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I think Bitcoins place in this ecosystem is secure and its value will continue to grow, as the baseline / reserve cryptocurrency.
You have put an awful lot of emphasis on ETH though here. I don't think this is necessarily correct and don't ever see ETH as the one and only home for DeFi in a winner takes all scenario. I think what is more likely is an eco system of many blockchains, with eventual interoperability, ETHs fees will remain (relatively) high but this is in return for its superior security, I think there will be a spectrum of blockchains to cater across the board, of which ETH will be one part of.
The article and the post I made did not make a winner take all assumption if you read it - in fact it makes the case for lower market capture, hence the more conservative 0.1% and 0.5% estimates for perspective. Additional efficiencies brought about by these cost-reducing algorithms and earnings generated mostly by dApps are presented within the framework we're assuming.
You can have multiple base settlement layers, but it is my bet that there really wouldn't be a need for multiples of this function, especially once you start getting more interoperability with ETH. What you want is a more decentralization, more secure, and faster base settlement layer, not necessarily more chains for this specific purpose.
If ETH gains on this, which I'm betting by this summer it will begin to really shine, then other base layers may not be as useful for global settlement purposes.
Other building blocks in the DeFi stack still have a long way to go and many fascinating projects are taking a jab at offering the most unique value proposition to users. I'm just not convinced we need 5 different settlement layers - I just need 1 really good, fast, decentralized one to secure all of my transactions.
I'm increasingly convinced that most problems can be solved with L2 and additional EIPs with new ERC standards. You have all of the elements you need... It's the creativity that's yet to catch up with the possibilities, it's not that we need more use-case-specific L1s. In fact I think the extra constraints or "rules" set up in the DOT ecosystem will workout against it in the long term. I think innovation requires flexibility and freedom - ETH offers more of this than DOT, which imposes all kinds of rules for the game. Maybe the extra rules makes the game stronger, or maybe it encourages the players and builders to switch to a more open sandbox.
In my estimation, Chainlink or maybe even some other Decentralized Oracle Network will be able to relay any information on and off chain. In that scenario, why do you need a Polkadot? It's faster! but ETH gets faster with DPoS and sharding. dApps on DOT can natively interact with each other! Link will allow any blockchain to speak to any piece of information - so once you have a scalable global settle network that can operate cheap and efficiently, all you need to do is plug data to it. That's how my thinking goes right now...
Anyway that's my understanding of it all where I stand today. I could change my stance as I learn more and I always welcome discussion so I may learn from differing perspectives.
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