1/16) Scaling a blockchain exclusively through L2s is a terrible idea
As it comes with bad UX or trust trade-offs; pushing people into custodian solutions
Ultimately leading to its competitive failure
Only BTC & ETH are doing this; a clear consequence of misaligned incentives:
As it comes with bad UX or trust trade-offs; pushing people into custodian solutions
Ultimately leading to its competitive failure
Only BTC & ETH are doing this; a clear consequence of misaligned incentives:
2/16) We have to acknowledge the elephant in the room:
There is several orders of magnitude more funding for L2 development compared to L1 in the ETH ecosystem
Tens of billions of dollars are being created around L2 tokens, compared to mere millions for L1 development...
There is several orders of magnitude more funding for L2 development compared to L1 in the ETH ecosystem
Tens of billions of dollars are being created around L2 tokens, compared to mere millions for L1 development...
3/16) This creates a massive bias toward L2 scaling
Even to the point of arbitrarily restricting L1 capacity & not pursuing L1 scaling technologies
We saw this in BTC as well; as it went against the original vision for Bitcoin by arbitrarily restricting the block size limit
Even to the point of arbitrarily restricting L1 capacity & not pursuing L1 scaling technologies
We saw this in BTC as well; as it went against the original vision for Bitcoin by arbitrarily restricting the block size limit
4/16) History is repeating itself in ETH
As its blocksize limit (gas limit) was set by miners & now its maximum is fixed by the client
Furthermore, ETH has pivoted away from on-chain scaling by dropping execution sharding from their roadmap
A betrayal of their social contract
As its blocksize limit (gas limit) was set by miners & now its maximum is fixed by the client
Furthermore, ETH has pivoted away from on-chain scaling by dropping execution sharding from their roadmap
A betrayal of their social contract
5/16) You might ask why I am so convinced that L2s are not the answer to the scaling trilemma
The problem lies with an unsolvable UX problem within the context of a competitive market
Using a simple example of two users exchanging value in an L1 world compared to an L2 world:
The problem lies with an unsolvable UX problem within the context of a competitive market
Using a simple example of two users exchanging value in an L1 world compared to an L2 world:
6/16) The case of two users exchanging value within an L1 is simple
Simply scan the other user's QR code & press send, as long as they are also using ETH
In the case of L2s, this is not so simple, as the user now needs to know what L2 their friend is on & how to bridge between
Simply scan the other user's QR code & press send, as long as they are also using ETH
In the case of L2s, this is not so simple, as the user now needs to know what L2 their friend is on & how to bridge between
7/16) To make things worse, the user also now needs to find out whether these specific L2 are even secure or decentralized
As in a free market, there will always be custodian & centralized L2s
Even today, the majority of L2s have admin keys & or centralized sequencers
As in a free market, there will always be custodian & centralized L2s
Even today, the majority of L2s have admin keys & or centralized sequencers
8/16) This is all a UX nightmare & far too much to expect from normal users
Inevitably leading to people just opting for custodian solutions, which is exactly what happened in BTC
As the majority of LN users are on custodian solutions, I correctly predicted this back in 2015
Inevitably leading to people just opting for custodian solutions, which is exactly what happened in BTC
As the majority of LN users are on custodian solutions, I correctly predicted this back in 2015
9/16) I predict the same will happen on ETH if it continues like this
A common objection to this is that on-chain scaling sacrifices decentralization
ETH's original roadmap included execution sharding (horizontal scaling)
Somewhere along the way, ETH decided that was too hard
A common objection to this is that on-chain scaling sacrifices decentralization
ETH's original roadmap included execution sharding (horizontal scaling)
Somewhere along the way, ETH decided that was too hard
10/16) However, here comes the twist
In the meantime, blockchains such as NEAR, EGLD, XTZ & TON have proven that execution sharding is possible!
This means we can scale on-chain without sacrificing decentralization or pushing the majority of users onto custodian solutions
In the meantime, blockchains such as NEAR, EGLD, XTZ & TON have proven that execution sharding is possible!
This means we can scale on-chain without sacrificing decentralization or pushing the majority of users onto custodian solutions
11/16) A far more competitive solution, one that will defeat the modular scaling thesis
As it will be able to provide all users with all of the benefits of the L1 without any of the inherent trade-offs that come with L2s
This can be done by "enshrining" L2s or sharding the L1
As it will be able to provide all users with all of the benefits of the L1 without any of the inherent trade-offs that come with L2s
This can be done by "enshrining" L2s or sharding the L1
12/16) The problem of corruption can also be solved, or at least mitigated through on-chain governance & treasuries
As these can provide an L1-biased source of funding based on the block reward of the L1
Providing a counterweight to the disproportionate profit-seeking in L2s
As these can provide an L1-biased source of funding based on the block reward of the L1
Providing a counterweight to the disproportionate profit-seeking in L2s
13/16) I am not against L2 solutions; I definitely do think they have their own use cases
However, I do not agree with arbitrarily restricting L1 capacity in favor of L2 scaling
Allow both to scale within the bounds of decentralization & let the market decide which is better
However, I do not agree with arbitrarily restricting L1 capacity in favor of L2 scaling
Allow both to scale within the bounds of decentralization & let the market decide which is better
14/16) Scaling the base layer allows both L1 & L2 scaling to occur
Favoring L2 scaling by restricting the L1 removes the option for users to choose L1
The goal of this restriction is to "force" users onto L2s
In reality, this will lead to users moving to scalable L1s instead
Favoring L2 scaling by restricting the L1 removes the option for users to choose L1
The goal of this restriction is to "force" users onto L2s
In reality, this will lead to users moving to scalable L1s instead
15/16) I was a Bitcoin supporter from 2013 to 2016
I even supported ETH from the first day of launch, mining it with several rigs in 2015
It makes me incredibly sad to see history repeating itself in this way
ETH is a huge improvement over BTC, but it too can be superseded
I even supported ETH from the first day of launch, mining it with several rigs in 2015
It makes me incredibly sad to see history repeating itself in this way
ETH is a huge improvement over BTC, but it too can be superseded
16/16) I really do believe in the massive utility cryptocurrency will be able to offer the world
So this critique comes from a deep place of optimism; we can solve the scaling trilemma
I hope the ETH community can take this as a constructive criticism
For a truly better future
So this critique comes from a deep place of optimism; we can solve the scaling trilemma
I hope the ETH community can take this as a constructive criticism
For a truly better future
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