The Cryptocurrency Trading Journal

[Daal]

I dont think anyone is actually thinking that these are premium testnets (except me and maybe some other people) but I bet most people feel that issuing an NFT or token on Ethereum is like playing at Wimbledon, issuing on BSC/Polygon/xDai and maybe SOL is like playing tennis at the amateur level
Everybody wants to play at the Super bowl, not in a college tournament. Well, Ethereum is the Super bowl, and it attracts talent unlike anything else out there. So its a never ending self-fulfilling propechy
Now with ETH burning, all this crazy gas fees at least will help the passive holders, so they have less of a reason to leave the ecosystem. If the ETH merge does go along like planned, then the only advantage the premium testnets have will be gone and at that point, I dont think they will be that valuable anymore (except MAYBE solana and cardano, where I need to learn more)

 

[Daal]

So it seems to me that all these 'cheap' alternatives to Ethereum are just premium testnets because whatever they can do, testnets can do as well. But presumably, they are a bit more secure than a PoW testnet that can be 51% attacked easily. But they are also much more centralized and very exposure to government pressure, particularly BSC and xDai. But it was funny when I was using Ropstein, it feelt so much like using BSC and Polygon except I didn't had to pay anyone

I forgot to mention, Ethereum also has PoS testnets, attacking those probably wouldn't be that easy. So, they are quite similar to these other protocols. They dont have premium services (the people running the PoS might get pissed if everyone started to use all their hard drive space and stuff) but you can do a lot on them

 

[Daal]

If someone had to create an NFT or token and gas fees were an issue, they could easily do it on BSC/Polygon/xDai and then say 'when Ethereum merges to PoS and fees drop, we will move over to mainnet but right now, we can get functionality and low fees'. In fact, depending on the project, I think that is a great idea

I bet a lot of people are doing a version of that. So when the Ethereum PoS merge does happen (or when it looks like there is a certain date for that to happen or the likelyhood of it increases), I expect a collapse in the price of BSC, MATIC and STAKE for the simple reason that a lot of that activity will move back to Ethereum mainnet from those "premium testnets". Heck some of the activity of the testnets might move to mainnet (i suspect some people are abusing the testnet due the high fees on mainnet). Between paying Binance and using a Ethereum PoS testnet, I think lots might have choosen the latter
That will pop Ethereum fees on mainnet, probably not as high as it is right now but pretty high still. Then Ethereum will need rollups to scale even more, but that rollup activity will not accrue any value to BSC, MATIC and STAKE tokens. So long-term, I dont these tokens make much sense as an investment. Well, BSC has some utility with Binance but that is probably not worth tens of billions of dollars
Its no wonder that FTX separated the utility token (FTT) from the protocol token (SOL), only a moron like CZ would merge the two

 

[Daal]

One of the things I dont like about Solana is that it is heavily owned by VCs
https://www.crunchbase.com/organization/solana-io/company_financials

And it has very high validator hardware requirements (128GB RAM+, plus very high hard drive requirements)
Their theory is that 'Moore's law and fixed hardware requirements means that Validators will be more accessible as time passes' (and if im wrong that this is their approach, someone correct me please). The issue is that I dont think people will pick up the slack and start running validators as time passes, at least not as much as they might be expecting. Its hard to get super excited about something so corporate when there is something more of the people like Ethereum
People are excited about running Bitcoin/Ethereum nodes or mining. They feel like they are helping the greater good. On SOL, they will feel like they are helping corporations (VCs, and FTX), I'm sure there will be plenty of people up for that job (because they own SOL) but not anywhere near as much as on Ethereum
So it will always be less decentralized, probably by a lot. But will it be decentralized enough? Maybe, probably? I'm not sure, I would need to learn more about it

 

[Daal]

Solana has around 1,000 right now. Polygon seems to be around 100, BSC 21 and xDai 19

What is remarkable is that Ethereum has one of the most expensive Validators possible (32ETH, which is over $100,000) and yet it has the most support. Launching things on Ethereum is playing at the pro level, launching on the others is playing in the little leagues

 

[Daal]

Interesting figure this "halt power"

 

[Daal]

On ETH 2, if I understand the theory correctly, you would need 33% of the validators, which would come out at 75570 halt power. However, lots of retail investors stake through exchanges and that leads to concentration of validators in the hands of a few players. So the halt power would be lower, BUT, lots dont do that, and validate directly.

So most likely, the more validators you have, the higher the halt power because a certain % of the validators will be sole validators. Although, that is probably a decreasing function.

A decent estimate on the amount of unique validators is the amount of ETH1 addresses used for staking on ETH2
https://beaconcha.in/validators/eth1leaderboard
Which is around 47,000. To be conservative, lets cut that in half. So 23,500 * 0.33 = 7,750 halt power vs 20 of Solana

Solana, or even Cardano for that matter, might be better technologies (with emphasis on might) but its really hard to beat Ethereum on its network effects/brand/community backing.

I just cant possibly see how any of the alternative chains will ever get anywhere near ETH halt power.
They might have enough to be resonably secure but then again, no one has ever halted xDai chain or BSC for that matter. So they are secure enough as well.
Its not about being secure enough, its about being in a whole another level. Ethereum is Wimbledon, everything else is practice. I think these other protocols are not fighting against Ethereum, they cant, its like a 10 year old fighting against Mike Tyson. I think they are fighting amongst themselves for 2nd place

 

[Daal]

Which is around 47,000. To be conservative, lets cut that in half. So 23,500 * 0.33 = 7,750 halt power vs 20 of Solana

Even if one were to assume that only 10% of the ETH1 unique addresses actually represent unique people. We are still talking about something with magnitude more levels of halt power than Solana or Cardano. Its like comparing Microsoft Office vs Open Office

 

[Daal]

Ethereum and Solana debate. Surprisingly they raised the same points as I did, so it looks like I was onto something

 

[Daal]

A similar chart can be made about things that are called "bubbles" by mainstream economists. One of the most bullish things for an asset/stock/tech is for it to be denounced by Paul Krugman