the impact of challengers. Last weekend, a debate involving many opinion leaders in the crypto circle appeared on Twitter.

On November 20, Kain Warwick, the founder of Synthetix, the leading synthetic asset protocol on the Ethereum chain, pointedly stated on Twitter that in this cycle, many people he respected in the early days speculated at the expense of their reputation in pursuit of profit maximization. But once Ethereum Layer2 inevitably arrives, they will all flock to the Ethereum ecosystem.

Just as onlookers were speculating about who Kain was mocking, Suzhu, founder of Three Arrows Capital, jumped out. He did not care about his previous investment in Synthetix at all, and directly posted the SNX/BTC K-line that continued to fall under this tweet, and said that Kain chose the worst expansion solution for users to protect his ETH position. Suzhu sarcastically said, "Do you still have the courage to insult people who are not as slow as you?"

Synthetix founder's tweet sparks controversy

Suzhu obviously felt that Kain's tweet offended him. As an investment institution, Three Arrows Capital fully caught up with this wave of new public chain explosion. It not only invested in the new public chain Avalanche in the early stage, but also invested in Solana chain projects including the chain game Nyan Heroes. He continued to comment that there are already many projects on Avalanche that have migrated from Ethereum, "I urge you to observe carefully and rethink."

Hearing this, Kain did not give in. "You are too excited about this matter. Maybe you should consult a good therapist."

The two big Vs were merciless in their attack, and Suzhu simply pointed the finger at Ethereum, "Although I supported Ethereum in the past, I have given up on it. Although Ethereum supported users in the past, it has given up on users. Newcomers can no longer afford this chain." After pointing out the disadvantage of Ethereum's high gas cost, he added that everyone on Ethereum is too rich to remember their original intentions. "Maybe it takes a bear market to remind them, or we have to build a blockchain that truly supports users elsewhere."

As soon as these words came out, the verbal dispute between the two people escalated into a group debate. Soon, Uniswap founder Hayden Adams and Balancer co-founder Ric Burton arrived at the battlefield. Adams said that Suzhu's statement was very bad and insulted all those who worked hard for ETH 2.0 and Layer2; Burton also began to fight back against Suzhu, "This is just because you didn't invest in the seed round of Layer2 projects such as Arbitrum and Optimism, and you didn't create anything."

After suzhu angered a number of bigwigs in the Ethereum community, he seemed to realize that his remarks were inappropriate. He sent another tweet saying that "giving up" was the wrong word and that he was too excited at the time and was sorry. He also praised the progress of Layer2. Only then did the debate subside.

From Suzhu's point of view, he, as a representative of capital, is considering Ethereum as the past tense and classic school of the public chain world. During the heated debate, the on-chain data analysis tool Nansen showed that the Three Arrows Capital address transferred 17,895 ETH to the FTX exchange, worth nearly 80 million US dollars. At the same time, some users found that Synthetix and Ethereum had been removed from the investment portfolio posted on the official website of the investment institution.

New chains are coming in full force, Ethereum is preparing for Layer 2 and 2.0

Suzhu's remarks sparked huge controversy, but it is undeniable that Ethereum's overly expensive gas fees have indeed "dissuaded" many retail players, and it has therefore been nicknamed the "noble chain."

Currently, when the Ethereum network is slightly congested, it costs about $10 in gas fees to make a normal transfer. If you want to make a transaction on Uniswap, the gas fee is as high as about $100. In contrast, when conducting general transactions on public chains such as Solana, the gas fee is less than $1.

As new public chains have better performance and lower fees, Ethereum native protocols including Curve, AAVE, and SushiSwap have gradually expanded to versions on other chains, while protocols such as Maker, Uniswap, Compound, Synthetix, etc. are still sticking to the Ethereum ecosystem.

Each protocol has its own considerations for its choice. However, it is obviously biased to think that "Ethereum has abandoned its users" simply because Ethereum Gas is expensive.

According to OKLink data, Ethereum is still the public chain with the largest user base and the most accumulated value. It has more than 69 million coin holding addresses and a total locked value (TVL) on the chain of more than US$169 billion, accounting for more than 65% of the entire blockchain ecosystem.

While the Layer1 network is difficult to improve scalability, the Ethereum Layer2 network has already achieved large-scale implementation this year. According to L2BEAT data, the TVL of all Ethereum Layer2 networks has exceeded $6 billion, setting a record high. Among them, Arbitrum's TVL is $2.59 billion, dYdX is $995 million, and Boba is $926 million. Following closely behind are Layer2 solutions such as Optimism, ZKSwap, and ImmutableX, which are also continuing to expand.

Ethereum L2 network total locked value exceeds $6 billion

According to actual tests, the transaction fee for a transaction on Arbitrum can be reduced to about US$5, and no Gas is required for derivative transactions on dYdx. This shows that the Layer2 expansion solution does indeed significantly improve Ethereum's performance while reducing user costs.

Recently, Ethereum founder Vitalik also encouraged in the Arbitrum community, "I know many people are frustrated by the remarks that 'the Ethereum team does not care about users', but you have made great progress as the backbone of solving the transaction fee problem."

As new public chains are coming on strong, the development of Ethereum 2.0 is also proceeding as planned. According to OKEx data, as of November 22, the total number of ETH2.0 staked exceeded 8.36 million ETH, accounting for 7.12% of the total ETH supply, and the total number of validators on the ETH2.0 beacon chain exceeded 260,000.

On November 23, the Ethereum Foundation announced that the 2.0 testnet Kintsugi is expected to be launched in the first week of December. After Kintsugi is launched, the relevant EIPs and specifications will enter the final call state, and the public proof of work and testnet will be merged and transitioned in the new year.

"The team is doing things" still applies to Ethereum. With the development of the Layer2 network and the implementation of ETH2.0 in the future, what the founder of Synthetix said, "They will all flock to the Ethereum ecosystem," is not impossible to achieve.

When this debate took place, the question of "which public chain is better" was also widely discussed in the crypto community. In the view of Chris Dixon, a16z partner, the more "Ethereum killers" the better. People's demand for blockchain always exceeds the supply, which will bring more public chain solutions, and on-chain applications will also evolve, which will then promote the birth of more ideal blockchains, forming a mutually reinforcing positive cycle. "Various experiments are important, and our greater goal is to mainstream blockchain and Web3."