The Ethereum mainchain is pushed to its limits. NFTs, Gaming,
DeFi….it’s all being built on Ethereum. But...have you noticed the Ethereum competitors
coming in HOT, fiercely shooting up the rankings!! Are these new competitors
going to make it...or are they just the EOS’s and Trons of this bullrun cycle!?
Well find out in about 10 minutes give or take a few...because it’s time for Chico Crypto!!
There is no doubt that Ethereum is getting ridiculous with the fees,
locking out a large majority of crypto users and investors! For a simple Ethereum transfer,
one of the most basic and cheap transactions, the average fee was 3.34 cents at the end of June.
Over the past 2 and a half months it’s trajectory has been up with a
peak of 18.50 cents being reached September 7th! That is an increase of 453 percent!
Just to transfer ethereum, you were paying nearly 20 bucks, more complex transactions like a swap on
a DEX AMM were costing between 150 to 200 dollars on that day! Nobody besides massive whales who are
making trades in the 10s of thousands of dollars, are able to profitably use the Ethereum mainchain.
There are only a few whales, there are many
minnows and fish and they need a home where they can trade too! That is why
we saw the Ethereum competitors have been doing their thing and PUMPING!
So let’s just look at the prices of Eth competitors over the past 2 and half
months compared with the gas fees chart! Solana going ballistic...End of June, when ethereum gas
was 3.34 cents...Solana around just 33 dollars. The daily close peak was about 189 dollars, and
this was September 8th, the day after Ethereum’s peak gas fee on the 7th. From 33 to 189
is an increase of about 472 percent. Ethereum gas increased over the same period by 453 percent. It
seems like Solana’s price is tracking Ethereum gas increases! Like almost to the tee…\
But it’s not just Solana, Eth competitors left and right had PUMPs as ETH gas fees hit highs.
Algorand soaring from under a dollar to a 2.35 cents high. Tezos from under 3 dollars to just
about 6 dollars. Elrond from just under 1 hundred to over 200 at it’s peak.. If
it’s an alternative blockchain, that offers high speeds and low transaction fees….it has
pumped over the past 2 and a half months. Cardano, Avalanche, Fantom...they have all went wild
Sooo, I don’t hate on any gains to be made in the crypto space. Buy what you want to and I
congratulate people on these gains..but I personally haven’t stuck finger in any
of these Ethereum competitors..because this is just the same narrative that happened in 2017…
Eth competitors promised the same things, they promised faster, cheaper transactions,
and the ability for dapps to be created on their chain! These weren’t empty promises either,
they did offer that, and because of the offering and Ethereum gas fees bubbling back then too,
the projects surged! The two most popular and well known are EOS and TRON.
As ETH Gas fees went insane, so did the prices of EOS and Tron...like
clockwork! Both EOS and Tron actually grew to outdue Ethereum in the number of transactions,
but as we can see by the end of 2019...that hype and transaction number crashed for both
Because...no one was using the chains, except insiders pumping the transactions from the
inside....there were no real dapps, developers stayed on Ethereum...because EOS and Tron
sacrificed the most important thing about cryptocurrency, for the faster
speeds and cheaper transactions.Something called decentralization! They were not decentralized…
They sacrificed one of the tri’s in the blockchain trilema.
What is the blockchain trilema? Well there are 3 things in cryptocurrency
that are important. Decentralization, Security, and Scalability!
Vitalik Buterin is the one who termed this concept and he understands you can’t have
all 3 of them as of yet. Developers are trying, but the blockchains that have been
created up to today are forced to make trade-offs that prevent them from achieving all 3 aspects.
Using EOS and Tron as an example, they gave up decentralization for high throughput….which
was obviously not the winning strategy! EOS and TRON are afterthoughts today….
But EOS and TRON have been replaced by a new batch of Ethereum competitors, saying they have created
something that solves this blockchain trilema! It took 4 years, but the competition cycle has begun
once again! We are in the midst of the competitor SURGE...but if we compare the 3 top ones...Solana,
Avalanche, and Fantom...there is one that sticks out based on TVL, total value locked up in it’s
protocol. That is Solana as their TVL is 5x bigger than Avalanches, and 8x bigger than Fantoms!
Soooo, has Solana solved the Trilema? Are they the next step
in blockchain? The scalable and fast Ethereum?
