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In the previous articles of the "Early Technology" column, Sanlin introduced popular concepts in the blockchain field such as blockchain, Web3, NFT, DAO, and Metaverse (see the end of the article for details of the article collection). In this article, at the request of readers, we will continue to discuss with you the largest open source public chain in the blockchain field - Ethereum. Ethereum can be said to be the most well-known among the many public chains in the blockchain. It is at the top in terms of transaction volume and number of applications. Based on Ethereum's "status in the world", this article will focus on introducing the applications of Ethereum and other public chains besides Ethereum to explore the many possibilities of the blockchain. It should be noted that from its birth to today, blockchain technology has become a key industry that many countries have invested heavily in development, and China is no exception. But this is limited to the industry application prospects of blockchain, not cryptocurrency. In fact, since last year, the central bank has declared all businesses based on digital cryptocurrency to be illegal, and the crackdown on activities such as cryptocurrency “mining” has also continued. This article does not discuss the cryptocurrency attributes of Ethereum, but focuses more on exploring the application functions of Ethereum as a blockchain "infrastructure" and what kind of addition it can bring to the development of fields such as DeFi, web3, NFT, and the Metaverse.  Image source: cointelegraph  What is Ethereum?The reason why it is called infrastructure in the blockchain field is because cryptocurrency is only one of its attributes. Ethereum has more possibilities. Sanlin believes that it still has its application potential. Friends who know something about Ethereum may know that the birth of Ethereum is based on BTC. Because BTC has problems such as non-scalability in practical applications and cannot meet user needs, Ethereum was born. The essence of Ethereum is a smart contract platform based on blockchain technology (see the historical article at the end of the article for an introduction to blockchain), an open source platform that can provide application construction and different gameplay (the source code is open to the public). We can perform programming, transactions, data storage, company management and many other functions on Ethereum. Therefore, for ease of understanding, we might as well regard Ethereum as a fully functional online world, except that this world exists based on the advantages of blockchain decentralization. Developers pay ETH instead of national legal currencies to support the operation of applications. Since it is a fully functional online world, the various social networking, e-commerce, information intake, content production and other activities we are currently using can naturally be carried out on Ethereum. At present, Ethereum has developed very rapidly. Most of the NFT market, which has been booming since last year, is issued and circulated based on the public chain of Ethereum. For example, Sanlin previously talked about Boring Monkey, a globally popular NFT IP. In addition, there are also head IPs such as CryptoPunks and Pudgy Penguins. The production of these NFTs can be understood as a kind of content production. NFT trading platforms such as OpenSea are similar to e-commerce, except that the transaction currency is ETH. The DAO mentioned in the last early technology column is also an Ethereum project. As a smart contract application on the Ethereum blockchain, The DAO, a large-scale crowdfunding project, was launched on Ethereum, raising approximately US$150 million. The DAO is also regarded by some established financial institutions and emerging technology companies as a very potential organizational method. (For an introduction to DAO, please see the historical article at the end of this article)  Image source: Blockchain, DApps, NEWS The gaming industry is also a regular industry in the blockchain industry. Take the once popular Ethereum Cat as an example. CryptoKitties (CryptoKitties, Chinese name: Obsessed Cat) is a virtual pet game. The logic for users to buy, sell, and breed kittens in the game adopts the Ethereum ERC-721 standard, which ensures that each kitten and its offspring are unique and cannot be copied, taken away, or destroyed, and all data is open and transparent. This is also what makes Ethereum-based games special. Unlike current mobile games, if the game development and operation company behind it goes bankrupt, the user's game props and equipment can only be lost forever. The characteristic of Ethereum Cat is that even if the game company goes bankrupt, as long as Ethereum is still there, Ethereum Cat can be recovered. This is the charm of blockchain smart contracts. As of 2021, Ethereum already hosts tens of thousands of applications (DApps) covering multiple token types and processes trillions of dollars in transactions every year. Ethereum is a key element in the decentralized finance (DeFi) sector and has become the blockchain network of choice for most stablecoins. The latest Ethereum has extended the second layer (L2) on the original basic protocol, which we can understand as a virtual machine (yes, virtual machines are also developed and applied on the blockchain). The cost of virtual machines is not high, and this is also true for blockchain. The