Bitcoin is Time, ETH is Money, so What is Crypto?
Years ago, I read an article titled “Bitcoin is Time,” which stated that the value of Bitcoin would be reflected through time. Whenever the industry and individuals were confused, I would read it repeatedly, believing that the power of time would change people’s existing knowledge. If people don’t change, then eliminate them, just like any technological progress in history requires sacrificing the “old spacecraft.”
Cryptographic technology has long existed, and decentralized currency has also been reflected in shells. The decentralization of currency is also a manifesto of anarchism. However, what we see today is the weakness of technological narratives. Decentralization is no longer important, and nationalization is prevailing under the name of compliance. Cooperating with governments and traditional financial institutions seems more respectable than working with the underground world.
BTCFi may be the main consensus intersection between Wall Street and Crypto OGs, but this fundamentally changes the decentralization orientation of crypto. If using cryptocurrency to resist Russia and North Korea is liberalism, then is complying with the United States also liberalism?
At least CZ and SBF think so, and perhaps Vitalik does as well.
With the influence of Bankless, the judgment of ETH is Money has become a hot topic in the industry. Although it is not as popular as before due to the violent performance of large-cap assets, it is fortunate that there are still people speculating on the present and future of cryptocurrencies. However, few people care about the performance of Solana Firedancer. The performance battle has lost its appeal.
Upon careful consideration, the last debate about underlying public chain technology was Ethereum’s The Merge. After that, people got used to acceptance because the Core Members under the decentralized governance structure still effectively control the overall direction of the public chain ecosystem. The same was true during TheDAO and The Merge. There is no need to argue; acceptance is good enough.
The weakness of technology is demonstrated by the market’s rejection of VC coins. The main theme of 2024 is resistance to the pace of listing on exchanges. This violent resistance has fueled the rise of TON and Solana Meme Coins. However, unlike the mockery spirit of the first-generation Dogecoin, the Meme Coin launch platforms have benefited the most in this round of Meme frenzy, while the market value of the Meme Coins themselves has decreased generation by generation.
To this day, the highest market value is still held by the first-generation Meme, just as the public chain race can only accommodate BTC and ETH; the remaining chains can only compete for the “third-chain” status. In the previous cycle, it was Avalanche/Near and Solana; this round it is Solana and TON. The focus of Solana and TON also coincides with Meme and highly PvP-oriented online gambling games.
In the past six months, I have been deducing the future based on the development history of cryptographic technology, from elliptic curve algorithms to Schnorr signatures, from ZK to the vision of fully homomorphic encryption. Unfortunately, the narrative of technology seems to have come to an end. Why?
Thinking back, Satoshi Nakamoto created Bitcoin using only cryptographic technology, aiming to create a payment system. Ethereum, on the other hand, proposed the grand vision of a world computer through smart contracts. After the short-term unfeasibility of sharding, Ethereum turned to PoS and a scaling roadmap centered around Rollups. This created a seamless transition from prosperity to chaos, and the L2/Rollup system is now being utilized by MegaETH and RISE Chain to provide highly optimized hardware experiences, becoming Vitalik’s new favorites.
Similarly, hardware optimization, gas fee optimization, and high performance are the essence of Solana 1.0 and Solana Firedancer (2.0). If development continues in this direction, then Crypto is TPS.
If this path is viable, Solana will become the third chain. If not, the technical narrative of crypto will need to provide new answers. What abilities do users truly need, rather than what builders and VCs need?
In the age of application scarcity, fast food protocols emerge.
The “Fat Protocol” article in 2016 prophesied the value growth path of Ethereum’s protocols:
ETH would become an incentive for early participants to build the world’s first super economy in a decentralized manner, not belonging to any country or individual.
Ethereum would change the dilemma of the internet protocol layer’s inability to capture value, creating the richest rewards for the people building the new generation of communication infrastructure, and these rewards would passively appreciate.
To truly understand the current weakness of Ethereum and ETH, we need to go back to this article. In a sense, it is more important than the Ethereum Yellow Paper and the IXO event. Prior to this, the internet operated on a three-tier structure of “protocol -> application -> user.” These applications later became the well-known large public chains we know today, benefiting from network effects. On the left, they enjoyed the free creativity of genius programmers, while on the right, they consumed users’ privacy endlessly.
In contrast, the answer given by blockchain/Web 3.0/Ethereum is to remove the application layer and allow direct interaction between protocols and users. In this system, all economic activities are measured in ETH, hence the statement that ETH is Money.
