Phew, I'm happy to see this short rundown after the large heaping you served a few days ago that I'm still trying to digest. This pairs nicely as a dessert.
2 random thoughts today:
Do you still consider ETH an altcoin? I'm on the fence because on one hand it still is directly affected by any medium to significant move that bitcoin makes. On the other hand it really is its own thing-personality, maxi / mizi communities, growth future etc are all very different from BTC.
I've given Ether a promotion to its own column in my macro investment spreadsheet - BTC, ETH, ALTs now.
The other thought is, I don't understand how ETH can maintain it's dominance and popularity in the non-BTC space. The first argument you hear is the immense utility of the Ethereum Network. Smart contracts, DeFi, NFTs, staking for 2.0 etc. I used to agree with this and was extremely bullish on it. From an investment angle I'm still bullish.
But I don't understand how. Who is using Ethereum for any of its impressive offerings when it costs absurd amounts in fees, even for just sending token A to place B?
I know there are millions of people interacting with Ethereum. The recent NFT hype is evidence enough. But again, how and who?
Personally, any service or transaction that has a fee more than 1% of the total cost is hard-stop for me. I'm not moving, let alone spending 5, 10, 20k USD regularly. If I were to explore Ethereum again (I did one time, long ago, after mistakenly hitting "OK" to sign a tx for approx $200 of a token that literally cost an extra $62.34 in fees) my zone is going to be $1000 or under. With a minimum fee of around $10-20 that's 2%! At $500 it's 4%. I won't even discuss the joke of borrowing $100 on DeFi. End result is back in Nov, Jan, Mar and now, actually using Ethereum for anything is completely out of the question for me.
Who and where are all these millions of users who are buying NFTs , borrowing and lending DeFi, and playing GAMES of all things on Ethereum? Nobody I know. How is this sustainable? Sure, there are many hundreds of people who are crypto rich that can throw around 50 ETH for a flex jpeg. I get that.
But surely there are way way more regular ppl or new-to-crypto ppl who navigate to a DEX w the hopes of snagging a gem only to see 1inch or Sushi or God forbid, UniSwap, demand a fee that's more expensive then the tokens they're trying to buy. I've since moved to Polygon, Avalanche, BSC etc for anything useful many months ago.
But it recently got me thinking, why am I bullish on ETH as a "price" when all the great stuff it has to offer is absurdly and offensively expensive? And it gets more expensive as it upgrades and rises in price? There must be tons of new ppl finally expanding from Bitcoin store of value mindset all excited to check out some NFTs, lend some coin, use some Dapps who get all the way to the last step (i.e. YES, I'm buying this NFT of a penguin) only to get smacked in the face and priced out of participating whatsoever. I'll consider spending hundreds of dollars on a jpeg, but no way am I spending upwards of 5-10% of that on fees.
Why would anyone use Eth, therefore, why is anyone, vs just going to the numerous other chains that have fees in pennies, therefore why would anyone invest in buy n hold ETH if it can't scale to include the poor man in it's wonderland? And who are these 20 somethings taking $20-$50 hits on fees?
Yet of course, I'm not selling my ETH, not even considering it. But that doesn't mean I have to like it while I hold it.
To your point, Ethereum has a lot of problems to fix. From my perspective, the bet is whether it fixes those problems before something else comes along to replace it. Fees are the tip of the iceberg. It's complicated to program with, hard to use, easy to break, and not very flexible. These things can change, and change a lot quicker than you think. But you can say that for Ethereum's competitors, too. I don't want to overcommit to any one crypto.
So is the network effect the only thing standing in between eth and Solana/Cardano/Avalanche etc?
I doubt that most ppl know the details of ETHs shortcomings and could be easily swayed simply by low tx fees if the newer chains are secure.
Then again, I don't know how reliable PoS is vs PoW. PoS seems to make decentralization tougher?
Something else that gets in my head is you look at an exchange like Gemini (and Coinbase to some extent) and it's just one giant Eth based token machine. All with their own MC but still reliant on ERC-20 format. And therefore ETH. I was also considering adding to a few positions that aren't offered on exchanges I have access to such as ZCN but I can't justify it when every DEX is going to cost me 1/3rd of what I wanted to invest.
Lastly (in my frustrated rant!) I had a petty neat idea for an NFT series and thought hey everyone else is doing it so why can't I ? So I go thru all the steps to " list it for free " but no, the very last step is paying the gas fee that was quoted at $271. I ask again, who are all these ppl minting thousands of NFTs a day?? Am I just naive to the situation and everyone but me has endless ETH to chuck around? I was planning to mint 3 simple silly NFTs and I'm priced out of participating in the space.
I must be missing something because no one seems to talk about this expense when they talk about NFT Ether rocks.
I think time and network, yes, but also ETH has a lot of development so some of these problems may get solved over time. LUNA is building awesome things with stablecoins, obv the three you mention have a lot of momentum behind them, too.
When you look at the data and analysis around NFTs, the JPEGs are basically playgrounds for rich people ATM, all whales with some smaller fish mixed in. But NFTs are widely applicable to lots of uses and use-cases. Look at WAX for NFTs. The WAX platform is growing a lot, already has a robust marketplace, and now they're hosting metaverse-type games like Immersys. It's not hyped like ETH so not sure you're going to make millions, but you can look around and maybe connect with Guilds (aka developers) and get your NFTs into their products. Who knows? I have ppl you can talk to if you email me mark@markhelfman.com I'll pass along their info.
