This article reviews the fierce debate between Suzhu, founder of Three Arrows Capital, and the Ethereum community

Origin

This weekend, a rare large-scale debate took place in the crypto industry’s Twitter circle. Almost all well-known KOLs participated in it, and it gradually evolved from a personal quarrel to a battle over the public chain structure.

The debate first occurred at around 1:00 p.m. Beijing time on Saturday, when Kain Warwick, founder of Synthetix, tweeted, “In this cycle, many people I respected early on pursued opportunistic gains at the expense of their reputation in order to maximize profits. Remember this, once L2 expansion becomes inevitable, they will all flock to the Ethereum ecosystem.”

This statement may be directed at the behavior of many industry KOLs and investment institutions who strongly support public chains such as Avalanche, Solana, and Fantom, boosting the prices of their tokens and benefiting from them.

Half an hour later, Su Zhu, founder of Three Arrows Capital, posted the SNX/BTC price K-line and a news link about Kain Warwick spending more than 30 million US dollars to buy real estate under his tweet, and replied: "You chose the worst expansion solution for users to protect your own ETH positions, thereby effectively impoverishing your own community, and now you have the guts to insult anyone who is not as slow as you?"

Since the beginning of the year, although the Synthetix token SNX has risen by nearly 300% at its peak, it has only risen by about 20% at the current price ($8.67), which may be one of the worst performing mainstream DeFi tokens, with a current circulating market value of about $1 billion. Three Arrows Capital became one of the investment institutions of SNX in 2020.

Among Ethereum’s mainstream DeFi projects, only a few projects such as Synthetix, MakerDAO, and Uniswap have not yet been deployed on L1 public chains outside of Ethereum, while projects such as Aave, Compound, Curve, Yearn Finance, and Sushiswap have all been deployed on public chains such as Avalanche and Fantom.

As the founder of Three Arrows Capital, Suzhu has invested heavily in public chain ecosystem projects such as Avalanche and Solana in the past few months, so much so that more than 70% of Suzhu's tweets in the past few days have been in support of Avalanche and its token AVAX. Therefore, Suzhu believes that Kain Warwick is too stubborn in the Ethereum ecosystem and believes that supporting L1 public chains such as Avalanche is a very reasonable choice.

"I'm trying to fund and support projects that bring greater economic freedom to the world, and Avalanche is doing that. You're doing your thing, and that's fair enough. But you can't act like your way is more correct than anyone else's without a public flogging."

"It makes me uncomfortable to see that you are more focused on ensuring the value of the ETH asset goes up rather than making sound technical decisions for your community. At Avalanche, we have welcomed many DeFi projects starting with Ethereum. I urge you to watch carefully and rethink," suzhu continued to reply.

Kain Warwick replied to suzhu, "I'm actually impressed by how triggered you are by this, it almost feels like you're feeling guilty about your choices. Maybe ask your assistant to find you a good therapist?"

Within a few hours, the two sides had at least 10 rounds of dialogue on the above-mentioned topic, fiercely criticizing each other, even to the point of personal attacks.

After the debate briefly subsided, Suzhu retweeted four bloggers’ tweets criticizing Ethereum or Synthetix. However, the influence of the discussion at this time was still relatively limited. It was Suzhu’s fierce speech the next day that really pushed the debate to explode the entire crypto industry.

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At about 8 a.m. Beijing time on Sunday, Suzhu tweeted, "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 to use this chain."

“Ethereum culture is deeply influenced by the founders’ dilemma. Everyone is too rich to remember their original intentions. Maybe it takes a bear market to remind them, or we have to build new blockchains elsewhere that truly support users.”

In this speech, suzhu, as one of the biggest beneficiaries of the Ethereum ecosystem explosion, clearly expressed his intention to abandon Ethereum, which aroused counterattacks from many die-hard supporters of the Ethereum ecosystem , including Unsiwap founder Hayden Adams, Balancer co-founder Ric Burton, etc. Ethereum founder Vitalik indirectly responded to this matter on Discord.

Hayden Adams, founder of Unsiwap, commented: “This is a very bad move and incredibly insulting to everyone working on ETH 2.0 and L2s, especially from someone who has gained extraordinary wealth with the support of Ethereum builders.”

Balancer co-founder Ric Burton responded, “Just because you didn’t get into the seed round of Arbitrum, Optimism, or any decent ZK project doesn’t mean we’re sitting there as a community. You’re a very insulting supplicant who only exists for other people’s work. You’ve created nothing except the exit narrative.”

Bankless founder David Hoffman responded that giving up decentralization is the biggest sin you can commit in this field . It is easier to fix fees than to fix centralization.