In fact, if we compare Web3 to Web2, the core difference lies in the way value is captured, rather than the removal of the application layer itself. Giants like Microsoft need users to pay for their services, while Ethereum needs to build or create a rich on-chain ecosystem to attract users, even if they are speculative users in the early stages.
In an ideal state, Ethereum and other blockchain systems would gradually replace traditional Web2 giants and transform into a new generation of internet infrastructure. They would provide decentralized on-chain versions of various applications for our online lives. In this narrative, the technology at the protocol layer is most important, while user demand is secondary. The only unimportant layer is the application layer, and various diverse and abundant dApps will replace super platforms, allowing people’s on-chain data and value to flow freely.
First, we must acknowledge that the narrative logic of Fat Protocol is completely technology-centric. User demands and experiences were not recognized until 2023, and concepts such as chain abstraction and intent were accepted by Crypto Native users.
Second, we must acknowledge that the application layer is not without value. Pure token incentives will not enable developers to create protocols and ecosystems that better meet user demands. In other words, to prevent the overuse of the term “protocol,” Ethereum is a protocol, but strictly speaking, Uniswap cannot be considered a protocol. Referring to the foundation of SMTP, Outlook can only be an application.
Finally, we must acknowledge that in the past few years, Web3 has lacked focus on the application layer, not the polishing of underlying technologies. People mistakenly believed that only protocols needed attention, and the application layer only needed to provide good transaction services. However, based on observed facts, Web2 giants actually care about underlying protocols and can be seen as the cornerstone of internet protocols.
Being misunderstood is the fate of giants.
I must declare that I have no intention of defending the giants. We are all digital laborers of the internet, and our daily online activities are exploited by the giants, infringing on user privacy and extracting excessive profits. This is true both domestically and internationally.
However, this does not mean that removing the application layer is the correct approach. In a token-driven world, real users cannot be obtained. If we define a real user as a non-trading user, let’s imagine a scenario: if a crypto user neither uses Binance nor Uniswap, can they be considered a high-quality user? I believe most project teams would consider them not.
The abuse of the token mechanism has at least retained the seed users of blockchain. The current state of Web3 is simply speechless, as Meme Coins have not become the mainstream of the market but overwhelm everything in terms of volume.
In summary, what I desire is a journey to Mars, but what I am given is Terminus and a dispute over capitalization. If this is the great voyage of Web3 technology, then it is truly pathetic.
In the business competition of Web2, the application layer that is closer to the user earns the most profit because they donate to open-source projects while exploiting. For example, the platinum members of the Rust Foundation are AWS, Google, Huawei, Meta, and Microsoft. Even the main source of income for the Firefox browser comes from advertising fees competing against Google.
Furthermore, the entire process of using Ethereum relies on smart contracts, and it is normal to pay for this, including Blob or Calldata, which are essentially designed for storing user data. The magic of being fully on-chain lies within this, and the cost is also incurred here. Traditional internet companies mainly establish rules and do not strictly address user demands.
Let’s consider a simple example. The operation of the traditional internet is similar to the relationship between legislation and the judicial system. Legislation is the power of the people, and laws are made public. Legislators are only responsible for establishing rules, while the daily practice of the law needs to be handled by complex legal departments. Therefore, people only need to pay for the costs generated during the process of legal practice, whether it’s high-profile legal cases or traffic violations. Depending on the different content processed by the judicial system, the prices will vary from person to person and from case to case.
However, in the Code is Law world of blockchain, the judicial process and legislation are integrated. As a result, efficiency cannot be improved, and people are trapped in various technical terms. The increasingly off-chain and centralized practices are a convergence towards traditional giants and judicial practices. On-chain only serves as a proof, while computation and storage are shifted off-chain.
Starting from this perspective, we can decipher the different paths that MegaETH and Firedancer have taken. Strictly speaking, there is no before and after. If blockchain is to continue advancing, squeezing hardware is the only solution.
Conclusion
In summary, the collapse of ZK and cross-chain bridge projects in 2024 is a preview of the end of the technical narrative. The user base and transaction data of LayerZero and StarkNet have revealed everything.
At the recent Token2049, consumer-level applications were the only positive aspect. Although they lack user experience and popularization comparable to marketing, they at least no longer play with chain abstraction and intent as abstract art.
However, the pursuit of technological superiority and proximity to Discord and Twitter communities still demonstrate a lack of real users. The correct way for technology to land is when B2B companies and the people of Africa use Web3 applications on a daily basis.
Fat Protocol has been around for 8 years, with too many complaints that can break one’s heart. I hope the era of Fat Applications truly arrives.
