Refreshing, after being ridiculed & ostracized from ETH for opposing "L2 scaling"
Everyone is singing a different tune now in harmony with leadership
Unfortunately, the new plan is uncompetitive too
ZK-EVM will take 3-5 years for significant scale & slows ETH down indefinitely
https://t.co/L3hFLzwbd5
@intocryptoverse Ironic for you to say, considering that BTC is the biggest meme coin of all
The definition of a meme coin is no utility = BTC
BTC actually helps justify all the BS in crypto
The only way the crypto & cypherpunk revolution can succeed is through the alts; BTC is holding us back
@Justin_Bons Alright, finally back and settled from my morning so can respond.
Firstly; Appreciate the kind words.
For anyone else reading I actually admire Justin because even though he's a bit bombastic with language he's generally principled and more importantly; technically correct in
MegaETH can censor, front run & steal all user funds without delay!
It is so centralized that it literally runs from a single server
Flexing capacity & speed in this case is not a flex at all
Less than 0.2% of fees make it back to ETH, which is also exceptionally parasitic: 🧵
If we truly care about decentralization & its utility. Then we should stay clear of centralized L2s & advocate for high capacity L1's such as SOL, SUI, & NEAR instead
Admin Key Risk:
It is the MegaETH smart contract that lives on ETH that exposes users to the risk of theft & loss of funds. As the smart contract can be "upgraded" through a 4 out of 8 multisignature, also known as an "admin key"
Such a change could include new rules that could send all tokens present in the L2 to a new address. Effectively draining all user funds deposited in the L2. This is currently the case for all major L2s!
We might not have seen any major exploits of this nature in major L2s in the past, but we have in other smart contracts with the same security setup. That means it is only a matter of time before this happens with one of the big L2s, hurting countless innocent people in the process
Ofcourse, like all other L2s, MegaETH promises to remove the admin keys one day, but if the history of "L2 scaling" proves anything, it is that the incentives rarely align for that to actually ever happen. As promises should carry very little weight in this industry, based on our shared history
Centralized Sequencer Risk:
There is currently a single permissioned sequencer that can therefore censor & frontrun. As it alone determines transaction ordering. Allowing it to ignore some TXs (censorship) & prioritize others (MeV). Throwing all pretense of decentralization out the window
This is literally a single centralized server sitting in a data centre with insane hardware requirements. As it costs over $100k to operate the hardware alone, that is for a single sequencer per year. Making it at least 20x more demanding than a SOL validator, for example
In MegaETH's defense, there are two additional backup sequencers that can be swapped in if a failure occurs. This also lays the critical technological groundwork for a larger sequencer set in the future, something that they plan to do. It is yet to be determined if this will be stake-weighted or PoA-based
The irony does not escape me that the only way to "decentralize" an L2 is to recreate the same decentralized consensus that enabled blockchains (L1) in the first place, putting us back at square one. That is how decentralizing L2s is a lot like re-inventing the wheel
Parasitic Economics:
As long as L2s such as MegaETH help to justify & in some cases lobby against ETH's L1 scaling significantly, the relationship remains fundamentally parasitic. As it slowly kills the host, while private L2s profit & siphon off ETH users to new chains
What makes MegaETH particularly bad in that regard is that it does not even settle directly on ETH but on EigenDA instead!
We can figure out the percentages by looking at the cumulative cost to ETH: Average cost per L2 user operation (UOP, which approximates a transaction or batch element in this context): $0.000006
We can then compare that to how much MegaETH actually charges its users: Using the targeted fee instead of the average fee, since the latter is higher: $0.003 user fee per tx. Percentage ≈ ($0.000006 / $0.003) × 100 = 0.2%
This ratio will only get worse as MegaETH does more TXs. This is efficient from MegaETH’s perspective while being wholly parasitic from ETH’s perspective!
Far from this being a reciprocal relationship, this strikes me as being more extractive. MegaETH should be called MegaEigenDA or MegaCentralized instead!
False Equivalance
Comparing the performance of MegaETH to a permissionless & decentralized system such as ETH, SOL, SUI & NEAR is totally bonkers. It is an unfair comparison because they are not the same thing at all. It would make more sense to compare it to traditional centralized server architecture
MegaETH is impressive from an engineering perspective. However, achieving the same performance on any decentralized system is far more impressive. Having a single centralized server solves many of the bottlenecks that real cryptocurrencies have to work around
The 10ms speed claim is also misleading. The time it takes for the speed of light alone to travel around the Earth is 130ms. So, the speed you experience depends on how far you are from their single centralized server.