The founder of venture capital firm Placeholder criticized Suzhu's public ridicule itself, saying, "If you are an investor operating in the private market, it is unacceptable to try to publicly humiliate an entrepreneur who is making a sincere effort."

Pi Ma, co-founder of ContinueCapital, indirectly expressed his support for Kain Warwick from the perspective of industry development. "It has nothing to do with the technology route, it's just an identity attribute, although we are a supporter of the multi-chain ecosystem. Any company founder needs to go all in, and there are few ways out. The longer it takes, the harder it is to grow. Capital is ultimately about optimizing resource allocation but cannot replace projects. Among the top 50 richest people in the world over the years, how many of them, except Buffett, got in through investment? They are all founders of top companies. Creating value is far better than discovering value. "

At the same time, Suzhu did not mention the value of Ethereum’s L2 expansion plan in his previous speech, which also caused dissatisfaction among many people. Vitalik also indirectly responded to this matter in the Arbitrum Discord community, “I know that many people are frustrated by the statement that “the Ethereum team does not care about users”, but you have made great progress as the backbone of solving the handling fee problem. You have obtained a withdrawal channel from Binance and hope to get support from more projects in the future (we are about to develop a decentralized cross-Rollup bridge).”

It can be seen that most of the criticisms were directed at suzhu's statement of "giving up" Ethereum. Such an uncompromising statement put suzhu in an extremely unfavorable position in the public opinion field, and almost no well-known KOL stood up to support him.

However, in terms of recognizing the development of L1 beyond Ethereum, many KOLs in the crypto industry still expressed clear support. For example, Aave founder Stani Kulechov expressed support for innovation and decentralization of all networks, and YFI founder AC tweeted that Avalanche's consensus mechanism and its implementation are reliable technologies. It will encounter state expansion problems, but so does ETH.

Arthur, founder of DeFiance Capital, said that from a game theory perspective, the best move for top Eth DeFi applications is to deploy to any legal EVM-compatible L1. If not, another team will fork it and magically siphon billions of dollars of value from you with minimal work. "We are likely to see some SNX forks on other chains get higher valuations than SNX, which is really unfortunate."

It is worth noting that Three Arrows Capital became one of SNX's investment institutions in 2020. After this controversy, the official website of Three Arrows Capital was also found to have removed Ethereum and Synthetix from the institution's investment portfolio.

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At around 7pm on Sunday, the incident ended with Suzhu's apology. Suzhu tweeted, "I want to soften this point. Saying 'give up' is the wrong word. I was too excited at the time. I'm sorry."

“I will always be grateful to the Ethereum ecosystem for giving us the opportunity in the first place. I was irritated by a small minority of people who I should have realized were not representative of the larger community.”

In addition, Suzhu also expressed his recognition of Ethereum L2, saying that there are many excellent teams on L2 committed to expanding Eth, and that the strongest L2 product is dydx on starkware.

But at the same time, Suzhu also defended his previous arguments, "In 2019, the focus of DeFi was to provide banking services to people without bank accounts. In 2016, many Ethereum people criticized Bitcoin for charging a fee of $0.05. Fast forward to now, a large number of users have been turned away, their funds are stuck on the chain, and so on."

“I don’t know what the solution is. But I do know that millions of new users are coming, and they shouldn’t be ashamed to enter other ecosystems. Developers shouldn’t be ashamed to build on top of them.”

“I think Bitcoiners and Ethereum people have too much nostalgia for the past. The future of crypto is to provide similar opportunities and freedoms to a new generation, without asking them to bow their heads and pay our rent or marvel at how early we were.”

Therefore, Suzhu expressed his preference for the roadmap of ETH L1 and hoped that Ethereum would focus more on users rather than the welfare of holders when upgrading.

Suzhu’s apology has calmed the anger of Ethereum supporters to a certain extent, but as Kain Warwick said, “At least now the Ethereum community knows his true thoughts. I’m glad I could drive the wolf out of the sheep’s clothing.” It may take a long time for Suzhu’s relationship with the Ethereum community to ease in the future.

For a long time, the competition between Ethereum and other major public chains has become increasingly fierce, especially public chain currencies such as SOL, AAVX, and FTM have all seen a sharp rise in recent times with the support of capital. Due to conflicts of interest, conflicts between public chain communities are actually gradually accumulating , and this debate is actually an outbreak of these conflicts.

There is no doubt that the cohesion of the Ethereum community has been fully demonstrated in this debate, and its position as the leading public chain investor remains solid. However, the issues reflected in this debate, such as Ethereum being too expensive, other L1s being despised by Ethereum OG, and the relationship between VCs and entrepreneurial projects, are still worth more people’s consideration.