Ethereum has been facing a “scalability crisis” for around 2 years now with gas prices having spent the bulk of that time on the higher end of the gwei spectrum. This, of course, has led to an explosion of scalability solutions either having come online already or planning to do so shortly. On top of this, the “excess demand” from Ethereum has spilled over onto other layer 1 crypto-networks over the last 12-18 months or so.

sassal.eth 🦇🔊🐼 @sassal0x

As an ecosystem, we need to be building better and more sustainable applications that people actually want to use and actually get both social and monetary value out of. None of the protocol-level stuff like scaling matters if we don't create the on-going demand to use it.

June 1st 2022

23 Retweets156 Likes

I’m going to make a bold prediction here - within the next 12-18 months Ethereum layer 2 will be offering magnitudes more efficient and secure blockspace supply than there is demand to fill it. You may think I’m a little crazy to make this prediction but I I don’t believe there are nearly enough sustainable applications, users and general demand for the cheap blockspace that will be available on layer 2’s after dank-sharding is implemented on layer 1 as it will quite literally cost just pennies to execute rollup transactions.

Let’s dive deeper into what I mean by “not nearly enough sustainable applications”. We’re all aware that most of the applications that gain traction in crypto are still based heavily on speculation and thus are at the whims of the crypto market cycles. Think about it - how many actually sustainable apps are there right now - and by sustainable I mean able to maintain overall growth and traction regardless of market conditions. Off the top of my head I can think of 3 applications that I consider sustainable - Uniswap, ENS and stablecoins - and there probably aren’t much more than this.

Secondly, due to there not being that many sustainable applications yet, the users of anything on-chain are few and far between. When a lot of users do show up, it’s usually for a brief period of time at the tail-end of a crypto bull market and 99% of them are only around to make some money - they couldn’t care less about anything else. This is just the harsh reality of where crypto is at today and why we need to move past ultra-speculative applications if we want to have sustainable growth of our ecosystem going forward.

On a more optimistic (heh) note, layer 2’s on Ethereum will enable unique applications that are just not possible on layer 1 which should, in theory, lead to better applications as there will be more design space for them to tap into. So maybe by the time we have proto-danksharding implemented, there will be lots of demand coming online and we can fill that blockspace up. Oh and for what it’s worth, this issue isn’t unique to Ethereum, even the centralized chains that offer thousands of TPS don’t get anywhere close to the sort of demand that’s needed to fill those blocks up - after all, not all blockspace is created equal!

Have a great day everyone,
Anthony Sassano

Enjoyed today’s piece? I send out a fresh one every week day - be sure to subscribe to receive it in your inbox!

Join the Daily Gwei Ecosystem

• Twitter

• YouTube

• Discord

All information presented above is for educational purposes only and should not be taken as investment advice.