cost of deploying L2 on Ethereum is not high, and it also integrates the security of L1. Therefore, some time ago, many people shouted that the arrival of the Ethereum 2.0 era may bring a new world. On CryptoFees.info, Ethereum L2 alone can generate $50,000 to $100,000 in revenue from block space sales every day, which is L2’s native revenue. However, just like in the current online world, diversified platforms can meet the diverse needs of different groups. Although Ethereum is the largest chain in the blockchain, it cannot meet all application needs. Beyond Ethereum: The arrival of the multi-chain eraThe multi-chain era has arrived. In addition to Ethereum, there are various chains in the blockchain ecosystem: Solana (SOL), BSC (Binance), Avalanche (Avalanche), Oasis (Oasis), Polkadot (Polkadot chain, cross-chain), Cosmos (together with Polkadot, known as the "cross-chain duo"), Fantom……  Image source: Avalanche official Just as the blockchain field has begun to develop different forks to solve existing problems, different public chains, private chains, and hybrid chains are also developing to meet different needs. We can see this from the issuance of NFT. When Sanlin introduced the current NFT casting and issuance platform in China, he mentioned that different platforms have different chains as underlying support (click on the right to read "If you don't understand blockchain, you won't understand Web3 and NFT"). Among them are Tencent's Zhixin Chain, Alibaba's Ant Chain, JD.com's Zhizhen Chain, etc. Among them are public chains, alliance chains, and some relatively niche chains. The characteristics of blockchain such as multi-node and decentralization determine that not all programs will be developed based on one chain. Just like in the mobile network era, with the increase of users and the differentiation of needs, different needs and corresponding platforms for e-commerce, music, video, reading, etc. will appear. On the blockchain, as the number of users and needs increase, chains that can meet different needs will also appear. The development of new development and application models such as Metaverse, DeFi, and Web3 has further strengthened the multi-chain structure. Ethereum cannot unify all chains. This is determined by user needs. Of course, at the same time the cake will get bigger. Because each service provider can complement each other, further enlarge the pie, promote the development of the blockchain industry, and finally achieve common benefits among the chain, on-chain services, and users. In fact, even if it is not user demand, the problems existing in Ethereum itself will prompt people to think about how to fill these problem loopholes. The widely criticized shortcomings of blockchain are congestion and handling fees, of which Ethereum is a typical example. It is not difficult to understand. When driving on the highway, once there are too many cars, it is easy to cause congestion. The solution is either to restrict traffic or widen the road.； In the current network environment, if there are too many users on a platform, but the software and hardware facilities cannot keep up, it is easy to cause APP lags, program crashes, interface crashes and other bugs. This is the reason why everyone can't pay when using grocery shopping software during the epidemic. The same is true in the world of blockchain. When the transaction volume on Ethereum increases to a certain level, it will cause network congestion. To solve this problem, either limit transactions or improve scalability to increase transaction throughput. However, the development of technology takes time. If the transaction volume cannot increase quickly, transactions can only be restricted (refer to the operation of the time-based opening system of food shopping software during the epidemic).  How to limit transaction volume? Adding gas fees (transaction fees) is an old trick. The increase in fees will inevitably lead to a decline in some transaction volumes, but user demand will not be reduced. Where do these lost transactions go? We can only develop a few more platforms to meet demand, and demand will flow to these platforms. The business world cannot achieve a complete monopoly, and in the world of blockchain, Ethereum will not be "the only one". So, besides Ethereum, what other new smart contracts have occupied a certain share or attracted much attention? The following are chains that have attracted much attention outside of Ethereum. Solana (SOL for short), also known as the fastest public chain, belongs to the fourth generation of blockchain. It is considered by some people in the blockchain industry to be a strong competitor to Ethereum. It has great advantages in transaction speed and cost. It also covers many projects such as DeFi, NFT, and Web3. As the best-performing crypto in 2021, although SOL is relatively new in the market and relatively volatile, it has many fans. Tezos has the advantages of high efficiency and cheap handling fees. Most of the codes and algorithms in the project can be self-corrected, thus largely avoiding the hard fork problem that occurs when upgrading the traditional blockchain system (in simple terms, vulnerabilities are reduced and security is increased. An important factor why blockchain is favored is based on its security, but the current contracts are far from meeting people's expectations for blockchain security). It is also worth mentioning that unlike the NFT market on Ethereum where