Why Ethereum is still the leader in decentralization and scalability

Source: Lightning HSL

Since the 85 crash, there has been bad news about ETH every day on x, all kinds of FUD. The most typical categories:

1. Sol is going to beat Ethereum.

2. L2 reduces the commercial value of ETH.

3. Ethereum has no innovation.

4. Wall Street only praises BTC, not ETH.

In fact, I think all these FUDs have not touched the root of a blockchain, or these criticisms have not touched the key points, but only talked about some details or speculations without solid reasons.

For the time being, I still think that the Ethereum blockchain is very healthy, but the price performance lags behind the expectations of most investors.

To evaluate whether a chain is good or not, the most important thing is the three key points that encrypted digital currency and blockchain promise to users:

1. Decentralization

2. Permissionless

3. Scalability

Among the many chains currently evaluated, only Ethereum has achieved these three points and has been put into production practice.

We can evaluate the degree of decentralization of a chain from multiple dimensions.

The first is to evaluate whether there is a force that can effectively force a chain to be shut down or killed.

The most amazing example of this is Bitcoin. At that time, law enforcement forces forcibly shut down a large number of mining pools and mines in a very short time, but Bitcoin's operation was completely normal. Ethereum also experienced a similar impact at the time, but now Ethereum has changed from PoW to PoS.

At present, it is difficult to imagine any force that can shut down Ethereum. However, I think it is difficult to shut down most chains. This is the characteristic of blockchain.

Secondly, we can evaluate whether the mining nodes of the chain's production blocks are decentralized.

Ethereum's PoS mining is often over-centralized, especially the Lido mining pool, which occupies too much share, but it is not more than 30%, which is completely safe at the algorithm level.

Mining, a commercial behavior, often leads to centralization due to the demand for efficiency. In fact, the degree of centralization of Bitcoin's mining pools is far greater than that of Ethereum. There are only four mining pools that produce Bitcoin blocks completely independently.

Mining centralization is a problem that almost all chains have to face, but Ethereum is now the best among the head chains.

Another factor of decentralization is whether the developers are centralized.

The power of blockchain node software developers is very large, because the code they write is the rules for the operation of the chain. If it is a centralized development team, it is controlled by a mysterious force and directly embeds the stealing code in the code, then it's over.

The current node software of Ethereum is divided into two parts: the execution layer and the consensus layer. It is very complicated. When the beacon chain was just running, I thought it was so complicated that there might not be many teams on the earth that could maintain and develop the complete Ethereum node.

But now it seems that in Ethereum, which has such great commercial value, there are so many commercial companies that parasitize their businesses on the Ethereum chain, and naturally multiple independent complete nodes have been born. Now there are four relatively mature applications, instead of relying on the direct development team of the Ethereum Foundation.

In terms of the degree of decentralization of the development and maintenance of complete nodes, Ethereum is the most successful among all chains. It is more successful than BTC.

I feel that many users and investors of Ethereum may have completely misunderstood the degree of decentralization of Ethereum. Now on x.com, there are often people praying to V God, hoping that V God will come out to work and persuade V God not to sell coins.

This is completely unlike the performance of a decentralized community. Decentralized blockchains do not need gods, nor should there be gods. Those users who pray to Vitalik Buterin should invest in stocks, because the stock world has a central node to pray for.

Whether it is possible to maintain permissionlessness is the real challenge for blockchain and encrypted digital currency.

Because almost all cryptocurrency users have registered with exchanges and have been KYCed, exchanges hold a large amount of coins, and exchanges are subject to supervision, especially by the United States.

Even the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) manages a list, the "Specially Designated Nationals and Blocked Persons List (SDN List)", to which OFAC will add individuals and entities suspected of engaging in illegal activities. There are some encrypted digital currency addresses and some IPs on this list.

For the earth and IP on this list, other companies will not dare to provide services for them, including not including packaging-related transactions.

After Binance admitted the penalty, I feel that as long as you can find a responsible person or organization, they will be included in this list. That is, the people, addresses, and IPs on the list may find it difficult to use Bitcoin.

It is said that the real-name mining pools of Bitcoin and Ethereum are now included in this list.

This is the biggest threat to permissionless.

There is also the Tornado project, which has been blacklisted by the exchange. When any address that has used Tornado to wash coins is used, some transactions will refuse to provide services, and even directly ban the relevant accounts.

But for now, Ethereum's permissionless status has been maintained. At least we can see that Tornado can still be used. This thing is really decentralized. It has been banned by a certain US government department, but it can still be used.

It's just that it is increasingly challenged now.

Now there are many projects in the Ethereum ecosystem, and more and more projects have begun to review users, especially stablecoins like usdt and usdc, including Dai, which has a blacklist after upgrading to USDS. This is not a good trend.

In general, from a horizontal evaluation, Ethereum is relatively the best in terms of permissionlessness. After all, its economic ecology is the most prosperous and hidden in the city. If you want to find fault with permissionlessness, I think it is the hardest to find fault with Ethereum.

And technical powerhouses like Monero, because their economic ecology is too poor, actually have little practical value without permission.

Finally, scalability.

With the support of Rollup, Ethereum has completely solved the scalability problem.

In the past, the Ethereum chain was really fully loaded and could only process 15 transactions per second.

Now, including the transactions in Rollup, it is estimated that the TPS (upper limit of transactions that can be packaged per second) of the entire Ethereum system exceeds 1,000. Arbitrum has achieved 100+ tps in actual operation.

Although many critics say that L1 sharding is better than L1+L2 in terms of expansion solutions, those sharding technology chains, such as MultiversX, have not been verified in actual production environments. BCH developers also claim that they have completed the Adaptive Blocksize Limit Algorithm upgrade, and BCH has also solved the scalability problem, but this still has not accepted the actual production link challenge.

Under the scalability of blockchain, the only one that is truly widely used and has been challenged by the long-term and real diversity of transaction volume to burst the block is Ethereum.

Sol has accepted the challenge, but it has indeed failed many times.

It’s just that the price performance is not good.

Perhaps, in the context of the ETF year, in the short term, the price mainly depends on the pursuit and recognition of large Wall Street institutions, and these financial institutions on Wall Street may not care about features such as decentralization, permissionlessness and scalability.