Lessons from the past: What is the current status of public chains that are older than Ethereum?

What was the first ICO digital currency? Ethereum is not the earliest public blockchain? What is the relationship between USDT and Mastercoin 6 years ago?

Ethereum is not the earliest public chain

Today, Ethereum’s position in the blockchain world is unquestionable. Except for its big brother Bitcoin, Ethereum’s position is unmatched. Whether as the originator of smart contracts or as the main battlefield of the currently popular DeFi, Ethereum is the undisputed leader.

But in fact, Ethereum is not the earliest public chain in the blockchain. Mastercoin, which was launched at the end of 2013, is the earliest public chain. Of course, many people may not have heard of this name nowadays, but if I say OMNI, many people may have some impression of it. Yes, there is a version of USDT called OMNI.

7 types of USDT, how many do you know?

When it comes to USDT, everyone knows it. However, there are actually 7 types of USDT now, based on 7 different blockchains: OMNI, Ethereum (ETH), Tron, EOS, Liquid, Algorand, and SLP. Among them, the OMNI version of USDT has the longest history and once accounted for more than 50% of the issued USDT.

But currently, the issuance scale of USDT has reached 16.9 billion US dollars, of which the Omni version of USDT accounts for less than 8%. From half of the market to less than 8%, how did Omni decline? This story started 7 years ago, in 2013.

7 types of USDT circulation provided by Tether’s official website

OMNI is the earliest public chain ancestor

I found a screenshot of the top 10 digital currencies by market value in December 2013. Can you take a look and see how many of them you know? In the cryptocurrency world in 2013, there was no public chain that could support smart contracts. At that time, there were only coins but no tokens, because Vitalik's Ethereum had not yet been released. However, attempts to develop public chains, smart contracts, and digital assets have already begun, and this is OMNI (originally called Mastercoin).

Top 10 digital currencies by market value on December 29, 2013

In July 2013, the development of Mastercoin was put on the agenda. Ethereum founder Vitalik even wrote an article to introduce Mastercoin - "Mastercoin: A Second-Generation Protocol on the Bitcoin Blockchain", which was published in "Bitcoin Magazine" on November 4, 2013.

This article was also translated by Chang Qia, a domestic blockchain pioneer and evangelist. The fact that two heavyweights in the blockchain field wrote and translated it shows how innovative and influential Mastercoin was at the time.

Article link: https://www.8btc.com/article/5952

Mastercoin launched crowdfunding on July 29, 2013 ( the term ICO had not yet been invented ), with an exchange rate of 1BTC:100MSC. In the end, Mastercoin raised a total of 5,120 bitcoins, which was about $500,000 at the time. After the release of MSC, it became a hot topic for a while, with the highest price reaching 0.24BTC and the highest market value reaching $110 million, ranking fourth in the market value of digital currencies at the time.

Mastercoin created two firsts. The first is the crowdfunding method , which is now known as ICO; the second is the first underlying public chain that truly supports smart contracts . Specifically, Mastercoin is an "open source, fully decentralized asset platform based on Bitcoin" that uses the Bitcoin blockchain to implement protocols with functions such as smart contracts, user currencies, and decentralized peer-to-peer trading platforms.

In other words, blockchain practices related to smart contracts, digital assets, and decentralized exchanges (DEX) have already existed as early as 2014. So neither STO nor DEX are new things that came out in 2020, but they are just an explosion after the completion of infrastructure construction.

Unfortunately, the good times did not last long. Due to a series of objective or subjective reasons, such as the overall bear market of digital currencies, the technical architecture of Mastercoin itself, and the management problems of the foundation, Mastercoin went to zero at the end of 2014. Although it had a brief flash of brilliance during the bull market in 2017, it could not escape the fate of death. Although the price of the token MSC began to return to zero, as an underlying public chain, Mastercoin has important reference value.

OMNI (Mastercoin) market value change chart from 2014 to 2020

On July 10, 2014, USDT based on the Omni chain was officially released by Tether, claiming to be pegged to the US dollar at a 1:1 ratio. USDT was born out of the crackdown on digital currencies by regulators and banks in various countries, and grew with the support of the then leading exchanges Bitfinex and Poloniex. It gradually gained a firm foothold, and the subsequent launch of OKEx, Huobi, and Binance made it an important means for Chinese users to deposit and withdraw funds.

USDT is to OMNI what Token is to Ethereum , the only difference is that more people know USDT but not OMNI . The market value of USDT token exceeds the market value of the underlying public chain OMNI , which is very surprising. How to assign value to tokens has become a problem that all subsequent Coin and Token initiators have to think about.

At present, as the leader of stablecoins, USDT has a market value of about 16.9 billion US dollars, ranking third in the digital currency market value ranking. From this perspective, the underlying blockchain OMNI on which USDT is issued has not failed. Without OMNI at that time, there would be no USDT today. Thanks to the explosion of public chains brought by Ethereum, issuing tokens such as USDT has become easier and easier, and it is more and more convenient to use. The USDT based on OMNI is gradually showing signs of fatigue. Based on the characteristics of the Bitcoin blockchain, the transfer of the OMNI version of USDT is slow and expensive, which does not meet the requirements of liquidity.

One day, the OMNI version of USDT will also exit the stage of history, and may be replaced by the ERC20 version of USDT, or by several other USDTs. Ethereum is undoubtedly the most successful public chain so far, but how to deal with the fierce competition in the future is a difficult problem. After all, if Bitcoin is digital gold, Ethereum is more like an operating system or development tool, and from experience, no operating system or development tool can stay young forever . Now, the new generation of public chains such as Polkadot are challenging Ethereum.

The death of Mastercoin may provide some inspiration to Ethereum and the new generation of public chains that are in the transition to 2.0:

1. One step ahead is a pioneer, three steps ahead is a martyr. Innovation is important, but innovation cannot keep you alive. Mastercoin is dead, while Litecoin is alive and well, although Mastercoin is more innovative than Litecoin.

2. It is important for developers to make appropriate adjustments and listen to appropriate opinions. In fact, in 2013, when Vitalik was working with the Mastercoin team, he suggested some improvements to the project. However, when Vitalik sent the document to JR Willet, the founder of Mastercoin, JR Willet politely expressed his gratitude, saying that the idea was interesting, but it would take a long time to actually realize it. "Go to hell, I can do it myself." The other party's perfunctory response made Vitalik determined to do it himself. Later facts also proved that this proposal ignored by JR Willet was a genius idea with a market value of hundreds of billions. The success of Ethereum must have learned the lessons of Mastercoin.

3. The success of technology is not related to the success of the project. The value of digital asset tokens does not necessarily feed back the value of the tokens of the underlying public chain . In some cases, the digital assets on the public chain do not have an absolute symbiotic relationship with the underlying public chain. The market value of USDT is 16.9 billion US dollars, while the market value of OMNI is currently only 2.69 million US dollars. This is definitely a rare case. This case may be highly referenced for investment institutions and individuals to participate in the investment of the public chain track. It is worth thinking about where Ethereum's moat is.

4. In the blockchain world, the mortality rate of new species is very high. Don’t become cannon fodder.