Ethereum Faces Fierce Competition from Scalable Blockchains

According to Justin Bons, founder of Europe’s oldest crypto fund Cyber Capital, competitors will overtake Ethereum if it does not implement the proposed updates on time. Bons explained this in a Twitter thread, noting that ETH is in a race to scale on-chain.

5/5) With all of this legitimate competition building up

ETH cannot afford to sit on its laurels; it should pivot back to execution sharding!

Especially now that the competition has proven its viability

L2s will not save ETH from this predicament, just as it did not save BTC

— Justin Bons (@Justin_Bons) April 30, 2023

Over the years, Ethereum has implemented several improvements to increase its block space and scalability. Bons acknowledged that to be a positive move, but he insists just increasing the block space does not exempt ETH from the competition. He indicated that several scalable blockchains have arrived, and if ETH does not buckle up, they will overtake it as the leading blockchain for developing DApps.

Bons’ concern was about the speed with which ETH was implementing already proposed upgrades. In his opinion, the Ethereum network needs to move faster. Bons observed that Elrond Network (EGLD), one of the scalable blockchains, has already implemented sharding. According to him, EGLD has beaten ETH to that race by executing all three aspects of the update, which include state, execution, and data sharding. He explained EGLD developed much of the technology and only needs to build up its ecosystem to catch up.

NEAR has also beaten ETH to the race and developed sharding, according to Bons. He noted that NEAR has fully implemented its sharding protocol, solving the holy trinity, and is fully interoperable. He explained that NEAR is composable because it uses a single chain where it splits blocks into parts instead of deploying multiple chains.

Bons also identified Tezos (XTZ) as an ETH competitor in terms of scalability. He observed XTZ enshrined roll-ups, utilizing the advantages therein without the disadvantages of Layer 2 protocols (L2s). With this implementation, XTZ eliminates the need for admin keys or permissioned elements. It has also become interoperable and composable, solving the UX problems confronting L2s.

Bons believes ETH needs to buckle up in the face of fierce competition. According to him, The Ethereum network needs to pivot back to the execution of sharding, as L2s cannot substitute for the actual development of the protocol. Bons cited the case of Bitcoin as a perfect example where L2s could not replace blockchain development.

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