The death watch for Ethereum is on.
We have seen the world's number 2 crypto fall out of favor with many. The introduction of Solana and Sui have led many to conclude that Ethereum base layer will never reach the potential envisioned in the early days.
It is not a view held by Vitalik.
In a recent interview, he stated that the blockchain should scale 10x over the next year.
Is this possible? It is something we will take a look at.
Vitalik: Ethereum To Scale 10X Over Next Year
Many developers flock to Ethereum. The challenge has always been speed and cost. Vitalik had some egg on his face when he said that blockchain fees should not be higher than what banks charge. Of course, that was in the early days of Ethereum.
As the network grew, scalability issues led to higher fees. During heavy times, using as the bull is running, the fees can certainly outpace what that of the banks.
To combat this, scaling is required. Ethereum cannot adequately handle the traffic that is being thrown at it. Developers are opting for other EVMs or layer 2 solutions that are faster and cheaper.
It is not lost on the core development team.
Vitalik is optimistic that solution is near. In fact, he thinks the network could be radically different in a year.
"In general, I do think there's a lot of room to scale safely," he said. "My view is that generally we should scale L1 by about 10x over the next year and a bit."
How realistic is this? Vitalik answered that by adding what some others are thinking.
Buterin added that there are people in the Ethereum ecosystem that were hoping to scale the layer-1 network by 1,000 times, but he said it was safer to do things at a slower pace—and not threaten centralizing the project in the process.
From this, my takeaway is they have the scaling map laid out. They know what needs to be done and how to get there.
Competing With Traditional Finance
The reality is that blockchain still lags the world of finance. We see some impressive numbers across the industry. However, this pales in comparison to traditional networks that Wall Street and the banks run.
When we look at the number of transactions done daily by a network such as Visa, the levels attained by crypto are dwarfed.
Ethereum looks to solve this. Since it is so popular with developers, handling the traffic could spur even more adoption. Large entities such as Blackrock are willing to build on Ethereum due to the fact that $10 or $20 transaction fee is nothing to them. Even $100 is easily swallowed when millions of dollars is being transferred.
Where problems occur is when dealing with things such as NFTs. These individual items often have a value less than the transaction fee. It it were a cent, like Arbitrum is, then it would not be an issue. However, a few dollars in fees is quite a hit.
Fighting Off MySpace
Will Ethereum become MySpace. Some appear to think so.
Personally, I never questioned the future of Ethereum with regards to its success. While it is easy to cite the lack of scalability, that is not going to deter the big players.
For years, I thought Ethereum would become a "banker" chain. It still might. So far, the traditional finance companies are drawn to it. Again, they deal at levels where the fees are not much of an issue.
There is also the case of transaction time. Even if Ethereum is slow compared to other chains, it still outpaces the banks. They settle things in days. Hence, 5 or 10 minutes seems like a dream.
With the upcoming tokenization of real world assets, it would not surprise me to learn much of this is starting on Ethereum. Trust is the name of the game and Wall Street provides it to this blockchain. Whether that translates into the coin mooning, only the markets can decide that.
Scaling Ethereum would answer a lot of questions. Under that scenario, it would be the primary location of tokens or other assets with EVMs acting as secondary placements. It would mirror much of the last decade with the exception being that most use Ethereum as opposed to the other chains.
We see the opposite forming now. Things are built on ETH but then when brought to the EVMs, that is where users gravitate towards.
For example, I use USDC on Arbitrum or Solana when I can over Ethereum. The fees are widely different.
If Ethereum was near it in speed and cost, I really wouldn't care about the other chains.
Being first to market like Ethereum did with smart contracts means nothing. MySpace is the poster child for that.
Vitalik is now tasked with fending off that distinction. If they can 10x the scale of the network in a year, we could be talking about a different ball game.