Well, let’s analyze that right quick!! Solana is cheaper and faster than Ethereum..there is
not doubt about that. Solana can supposedly support up to 65 thousand transactions per second
That means Solana in the blockchain trilema, is focusing #1 on Scalability.
What about Security in the trilema!? Well Solana utilizes a combination of proof of
stake consensus and proof of history. Proof of history is the main innovation.
Solana has created a synchronized clock that allocates a timestamp to each transaction.
Proof of History is a way to decrease the time spent validating the order
of transactions. Utilized with Proof of Stake, this eases the selection of the next validator.
In theory this removes the ability of the validators to control the order in which
transactions appear on the blockchain which in turn enhances security and censorship resistance
But, they haven’t solved the blockchain Trilema. As the validators who are
confirming the transactions are the reason they haven’t solved the decentralization factor.
The most important part! As this is cryptocurrency by the way!
Validator requirements are ridiculous! Going to Solana documentation,
you can see the hardware requirements. For the CPU, you need 12 cores, 24 thread minimum with
2.8 Gigahertz speed with support for high end instructions. RAM needs to be 128GB, or more
And a Motherboard with 256GB capacity suggested.
And the Disk requirements are just as insane! 1 Terabytes or more just for the ledger,
and 500 gigabytes for the accounts alone. And then a GPU? Not necessary right now,
but it will be! One or more high-end GPUs in the future suggested…
For the minimum right now, with no GPU...it would cost you 5 thousand dollars just for the hardware.
If you wanted all the best, to future proof, including a couple GPUs
it would cost you over 12 thousand dollars! That is for the hardware alone my friends!
Compared with Ethereum, of which you can run a validator with a raspberry
PI...it’s a freaking supercomputer! That is why a majority of Solana validator
nodes are not run by people at their homes, they are run in data centers.
Validators.app has Solana validators sorted and ranked by stake in Data Centers.
As we can see there’s a total population of 1044 validators on Solana...from
the 5 top data centers ranked by stake, there are 332 validators located in them. That is
nearly 1/3rd...31 percent of all validators in Just 5 data centers. And from the total
stake of Solana...those 5 data centers control over 50 percent of the stake on the network.
Can you say centralized AF….
But many will argue, well Ethereum validation is extremely prohibitive too! You need 32 Ethereum
to run a validator node...that is nearly 110 thousand dollars!! Who has that kind of money!!
You can run a Solana node with any amount of Solana!
Well that is true.. going back to the requirements documentation
Solana says “There is no strict minimum amount of SOL required to run a validator on Solana.”
Yeah no requirement, you can build the supercomputer and spin up a node...but if
you don’t have a certain amount of stake to compete with the other validators, you will
not be chosen to validate….remember Solana too is a proof of stake system which rewards nodes
with a higher stake! The more solana staked the better chance of being chosen for validation!
How much Solana? Well we can check out Solana beach, and their validator sections.
As we can see, the top validators have millions upon millions of Solana staked,
and scrolling down, and down, and down, and down some more to the 800s...you
still need over 100 thousand Solana to validate blocks. At yesterday’s prices,
you would need over 17 million dollars to be an effective chosen validator Solana….
This isn’t a blockchain you or I can participate in...it’s a blockchain
for the RICH. Per example...here is a smaller validator, from GBV capital with 2697 solana
staked with it, which is still over half a million….how many blocks has it validated
and been rewarded for? Just 2 blocks, and those 2 blocks came 4 months ago….this validator with
half a million hasn’t been rewarded or proposed a block in over 4 months. Let that sink in…
It gets worse...how about this node from hewkatoo with 101 Solana staked?
They don’t even get a single block...nothing for this node,
and it’s very very unlikely they will ever be picked in the selection rotation!
Decentralization isn’t there...but Ethereum is not like this. Going to ETH2 documentation
and the validator FAQ it asks…”Is there any advantage to having more than 32 ETH at stake?”
and it says “No. There is no advantage to having more than 32 ETH staked.
Limiting the maximum stake to 32 ETH encourages decentralization of power
as it prevents any single validator from having an excessively large vote on the state of the chain
because with validator vote is weighted by their stake. That’s how proof of stake works!
Sooo, the blockchain Trilema...it hasn’t been solved by either Solana or Ethereum in their
current forms! Ethereum 2.0 with sharding is attempting to be the one that does.
Solana claims with improvements, this decentralization will come
through slashing and better leader selection. Who’s going to do it 1st?
I’ll keep you updated as the finish line gets closer. Cheers I’ll see you next time!