Cosmos Collective

Sat, 19 Feb 2022 17:57:08 -0800

As the price of Ethereum, and usage of the Ethereum network exploded in 2021, the cost of the limited Ethereum block space soared. With the cost of a routine trade on Uniswap consistently reaching $100, all but the crypto elite were priced out. To make matters worse, as NFT’s exploded in popularity, hyped up mints would cause further network congestion.

The result was frustration among users, who began to loath the thought of touching the Ethereum mainchain. This frustration manifested itself in Twitter rants and many questions about when, and if, Ethereum would scale. All the while, the Ethereum community was working day and night to build bridges and rollups to meet network demand.

In many ways, these issues boil down to how Ethereum is built.

On Ethereum, the decentralized applications (dApps) run on the same virtual machine (the Ethereum Virtual Machine, or EVM), and effectively compete for limited block space. As noted above, it can prove difficult to run NFT minting, decentralized finance (DeFi), and crypto gaming all on the same blockchain. The cost of block space leaves certain users, and use cases, on the sidelines.

This can be counteracted with alternative layer 1 (L1) blockchains, or vertical scaling with layer 2 (L2) rollups, but middleware (bridges) is then necessary to create an interoperable system. The problem is that bridges often rely on centralized entities and are prone to exploitation. In recent days, Wormhole (a bridge between Solana and Ethereum) was exploited for $326.0 million (one of the largest hacks in history). This exploit brought even more attention to comments recently made by Ethereum Co-founder Vitalik Buterin, who noted his skepticism towards the viability of cross-chain bridges at...Read More