That is where decentralized systems have the potential to be even faster than centralized systems one day & truly global. Thanks to the type of multi-leader architectures, the likes of SOL & SUI have been innovating recently
Credit Where Credit Is Due
MegaETH is the most interesting & best L2 from my perspective, as unlike other ETH L2’s, it actually scales!
Not sure how much that praise is worth coming from one of the biggest L2 critics, but this needs to be acknowledged
What also needs to be acknowledged is that @bread_ is a great guy. He helped review this critique & he did so very fairly & graciously. Helping to correct any inaccuracies, even when he obviously does not agree with my conclusions, but we can agree on the facts.
So, despite our strong disagreement on this point, there is a great mutual respect here. Ultimately, we have the same goals in mind; we are just taking radically different paths to achieve them
MegaETH is also my favorite L2 for not pretending to be something it is not. It embraces its centralization as a strength & confidently bites the bullet on trade-offs
Conclusion
Anyone who cares about decentralization & everything that entails. Should stay clear of L2’s, including MegaETH
High throughput L1’s cannot censor & cannot steal user funds, MegaETH can
The blockchain trilemma has effectively been solved. We do not need to sacrifice decentralization on the altar of utility. We can have our cake & eat it too
That is what makes the entire concept of “L2 scaling” an anathema. An unnecessary compromise in what matters most to this entire movement: Decentralization & more importantly, the goals it was meant to accomplish. From censorship resistance, financial sovereignty, credible neutrality & more. MegaETH supports none of these causes & only drives more people in the opposite direction
That is how ETH’s misguided quest to preserve decentralization has paradoxically pushed most of its users away & into centralized systems such as MegaETH. I do not blame L2 founders for finding opportunities in the free market. My gripe lies with the ETH’s leadership for not scaling their L1 & consequently creating this market segment in the first place!
MegaETH is the best L2, for whatever that is worth. As it remains an incredibly low bar. As all of the major L2s can still censor, frontrun & steal user funds today. However, none of the major L2s are actually capable of significant scale. This is where MegaETH at least gives something in return for that horrible trade-off
We are all free to innovate in our own unique ways, but always keep in mind to “never make a deal with the devil unless you’re prepared to lose”
@Justin_Bons I really like the way you made unambiguous definitions! Let me see if I agree with you on ZEC's marks on your unambiguous definitions! ⤵️
According to @Justin_Bons’s chart @SuiNetwork isn’t doing too good:
- Centralized
- Bad tokenomics
- Unrealiable (downtime)
- Lacks on-chain governance (factual)
Good to be underdogs again 😁
Top 100 chains rated on: Scalability (1), Governance (2), Decentralisation (3), Economics (4), & Reliability (5): 🧵
1. 2. 3. 4. 5.
BTC: ❌❌✅❌✅
ETH: ❌❌✅✅✅
BNB: ✅❌❌❌❌
XRP: ❌❌❌❌✅
SOL: ✅❌✅✅❌
TRX: ✅✅❌✅✅
ADA: ❌✅✅❌✅
DOGE:❌❌✅❌✅
BCH: ✅❌✅❌✅
XMR: ❌❌✅❌✅
HYPE: ✅✅❌❌❌
XLM: ✅❌❌❌✅
SUI: ✅❌❌❌❌
ZEC: ❌❌✅❌✅
AVAX: ✅❌✅✅❌
LTC: ❌❌✅❌✅
HBAR: ✅❌❌❌✅
CC: ✅❌❌❌✅
TON: ✅✅✅❌❌
DOT: ❌✅✅❌❌
NEAR: ✅❌✅❌✅
ICP: ❌✅❌❌✅
ETC: ❌❌✅❌✅
PI: ❌❌❌❌✅
APT: ✅✅✅✅❌
ATOM:❌✅✅❌❌
KAS: ✅❌✅❌✅
ALGO: ✅✅❌❌✅
FIL: ❌❌✅❌✅
VET: ✅❌❌❌✅
DASH: ✅✅✅❌✅
S: ✅✅❌✅✅
SEI: ✅✅✅❌✅
XTZ: ✅✅✅❌✅
TIA: ❌✅❌❌✅
No chain is perfect. Despite that, most claim they are the best in all categories; that is clearly false. The key difference is that we are not cherry-picking an evaluation methodology. We are instead applying a consistent, but simple standard & to all cryptocurrencies fairly. Let me explain, before you unfollow me out of sheer rage:
Scalability:
Any chain that exceeds 2k TPS of "theoretical max capacity" gets a check mark. This is calculated by taking the smallest basic TX type & dividing that by the current capacity (block size/gas limit), making it a fair & objective measurement.
I also deducted any "fake" TX's, such as consensus messaging. However, I did not count parachains/subchains or L2's. I am strictly measuring the capacity of the L1 here, as I remain sceptical of all modern modular designs.
