Vitalik Buterin talks about his enthusiasm for Ethereum’s potential.
To protect user privacy, the co-founder of Ethereum was optimistic about developing decentralized blockchain identities.
The main innovations in the Ethereum ecosystem, by Vitalik Buterin, include money, blockchain identities, decentralized finance (DeFi), decentralized autonomous organizations (DAOs), and hybrid applications. The co-founder of Ethereum explains his use of Ether as a form of payment in an Argentine cafe in a blog post from December 5:
“The owner recognised me when we walked in and showed me right away that he owns ETH and other digital assets on his Binance account. Inquiring about using ETH as payment, we placed an order for tea and nibbles. In response, I sent roughly $20 worth of ETH from my Status wallet on my phone to the coffee shop owner’s Binance deposit address using the QR code he provided.”
The transaction didn’t make “pragmatic sense,” Buterin said because the cafe visit took place in December of last year when Ethereum was still a proof-of-work system. The transaction cost one-third in network fees, and it took some time for the money to transfer. Though “transactions get added substantially more quickly, and the chain has become more stable, making it safer to accept transactions after fewer confirmations,” due to Ethereum’s switch to proof-of-stake in September.
The sector began honorably but swiftly developed into “an overcapitalized monster that relied on unsustainable types of produce farming,” according to Buterin, who then addressed the growth of DeFi. He said that DeFi is still in the “early stages of setting down into a stable medium, enhancing security, and focused on a few applications that are really valuable.”
Next, Buterin lauded the development of blockchain identification strategies like Sign In With Ethereum (SIWE) and its capacity to increase user privacy. The SIWE protocol, according to Buterin, “allows you to interact with a site without providing Google or Facebook access to your private information or the power to take over or lock you out of your account.” He added that these procedures might be used to demonstrate eligibility for activities like governance or airdrops without jeopardizing users’ personal information.
When referring to DAOs, Buterin stated that while the term “captures many of the hopes and dreams that people have put into the crypto space to build more democratic, resilient, and efficient forms of governance,” more work needs to be done to increase censorship resistance and susceptibility to internal organization. Buterin wrote, highlighting MakerDAO as one illustration:
“The $7.8 billion in collateral held by MakerDAO is more than 17 times the market capitalization of the profit-taking token, MKR. Therefore, if governance was left to the discretion of MKR holders without any safeguards, someone could buy up half of the MKR, use that to manipulate the price oracles, and take for themselves a sizable piece of the collateral.”
Finally, the co-founder of Ethereum mentioned the possibility of combining Ethereum blockchain technology with off-chain procedures like voting. Buterin outlined the following scenario: “Users have a means independent of the voting system to verify that their votes are counted because they are published on the blockchain. However, using a ZK-SNARK method, votes are encrypted to protect voter privacy.”
As for the following stages, Buterin remained adamant about giving projects with long-term value propositions the highest priority over those only concerned with making money immediately. The author wrote that the LUNA market cap reached over $30 billion, while stablecoins aiming for robustness and simplicity frequently get largely ignored for years. “Many of the more stable and boring applications are not built because there is less excitement and less short-term profit to be earned around them.” The Shanghai hard fork, which will allow users to withdraw their staked Ether, is Ethereum’s next significant anticipated development following the Merge. The renovation is slated to take place in the second half of 2023.
Following the Merge event, the co-founder of Ethereum discussed his primary thoughts on the current state of the ecosystem.