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10 tweets,
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1/ Many smart contract platforms (both liquid and illiquid) other than Ethereum are incredibly overvalued and are holding the industry back. Investors are mostly to blame for this.
2/ Most investors accept that ETH valuation only makes sense currently if viewed as a programmable store of value. The road to become such is long and hard.
3/ The majority of competing platforms offer innovations on technical and governance axes— increase tx/s, sharding, determined set or number of validators, PoS, formal verification, etc.
Curiously, none of which directly lead to becoming a SoV
Curiously, none of which directly lead to becoming a SoV
4/ The thinking goes something like “well, if we can provide a measurable improvement over Ethereum, developers will surely transition over. If developers transition over, then our token can become a SoV.”
5/ This line of thinking makes sense, directionally. However, no Layer 1 has made much headway in developer traction beyond ETH (Tron and EOS have, but on-chain metrics are easily fabricated for both chains) Furthermore, no Layer 1 has even sniffed the surface of becoming a SoV
6/ So the first question then becomes — what drives developers to specific Layer 1 protocols? Is it purely base level protocol improvements? I would say the evidence seems to show that it is not.
7/ Despite that, investors are still pouring capital into Layer 1 protocols at valuations north of $100M and some above $1B. In the short term, these can work as “trades”, but most of these investments on a longer term time horizon will go belly up.
8/ While every dev team of a new smart contract platform can eloquently explain why their chain is “technically” better than Ethereum, very few are able to explain why a dev will use it instead.
This screams lack of problem-solution fit.
This screams lack of problem-solution fit.
9/ And if they can explain why someone theoretically will use their platform, very few can point to north of three dev teams that *need* their specific solution.
This, again, screams lack of problem-solution fit.
This, again, screams lack of problem-solution fit.
10/ Nonetheless, Layer 1 protocols keep raising tens of millions of dollars. This capital will keep them afloat in the near term, but it is delaying the industry from solving problems that can increase adoption today.