Scaling matters, both to maximize decentralization, security & scarcity through fees. But also because the empowering world-changing aspects of crypto can only be achieved by bringing it to the masses.
Governance:
Any chain that has fully implemented on-chain governance (direct stakeholder voting/token voting) gets a check mark; plans & half-implemented systems do not count!
This matters, as the only alternative to on-chain governance is centralized control (off-chain governance), a concept totally antithetical to crypto & even worse: Leads to bad & often corrupt decision making
Decentralization:
This is far too complex to measure so simply, so we went with the lowest possible bar: Permissionlessness, in every possible aspect, when it comes to the L1.
This gives us a binary for every blockchain. Though this is definitely still a gross undersimplification, which I can acknowledge here, it does mean that some of the chains we define as "decentralised" here are often far from that in practice.
So, to help alleviate that situation, we will add another criterion: validator count! Requiring a minimum of 150 validators (block producers) is reasonable.
Though this is sufficient for a simplistic analysis, a more granular approach would consider far more decentralisation metrics.
Decentralization is not the goal; it is a means to an end. That end includes freedom, censorship resistance, privacy, immutability, financial sovereignty & far more. Decentralization is the key innovation that has allowed us to achieve these goals. That is why decentralization matters
Economics:
This category might be the most contentious. As there are many competing theories over what good token economics looks like. So, I acknowledge that I might be in the minority on this one, making it a contrarian view:
Specifically, a good token economic design has to include a LOW long-term tail inflation (below 2%) combined with a fee burn.
This ensures long-term sustainability & maximum scarcity depending on economic conditions, as the supply is now determined algorithmically. Where it reacts to market conditions, making it more scarce during good times & giving it a low inflation rate during bad times.
It is beyond the scope of this thread to defend this theory more here, but I am absolutely convinced that this is the best economic design.
This means all chains with supply caps get a cross; as such, a limit is far too risky for long-term security & sustainability from my perspective.
Economic design matters because these cryptocurrencies are not only platforms & forms of money but also Stores of Value. My crypto economic theory demands that an L1 combine all three into a single asset, for competitive reasons. Because we can, that is why scarcity & concepts of sound money are still tantamount to all blockchain design.
Reliability:
Another simple metric: If a chain has not gone down in the last two years, it will get a check mark!
This has to be a complete downtime period during which ZERO users were able to use the blockchain at all.
We should expect absolute uptime for all blockchains; it is one of the big competitive advantages of decentralization. However, growing pains are to be expected & are the norm. That is why I set the time period to 2 years, as otherwise the vast majority of chains would have failed this check. Fortunately, events such as BTC's 2010 inflation bug have become ancient history, forgotten by most. What matters is the reliability of the chain right now.
Nothing is perfect:
As you can see from this list, nothing is perfect or unique. Not a single chain passed all the checks or stood on its own within a single category.
This is the main point I wanted to drive home, counteracting some of the irrational thinking we often see in the crypto industry. It is human nature to think your tribe is special, set above everyone else. However, this is more often just another psychological trap within our human nature.
This definitely makes some of the quasi-religious tribalism in the space all the more ridiculous & insane. That is why we must always take a pluralist approach by never exclusively aligning ourselves with a single blockchain ecosystem. That way, we are better able to maintain our objectivity & steer away from biases.
As you will undoubtedly see in the comments, this will upset many people. But as I hope some of the more reasonable people can also see, I am setting up objective measures & comparing these blockchains fairly according to those objective measures.
If your favourite chain does not get a checkmark, it is not my fault; blame the chain, not the science or the messenger!
Conclusion:
The number of checks or crosses a project gets on this list does not necessarily reflect my support, so please do not take this as financial advice; there is far more to consider than these five metrics.
It is simply an interesting exercise for the sake of comparative analysis. I certainly cringed at how few or how many checks some of these got.
That is because this is not a subjective popularity contest; it is not about how you "feel" about a chain. Good fundamentals can be measured, cutting through our preconceived biases.
It is tempting to write these differences off as trade-offs. However, that is not the case. The feature sets I measured in this thread are not mutually exclusive in any way. We can have our cake & eat it, too, so to speak. My ideal blockchain does not exist yet, as nothing checks all of the boxes, even though theoretically, something could.
Please also understand that this list is far from complete; at @cybercapital, we use over a hundred fundamental parameters within our own internal price target models. Demonstrating how this type of thinking can be scaled to operational extremes, requiring the coordination of large teams of researchers over many years. Something Cyber Capital has specialized in for over a decade.
I hope this was informative & insightful. Let's aim to have all chains pass these checks one day, to create a sea of green: For your sake, for freedom, justice, civilisation, cypherpunk & humanity! 🔥