a hundred flowers bloom, in the NFT market on Tezos, collectors can find some niche collectibles. BSC, Binance Smart Chain. If we also calculate the income and expenses of blockchain business (some people think that blockchain, as a technology, is not a business and has no profit margin. However, Sanlin believes that even the technology itself requires development costs, not to mention the various business possibilities based on blockchain). The blockchain closest to achieving profitability is BSC, which earns about 1.4 million US dollars in fees every day, and the maintenance cost is 1.74 million US dollars. Although it is not profitable yet, it is not a huge loss operation (many platforms are still in the stage of massive money burning). Due to the length of the article, this article will not introduce other chains. However, at this point we can basically discover why it is not enough to have a “leading” Ethereum in the blockchain field. Therefore, the Ethereum network cannot meet the global expansion needs of decentralized financial infrastructure. Huge blockchains are developing. As transaction needs continue to increase, the emergence of other new smart contracts (that is, new chains) is inevitable. Of course, Ethereum itself is undergoing a correction. In order not to affect the decentralization characteristics while enhancing the scalability, security and energy efficiency of the network, Ethereum 2.0 (ETH 2.0) came into being. After the concept was proposed in 2019, ETH 2.0 has also been in transition for a long time. Recently, Ethereum co-founder Joe Lubin said that Ethereum 2.0 will be launched in the second quarter of this year, and Sanlin will also bring relevant news at that time.  The blockchain battle has just begunEthereum takes the lead in entering the era of modular blockchain, and the cryptoeconomic garden based on blockchain is gradually opening up. Many people are curious about how Ethereum will evolve in the future and how the entire blockchain field will be connected in the future. One of the questions everyone is concerned about is: Ethereum has multiple interoperable clients, which are developed and maintained by independent teams in different languages. But is Ethereum or the blockchain really safe? A well-known "digital theft" incident occurred in 2016. Hackers exploited smart contract vulnerabilities on Ethereum to attack the largest crowdfunding project in the blockchain at the time - The DAO (about the DAO, a decentralized autonomous organization, Sanlin introduced it in a previous article on "Early Technology". Interested friends can click on the title to read "DAO, a new possibility for "freedom to work"). Eventually, 3.6 million ETH was stolen by the hacker in a short period of time. In the field of blockchain, except for speculators, everyone's consensus can be said to be to create a fair, decentralized consensus network society where everyone participates. But ideals are always beautiful, but the reality is: we will be in a transitional period for a long time, which greatly restricts the development of other chains that have not entered the public eye. Otherwise, the chain with the highest market capitalization has a "superpower": relying on liquidity to bring capital, network effects intensify the advantageous cycle of liquidity, and maintaining existing advantages. This is winner-take-all. Of course, compared to the optimism that Ethereum can be a "winner takes all", there are also some people who believe that Ethereum is just a transitional product. Based on the history and flaws of Ethereum, some people believe that Ethereum is only an initial stage of blockchain development. Although it is now the largest public chain, as the blockchain matures and demand differentiates, Ethereum will be replaced by more latecomers, like many platforms in the current Web 2.0 network world. The current situation is that the battle in the blockchain field is quite anxious. Several mainstream chains we mentioned above, such as Solana, Avalanche and Terra, have overshadowed the momentum of Ethereum. The current situation is like a domestic platform war. Whether it is the battle for taxi-hailing software or the popularity of community group buying, platform wars continue to be staged in major industries. Many people in China believe that the same will be true for blockchain. Some people are betting on Ethereum, new chains (new smart contracts) such as Solana, Avalanche, and Terra, and there are also loyal Ethereum fans who argue for it. Sanlin believes that blockchain as a technology is still in its early stages, and large-scale adoption has not yet been achieved. The technology itself still has a lot of room for optimization, and there are many loopholes. The future is not a foregone conclusion. We still need time. Historical articles in the blockchain field (click on the title to read):
 Statement: The views in this article are for reference only and do not constitute investment advice or commitment. Investors need to establish a correct investment philosophy, consciously resist speculation and speculation in cryptocurrency, enhance their awareness of self-protection, be wary of and stay away from illegal financial activities related to cryptocurrency, and effectively safeguard the safety of their own property. If relevant illegal activities are discovered, they should be reported to the relevant departments in a timely manner. |
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