We are living in –well, interesting times. 2020 was one for the history books, and for a variety of reasons. There was one topic that splashed headlines literally daily, and I probably speak for most of us when I say it was a year we wish we could Ctrl+Z. That said though, if not for a worldwide pandemic, the big headlines of the year would probably be around the birth of a new economy, new currency, new technology, and a new way of seeing the world. The blockchain revolution, though around for a solid decade, truly hit the stratosphere in the summer of 2020. In the midst of global panic, economies suffering, and many people getting a really good look at the inside of their homes, a growing number of innovators were using their time to build applications and platforms that would add value in industries from finance, contracts, supply chain, and even gaming.
If Bitcoin was the introduction to the concept of blockchain for many, then Ethereum was the introduction to what blockchain could do, and how it could evolve from a vaguely understood buzzword to something that added value in a way that was tangible. From Ethereum, countless developers designed, built, and launched apps that grew very quickly in popularity. ICO’s became more and more common, and though there were some useless platforms built only to sell their token and make the founders rich, many others were exploring the limits of what blockchain a la Ethereum could do. It was a magical, wonder-struck time.
The Ethereum Ecosystem
Fast forward a year, and the growing pains are straining. While Ethereum is still the undisputed leader in the blockchain economy, its popularity has created serious bottlenecks resulting in system congestion. This congestion takes the form of slow transactions and exorbitant gas fees. And those two items mean life or death for the countless apps that are built for speed and low value transactions. If this is the best blockchain can offer, then only high value transactions with time and money to spare will continue to gain use out of the system. And that would be an $80 Billion dollar shame, given how much has been invested in this new ecosystem.
However, there is good news. Very good news, in fact. As it often happens in a free flowing economy, a bottleneck that costs billions in lost opportunity, especially when the economy is decentralized, will bring out of the woodwork the innovation required to break the bottleneck wide open. We’ve seen new platforms emerge to either compete with Ethereum with their own chains or provide what customers are really asking for: Ethereum compatibility, with fast transaction times and low gas fees.
Expanding Ecosystem. Photo by Martin Rancourt on Unsplash
What to Do?
There are different ways to accomplish this, from relay chains to bridges, and everything in between. While new entrants into this market appear on a regular basis, a few stick out as game changers. When looking at the future of blockchain, it’s important not to see the market as a zero sum game. This isn’t a format war, but is rather an economy that is built on individual value propositions, but relies on interconnectivity. What we are very likely to see are new applications building on the platform of their choice, selecting a platform based on transaction speed and cost. The interconnectivity to Ethereum, along with other key networks such as Binance Smart Chain (BSC), and Bitcoin, will be expected—either the platform has them, or they will fail.
This puts a lot of burden on applications to suddenly be available and compatible with each major network. In some ways this mimics the rise of social media platforms, when companies found themselves needing to dedicate real time and money to duplicate their presence on each platform. Thankfully with blockchain, an application doesn’t need to have a different style and persona as is the case with social media; rather, it is about being compatible and interconnected. There have been cases where companies decide to build out full applications on each major blockchain network, such as Oddz building separate applications on Ethereum, BSC, Polygon, and Polkadot. However, these cases will be rare, and thanks to emerging innovation, the extra effort to create and then maintain each version are unnecessary.
Making Connections. Photo by Bryson Hammer on Unsplash
The Way Forward
Let’s consider the ideal options. If an app or platform is gaining ground and wants to reach multiple networks, what would be the best way to support its business model? There are three possible scenarios:
- Build on a primary platform such as Ethereum, accept the slow transaction speeds and high gas fees, and use various bridging platforms to access the larger ecosystem. This is initially the simplest option, but greatly limits growth and the high costs may kill the project before it can take off.
- Choose the Oddz method and build a separate app for each network. This is the most complex option, with each app being at the mercy of that network’s speed limitations and fee structure. Plus, the separate maintenance efforts are going to make you want to close the project after the 10th upgrade across a cluster of networks.
- Because of Ethereum’s high gas fees and slow traffic, this struggle has forced innovation in the form of new enabling platforms, such as Harmony. There are different tweaks to the value proposition for each, but the key service is allowing a project to build itself once, then port to other networks. The limiting factor is how well integrated this platform is to the greater Ethereum ecosystem, as well as the other major ecosystems such as Bitcoin and BSC.
It’s easy to see that options 1 and 2 have no future in the current market, not with option 3 available. The question then becomes—which of these platforms do I trust to hold my project? To make the right decision, you need to consider experience, speed, and cost. Harmony was mentioned above because it is in the top running for all three factors, and thus far no other platform has been able to match its results. The charts below show the top “ecosystem facilitators”. Some have a factor that gives them weight, but Harmony’s experience (it’s a seasoned veteran in this fast paced market), its speed (less than two seconds), its gas fees ($0.000 – 001), and its robustness (1,000 validators), it leads the pack for overall value. For Ethereum ecosystem optimization, it’s certainly my pick and there aren’t any projects on the horizon that are close to catching up. With the continuous improvements Harmony’s team has implemented, that isn’t likely to change any time soon.
Source: Harmony Lightpaper.
Conclusion
It’s amazing to see the innovation bursting from the blockchain ecosystem. With each new wave of capabilities, we see new bottlenecks stifle the innovations, only to be overcome seemingly overnight by the next wave of visionaries. The “ecosystem facilitators”, led by Harmony, have solved the looming and dangerous risk of the Ethereum ecosystem strangling itself with its own success, and wasting billions of investment. We will continue to watch this natural and lightning fast evolution develop, but it seems that for the foreseeable future platforms should build their projects on trusted partners such as Harmony. Doing so protects this next generation of innovators from the traffic jams and fee spikes plaguing everyone directly on the Ethereum platform, giving the Harmony sheltered programs a major competitive advantage and sheltering them from the volatile congestion floods we see almost daily.
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