There have been many different layer 1 protocols vying to “kill” Ethereum over the years with claims of better tech, better scalability, improved developer tooling and more. Though, as we’ve all witnessed over the last few years, none of these other platforms have even come close to killing Ethereum and during that time Ethereum has continued to grow at an incredible rate - greatly increasing the distance between it and its competitors.
Over the weekend, the Ethereum 2.0 deposit contract hit 2.5 million ETH deposited or over $3 billion (at time of Alex’s tweet). Being a little creative here we can say that the market cap of eth2 (until the eth1 <> eth2 merger) is around $3 billion which would place it ahead of almost all of the Ethereum killers (the only exceptions being Polkadot and Cardano) - pretty crazy when you think about it like that, right? Not only is eth1 far ahead of any other platform in both market cap, usage, general network effects and more, we also have eth2 that is securing more value that most of the other blockchains - the best bit is that eth2 hasn’t even been live for 6 weeks!
I wrote about how and why Ethereum is the king the other day here but that piece was mostly focused on the technical/fundamental aspects of Ethereum’s network effects rather than its community. The amazing thing about Ethereum is that it has many different sub-communities that are focused on different things. We have communities for NFTs, DAOs, DeFi (and communities within DeFi), the core Ethereum community itself, the developer community and more. Sometimes these communities overlap, sometimes they don’t, but the common denominator is that they are all additive to the overall “Ethereum community” itself.
Generally I think that the support the Ethereum community showed in launching eth2 “on time” and depositing over $3 billion into the deposit contract just proves how strong the it is. I remember on the day that the deposit contract reached the minimum ETH amount required it was basically all that crypto Twitter could talk about and the excitement was unreal - I haven’t seen anything like that for any other platform. The key thing to remember here is that this community did not just spawn overnight and was not bought - it formed over the last 6 years around shared values and goals. On top of this, the Ethereum community has been through a lot together which means that the bonds between community members run deep and are very tight - breaking them is a near-impossible task.
So, as the title of this post implies, I believe that community is the moat when it comes to base layer protocols and even certain decentralized apps. Without a strong cult-like community, it’s very hard to get anyone to buy into the vision/mission of your project which means it may end up failing due to this lack of support. Don’t believe me? Well, go look at some of the most successful apps on Ethereum today - Aave, Synthetix, SushiSwap, Yearn and more - these projects all have incredibly strong and engaged communities. Though, don’t get me wrong, a project can have a really strong community/team but still fail due to lack of product-market fit (as I wrote about here) but I believe that a project that has both has the highest chance of success.
Have a great day everyone,
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All information presented above is for educational purposes only and should not be taken as investment advice.