To De or Not to De - The Daily Gwei #220

What is the true cost of decentralization?


Every transaction on Ethereum enjoys an incredibly decentralized and secure experience but this, of course, comes at a price in the form of high gas fees. Though at this point, the cost of decentralization is not worth it for many people transacting on Ethereum today.

Source: https://twitter.com/sassal0x/status/1379687066296967168

To be honest, I was quite surprised by the results in my tweet above because lately I have been quite disheartened by how many people don’t seem to care at all about decentralization. Though, as I thought about the results some more, I realised that maybe the question wasn’t the right one to ask because people were probably misunderstanding it. I believe this is because “decentralization” is not a well understood term and seems to mean different things to different people. I always find myself going back to Balaji’s ‘Quantifying Decentralization’ piece as I believe it’s the best resource for giving newcomers an overview of what we actually mean when we say something is “decentralized”.

Another question that I’ve been asking myself for a while now: do people really care about decentralization? Or is it just a luxury feature for them? Well, I’d say the answer is a mix of both - I think people do care once they actually understand the benefits but I don’t think most people care enough to spend $100’s of dollars for the luxury of using something that’s decentralized if they have cheaper alternatives. Though, don’t get me wrong, these cheaper alternatives are mostly all centralized and have no viable path to ever becoming decentralized but I don’t think this really matters to most people in a bull market.

The main reason Ethereum continues to remain expensive to use is because the community does not want to compromise on the decentralization of the network. We want everyone to be able to run their own node and we want everyone to have strong security guarantees when they use the network. The trade-off here is that it’s much more difficult to scale and requires literally inventing new technologies (like zkRollups and Optimistic Rollups) to scale while retaining decentralization. It also requires a lot more patience as these things take time to build out - and we all know that the crypto ecosystem is anything but patient!

In the end, I don’t think we can actually call anything 100% decentralized unless it has undergone many different “trials by fire”. At this point Ethereum has faced many of these trials already and come out stronger after every single one but even Ethereum still hasn’t faced attacks from literal nation states. Maybe those attacks never come but if they do, I believe that Ethereum will be the only smart contract chain that will be able to resist them.

Have a great day everyone,
Anthony Sassano


Join the Daily Gwei Ecosystem


All information presented above is for educational purposes only and should not be taken as investment advice.