Author: Cryptocurrency Researcher Ann; Translation: Baze Research Institute
The latest soap opera in the cryptocurrency industry is unfolding.
Yesterday, a piece of news flooded Crypto Twitter that Vitalik, co-founder of Ethereum, is selling his MakerDAO token $MKR, which is the first time he has done so in two years.
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My initial reaction was that Vitalik may not be enthusiastic about Real World Assets (RWA), a sub-field of the cryptocurrency industry, in which MakerDAO and its stablecoin DAI are leading protocols.
However, what really happened is something I could never have imagined in a million years, and many other members of the cryptocurrency community feel the same way – which is why many people are uneasy.
The founder of MakerDAO, Rune, proposed building a new blockchain based on Solana for the protocol.
Unless you are a “local” who frequently follows the cryptocurrency industry, you would not know how big of a deal this is.
Solana, the biggest “Ethereum killer”
Maximalism, emphasizing more is more, is not something I am proud of in the cryptocurrency industry – although I am often fascinated by it. Each Layer 1/smart contract platform has its own die-hard fans who like to argue and debate who is the strongest.
Sometimes, it’s just a healthy joke, and people excitedly discuss whose technology is superior, more decentralized, and so on. But most of the time, it often turns into a fierce “online fight,” with each group insulting each other.
During the last bull market, the L1 war became the focus of the cryptocurrency market. I believe it was a period when ETH maxis lost their sanity because the limelight and liquidity of their beloved Ethereum were stolen by the most popular L1s at the time.
However, among the various “Ethereum killers,” Solana is the most well-known. For ETH maxis, Solana is like a nightmare. Why?
First of all, it received support from the cryptocurrency giant and great entrepreneur SBF at the time (who is now in jail). Having just one SBF is not enough; Solana’s passionate supporters also include Su Zhu from Three Arrows Capital.
Secondly, Solana is cool and powerful – it claims to handle four thousand times more transactions than Ethereum.
The price of Solana’s native token $SOL skyrocketed from $3 in the early bull market to an all-time high of $259.
Since then, the Solana community has become arrogant and arrogant.
However, no one dislikes Solana more than Ethereum supporters.
Shocking Proposal by MakerDAO
In the governance forum of MakerDAO, Rune proposed rebuilding the MakerDAO protocol by using the Solana codebase to build a new blockchain.
MakerDAO is the OG of Ethereum DeFi and they are the bluest of the blue chips. Maker has been an important part of the Ethereum community since the early days (2014). In 2017, they launched the stablecoin DAI, which quickly became the largest algorithmic stablecoin in the crypto market, serving as an alternative to centralized stablecoins USDC and USDT.
In short, Maker, as the OG of Ethereum, is so deeply rooted that Rune’s proposal feels shocking, like the most severe “betrayal” event in Ethereum’s history.
Among all the blockchain and smart contract platforms, why choose Solana for sure?! This slap in the face is much louder than when decentralized exchange dYdX moved from Ethereum to Cosmos as its main chain. At least dYdX chose Cosmos, a blockchain respected by Ethereum supporters (including Vitalik).
But Solana? The humiliation felt by Ethereum supporters would be even worse.
Why Solana?
Rune believes it has the most efficient and high-performance technology stack. He also takes into account Solana’s bustling developer community, which means he will never lack talent to help him build using the Solana codebase.
Full proposal: https://forum.makerdao.com/t/explore-a-fork-of-the-solana-codebase-for-newchain/21822
One interesting aspect of his proposal is the subtle shadow he casts on Ethereum. MakerDAO has too much technical debt, and I wonder if he is implying that the existence of this debt is due to the platform (Ethereum) that MakerDAO is built on also having a lot of technical debt.
To address these debts, he is considering a fresh start.
dYdX also agrees with the view of upgrading to a new chain instead of building on the old chain. This boils down to one thing: Ethereum is difficult to scale and doesn’t allow ambitious DApps to achieve their goals. (In the case of MakerDAO, their goal is a supply of 100 billion DAI.)
Another shadow that Rune brings to Ethereum: the rampant MEV extraction. The emergence of MEV is a result of Ethereum’s lack of foresight in the early days. Who would have thought that bots would exploit simple arbitrage transactions on such a large scale that now most transactions are done by these rent-seeking bots? MEV is Ethereum’s everlasting technical debt.
In short, Rune wants to completely upgrade to a new chain, a new stablecoin, and a new governance token to achieve scalability at a large scale. A fresh start to correct some past mistakes. He doesn’t have many choices, it’s either Solana or Cosmos, and he chose the former.
“The biggest difference between Cosmos and Solana is that Cosmos doesn’t prioritize efficiency like Solana does, which means the cost of maintaining and achieving high performance will be higher. Cosmos also doesn’t have a centralized foundation organization as powerful as Solana, which could be either a good thing or a bad thing.” – Rune
Reactions from the Ethereum Community
It seems that selling $MKR is not enough to vent their frustrations. Vitalik briefly mentioned the possibility of MakerDAO developing in a strange direction on Discord.
To be honest, compared to the various “ngmi” (not gonna make it) comments made by frustrated Ethereum supporters on Twitter, Vitalik’s reaction is quite elegant.
Rune’s proposal is a big blow to Ethereum. MakerDAO is the OG protocol of Ethereum and has the second-largest liquidity in the DeFi space. This will only exacerbate the severity of the existential crisis that is already happening on Ethereum. Recently, there have been discussions about the security of Rollups and how they are neither secure nor decentralized in practice.
What if other OG protocols follow suit? It’s not good for Ethereum, and it’s not good for the wallets of Ethereum supporters.
Conclusion
With this proposal, the multi-chain debate is once again making waves (after the L2 Summer narrative we just went through). Choosing between Ethereum and other blockchains is a complex issue, and every decision requires some trade-offs.
If more protocols attempt to branch out from Ethereum, I personally think it’s a good idea. (Just that Rune didn’t choose Cosmos)
We like to think about what would happen if we move Ethereum’s DApps to other chains. Would it work? Would it scale? Or would the catastrophic events that people often like to speculate about actually happen? We will never find the answer unless someone is building there and taking risks, and for that, I commend MakerDAO for being the latest pioneer.
Translator’s Note:
The projects and opinions mentioned above should not be considered investment advice. DYOR. According to the “Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation” issued by central banks and other departments, the content of this article is only for information sharing and does not promote or endorse any business or investment activities. Readers are strictly advised to comply with local laws and regulations and not participate in any illegal financial activities.
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