Strategies for Ethereum competitors
In my previous post, I gave some general thoughts after Devcon iv and some vulnerabilities I see in Ethereum.
It’s becoming more clear that the value of ETH is in the community. So below I’ll try to outline a couple of “attack vectors” that might work for competitors in kick-starting their own following.
1) Faster execution
It’s no secret that ETH is not moving as fast as many have hoped. At times it can seem like they are moving in circles and that they would grind to a halt without Vitalik.
A small, focused team could out-execute them on technical milestones. All things being equal, executing the ETH 2.0 roadmap would be much easier for a new team. This is due to both not having a legacy to think of and also learning from all the mistakes ETH has made along the way.
The small caveat here is that ETH foundation has shown itself to be quite pragmatic and not afraid to abandon bad ideas, no matter the sunk costs. If they would be willing to flat-out copy a competing solution (it is all open source after all) they might be able to move fast enough before the competitor had a chance to achieve escape velocity.
2) Better governance
I heard very little at Devcon on how they plan to actually improve governance. For instance, there was only one mention of it on Vitalik’s keynote slides under medium term goals (bullet point which said — “Think about governance…”).
Further, it’s unclear how decisions are made at Ethereum. For example who are the less visible people at the Foundation? Who hires / fires them? To me, it looks more like a random selection of people that were at the right place and time. This seems an easy way to have mediocre people sneak in. As Steve Jobs famously said, “B players hire C players, C players hire D players and it doesn’t take long to get to Z.”
Perhaps, the Ethereum foundation is hiding these faults behind the decentralization mantra (if they are aware of them). That being said, there are plenty of decentralized organisations with good structure and governance (e.g. universities).
A team that comes up with better off-chain and on-chain governance could set up better infrastructure while ETH struggles with organisational chaos.
3) Regulation friendly
Regulations in crypto are unclear. So far, it seems ETH is opting for passivity. The problem with this is that this creates uncertainty for companies that fundraised on top of their platform and those building dApps. Furthermore, I don’t see how in ETH’s current state any serious enterprise company would use it (outside of their innovation centre).
A public chain that is built from the ground up with KYC / AML in mind by people that understand regulation and the legacy financial system might just be the compromise solution that gets traction.
4) Privacy focus
Privacy is very important to onboard more people into crypto. Nobody will use a payment system where everyone can see your balance and smart contracts are little more than toys without proper data and transaction privacy built in.
While ETH do work on privacy, are they focused on it enough? It seems like a lot of their privacy efforts are done by third parties (who are actually separate projects with separate investors). Third parties with their own agendas means conflict of interest down the line.
Teams that are doing privacy first could definitely execute faster and find a privacy focused use case that could propel them to on-board the next wave of crypto users.
5) dApp store
The reason why the App store was so successful in attracting developers is because Apple had users willing to try and to pay for mobile apps. Developers were then scrambling to catch the new gold rush. Other platforms couldn’t compete no matter how much money or incentives they offered to developers (Nokia, Microsoft).
Platforms are much easier to build around users than the other way around. But currently everyone is chasing developers and nobody is chasing users.
If a team could find a way to hack user growth and build an actual dApp store with active participants and an easy on-boarding process, that could easily snowball into something impossible to stop.
This could very well turn out to be a more centralized solution than ETH in order to solve some technical challenges needed for real world dApps. However, it is likely that dApp platforms need to be just decentralized enough so that the rules of the game can’t easily change for participants (as Twitter and many others have done).
6) More stable & more decentralized
While Ethereum is always pitched as the second most decentralized cryptocurrency. How decentralized is it really? What does decentralized even mean?
Something that is build more like a traditional financial asset while solving some of BTCs shortcomings (blockchain size, fairer mining, etc) could gain traction. It would start by looking more like Bitcoin 2.0 but could steal the decentralization narrative and then, later on, rebuild all the ETH elements that make sense.
Conclusion
These are just some of the potential opportunities for competitors and part of our thesis at StakeZero. I’m sure there are many more but the point is that ETH is looking vulnerable.
PS — I don’t think the latest price decrease ( ̶$̶1̶7̶5̶ ̶$̶1̶5̶5̶ $129 at time of writing) has anything to do with these shortcomings. This is still just the crypto space deflating and miners playing games around the BCH fork.
