Yesterday was a little insane… Despite that, it was the day for me, where the inevitability of every financial transaction occurring on a public blockchain solidified. You are probably thinking this sounds crazy, didn’t everything break?!?! Yes it did, but let’s discuss why. 1
You may notice I said public blockchain, not Ethereum, what I am talking about is too far out to be certain of which platform will win, personally I believe it will be Ethereum but it almost doesn’t matter it will be a network that is open source and public though, I am sure. 2
Yesterday was the fist time (excluding some ICO’s) where the magnitude of financial transactions overwhelmed Ethereum. Volatility increases transactional demand in trading systems. Yesterday was to put it mildly, volatile as fuck. That volatility induced a huge spike in demand. 3
But here is the really interesting part, demand was so overwhelming that despite tx prices of $10+ demand stayed high for over 24 hours. To the point where we hit a level of gas pricing that was unprecedented. There's a good reason, these transactions were still profitable! 4
If you want to measure how much real demand there is for a blockchain, that is your measure. I haven’t done the numbers but I would bet more than $1m was spent on tx fees yesterday on Ethereum. 5
There are now so many DeFi platforms and DeFi positions open on Ethereum that people were willing to pay insane amounts to interact with them. This is real financial activity, you may call it speculation, but it is the same flavour of speculation that drives CeFi markets. 6
When gwei was upped to 300 on @KyberNetwork it hit me, I realised people didn’t care about paying $10-$20 per tx, they just needed to get it done. This trend will accelerate, in 6 months time during a high volatility day we may hit 500 gwei. We're through an inflection point. 7
And here is the crux of my argument. Ethereum now supports a nascent ecosystem of permissionless financial primitives that will suck in almost all economic activity. 8a
Always on settlement and far lower costs will be too enticing and financial activity brought on-chain will outcompete centralised platforms. Removing recourse to nation state based legal systems will also make most transactions safer. But we will need extremely robust oracles. 8b
There are two missing pieces right now, that prevent this from going from a small group of dedicated early adopters to everyone. Scalability and privacy. If you believe neither of these are intractable as I do, then the trajectory is simply inevitable. 9
I remember going to the movies in like 1997 and a few of the previews were starting to have URLs at the bottom and I recall thinking that is stupid what is the point when the movie won’t even be screening in a month. I didn’t anticipate the trend. 10
A few years later I recalled that moment and thought, what an idiot I was to not get how powerful it would be to have a place where you could provide info on a topic that was accessible to anyone in the world and cost almost nothing to distribute. 11
Today is 1997 in DeFi, everything is shitty and slow and ugly and unusable. But we're still through the inflection point, all those objections will fall away soon enough, some already are. We will look back and say how was this not obvious. Well, yesterday it became obvious. 12