Phew, I'm happy to see this short rundown after the large heaping you served a few days ago that I'm still trying to digest. This pairs nicely as a dessert.
2 random thoughts today:
Do you still consider ETH an altcoin? I'm on the fence because on one hand it still is directly affected by any medium to significant move that bitcoin makes. On the other hand it really is its own thing-personality, maxi / mizi communities, growth future etc are all very different from BTC.
I've given Ether a promotion to its own column in my macro investment spreadsheet - BTC, ETH, ALTs now.
The other thought is, I don't understand how ETH can maintain it's dominance and popularity in the non-BTC space. The first argument you hear is the immense utility of the Ethereum Network. Smart contracts, DeFi, NFTs, staking for 2.0 etc. I used to agree with this and was extremely bullish on it. From an investment angle I'm still bullish.
But I don't understand how. Who is using Ethereum for any of its impressive offerings when it costs absurd amounts in fees, even for just sending token A to place B?
I know there are millions of people interacting with Ethereum. The recent NFT hype is evidence enough. But again, how and who?
Personally, any service or transaction that has a fee more than 1% of the total cost is hard-stop for me. I'm not moving, let alone spending 5, 10, 20k USD regularly. If I were to explore Ethereum again (I did one time, long ago, after mistakenly hitting "OK" to sign a tx for approx $200 of a token that literally cost an extra $62.34 in fees) my zone is going to be $1000 or under. With a minimum fee of around $10-20 that's 2%! At $500 it's 4%. I won't even discuss the joke of borrowing $100 on DeFi. End result is back in Nov, Jan, Mar and now, actually using Ethereum for anything is completely out of the question for me.
Who and where are all these millions of users who are buying NFTs , borrowing and lending DeFi, and playing GAMES of all things on Ethereum? Nobody I know. How is this sustainable? Sure, there are many hundreds of people who are crypto rich that can throw around 50 ETH for a flex jpeg. I get that.
But surely there are way way more regular ppl or new-to-crypto ppl who navigate to a DEX w the hopes of snagging a gem only to see 1inch or Sushi or God forbid, UniSwap, demand a fee that's more expensive then the tokens they're trying to buy. I've since moved to Polygon, Avalanche, BSC etc for anything useful many months ago.
But it recently got me thinking, why am I bullish on ETH as a "price" when all the great stuff it has to offer is absurdly and offensively expensive? And it gets more expensive as it upgrades and rises in price? There must be tons of new ppl finally expanding from Bitcoin store of value mindset all excited to check out some NFTs, lend some coin, use some Dapps who get all the way to the last step (i.e. YES, I'm buying this NFT of a penguin) only to get smacked in the face and priced out of participating whatsoever. I'll consider spending hundreds of dollars on a jpeg, but no way am I spending upwards of 5-10% of that on fees.
Why would anyone use Eth, therefore, why is anyone, vs just going to the numerous other chains that have fees in pennies, therefore why would anyone invest in buy n hold ETH if it can't scale to include the poor man in it's wonderland? And who are these 20 somethings taking $20-$50 hits on fees?
Yet of course, I'm not selling my ETH, not even considering it. But that doesn't mean I have to like it while I hold it.
Thoughts? (-:
If it aint bitcoin it's an altcoin.
To your point, Ethereum has a lot of problems to fix. From my perspective, the bet is whether it fixes those problems before something else comes along to replace it. Fees are the tip of the iceberg. It's complicated to program with, hard to use, easy to break, and not very flexible. These things can change, and change a lot quicker than you think. But you can say that for Ethereum's competitors, too. I don't want to overcommit to any one crypto.
Yes I've heard devs find it a pain to code with.
So is the network effect the only thing standing in between eth and Solana/Cardano/Avalanche etc?
I doubt that most ppl know the details of ETHs shortcomings and could be easily swayed simply by low tx fees if the newer chains are secure.
Then again, I don't know how reliable PoS is vs PoW. PoS seems to make decentralization tougher?
Something else that gets in my head is you look at an exchange like Gemini (and Coinbase to some extent) and it's just one giant Eth based token machine. All with their own MC but still reliant on ERC-20 format. And therefore ETH. I was also considering adding to a few positions that aren't offered on exchanges I have access to such as ZCN but I can't justify it when every DEX is going to cost me 1/3rd of what I wanted to invest.
Lastly (in my frustrated rant!) I had a petty neat idea for an NFT series and thought hey everyone else is doing it so why can't I ? So I go thru all the steps to " list it for free " but no, the very last step is paying the gas fee that was quoted at $271. I ask again, who are all these ppl minting thousands of NFTs a day?? Am I just naive to the situation and everyone but me has endless ETH to chuck around? I was planning to mint 3 simple silly NFTs and I'm priced out of participating in the space.
I must be missing something because no one seems to talk about this expense when they talk about NFT Ether rocks.
I think time and network, yes, but also ETH has a lot of development so some of these problems may get solved over time. LUNA is building awesome things with stablecoins, obv the three you mention have a lot of momentum behind them, too.
When you look at the data and analysis around NFTs, the JPEGs are basically playgrounds for rich people ATM, all whales with some smaller fish mixed in. But NFTs are widely applicable to lots of uses and use-cases. Look at WAX for NFTs. The WAX platform is growing a lot, already has a robust marketplace, and now they're hosting metaverse-type games like Immersys. It's not hyped like ETH so not sure you're going to make millions, but you can look around and maybe connect with Guilds (aka developers) and get your NFTs into their products. Who knows? I have ppl you can talk to if you email me mark@markhelfman.com I'll pass along their info.