Narrative Layers - The Daily Gwei #468
Narratives are like onions - they have layers.
Narratives rule absolutely everything in crypto because they are what control people’s attention and in the age of social media, he who controls the attention controls the universe. A big narrative that has persisted for many years now is around “Ethereum competitors” and how they are all going to kill Ethereum - and this narrative really took off in 2021. But fast forward to 2022 and these “alt-L1’s” have taken a backseat to Ethereum’s now-bustling layer 2 ecosystem - and for good reason.
I’ve always wondered what the mass-market appeal of an alt-L1 would be when fees to use the Ethereum network dropped to 0. I mean, all of these other chains like to advertise their main value prop as being “cheap fees” relative to Ethereum but now that Ethereum has a bustling layer 2 ecosystem where fees are getting cheaper all the time, the appeal of these alt-L1’s is trending towards 0. I mean, why settle for fast, cheap and insecure/centralized with alt-L1’s when you can have fast, cheap and secure/decentralized with Ethereum layer 2’s? The choice is a no-brainer to me - especially for developers.
Of course, people are also fans of these other chains because they buy into the native tokens which may appreciate in value causing people to have a sense of loyalty to an ecosystem. Though this same thing will happen with layer 2 projects once they tokenize so again, this isn’t something that alt-L1’s have a monopoly on, it’s just that they beat most of the layer 2’s to the punch with issuing a token. On top of this, there will be plenty of unique layer 2 native applications that will attract their own communities with their own loyalty which will bolster the layer 2 protocol’s own moat.
There are other things alt-L1 proponents will talk about when comparing their favorite chain to Ethereum such as an alt-L1’s consensus mechanism, its overall architecture, the aggressiveness of business development/marketing and many other things. Though I once again come back to what I said above - no ecosystem has a monopoly on any of these things - the “winners” are usually dictated by the effectiveness of building a long-lasting and loyal community - and money & marketing can only get you so far in that respect.
Obviously I believe that the Ethereum modular scaling roadmap is the best path forward to achieve global mass adoption while keeping the network decentralized, secure and sustainable. Many alt-L1 proponents disagree with this thesis - and that’s totally fine - but at the end of the day the technology will speak for itself over the long-run.
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.