OG Protocol Betrays Ethereum? MakerDAO Builds New Chain, Good or Bad?

OG Protocol Betrays Ethereum? MakerDAO's New Chain Good or Bad?

Original Author | Cryptocurrency Researcher Ann

Original Translation | Baze Research Institute

The latest soap opera in the cryptocurrency industry is unfolding.

Yesterday, a news broke the Crypto Twitter, that Ethereum co-founder Vitalik is selling his MakerDAO token $MKR, which is the first time he has done so in two years.

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My initial reaction was that Vitalik may not be enthusiastic about real-world assets (RWA), which is a subfield of the cryptocurrency industry, where MakerDAO and its stablecoin DAI are leading protocols.

However, what really happened is something I could never have imagined in a million years, and many other members of the cryptocurrency community feel the same – that’s why many people feel uneasy.

MakerDAO founder Rune proposed building a new blockchain based on Solana for the protocol.

Unless you are a “local” who often pays attention to the cryptocurrency industry, you would not know how big this situation is.

Solana, the biggest “Ethereum killer”

Maximalism (emphasizing more is more) is not something I am proud of in the cryptocurrency industry – although I often find it fascinating. Every Layer 1/smart contract platform has its own die-hard fans who like to argue with each other about who is the strongest.

Sometimes it’s just a healthy joke, people excitedly discussing whose technology is better, more decentralized, and so on. But in most cases, it often turns into a fierce “online fight” with each group insulting each other.

In the last bull market, the L1 war became the focus of the cryptocurrency market. I think it was a period when ETH maxis kept losing their minds because the spotlight and liquidity of their beloved Ethereum were being taken by the most popular L1s at that time.

However, among the various “Ethereum killers,” Solana is the most well-known. For ETH maxis, Solana is simply a nightmare. Why?

First of all, it received the support of the cryptocurrency giant and great entrepreneur SBF at the time (who is now in jail). Having just SBF is not enough, Solana’s enthusiastic supporters also include Su Zhu from Three Arrows Capital.

Secondly, Solana is cool and powerful – it claims to process 40,000 times more transactions than Ethereum.

The price of Solana’s native token $SOL soared from $3 in the early bull market to an all-time high of $259.

Since then, the Solana community has become arrogant and arrogant.

But no one hates Solana more than Ethereum supporters.

MakerDAO’s shocking proposal

On the MakerDAO governance forum, Rune proposed rebuilding the MakerDAO protocol by using the Solana codebase.

MakerDAO is the OG of Ethereum DeFi, and they are the bluest of the blue chips. Maker has been an important part of the Ethereum community since the early days (2014). In 2017, they launched the stablecoin DAI, which quickly grew to be the largest algorithmic stablecoin in the crypto market, serving as an alternative to centralized stablecoins like USDC and USDT.

In short, Maker, as the OG of Ethereum, is so deeply rooted that Rune’s proposal is shocking, feeling like the most serious “betrayal” event in Ethereum’s history.

Among all the blockchains and smart contract platforms, why choose Solana?!

This slap in the face is much louder than when decentralized exchange dYdX moved from Ethereum to Cosmos as its main chain. At least dYdX chose Cosmos, a blockchain respected by Ethereum supporters (including Vitalik).

But Solana? The humiliation suffered by Ethereum supporters would be even worse.

Why Solana?

Rune believes it has the most efficient and high-performance technical stack. He also takes into account Solana’s bustling developer community, which means he will never lack talent to help him build using the Solana codebase.

Full proposal: https://forum.makerdao.com/t/explore-a-fork-of-the-solana-codebase-for-newchain/21822

Regarding his proposal, what’s interesting is the subtle shadow he cast on Ethereum. MakerDAO has too much technical debt, and I am curious if he is implying that the existence of debt is due to the platform (Ethereum) that MakerDAO is based on also having a lot of technical debt.

To address these debts, he is considering starting over.

dYdX also agrees with the view of upgrading to a new chain instead of building on an old chain. This boils down to one thing: Ethereum is difficult to scale and does not allow ambitious DApps to achieve their goals. (In the case of MakerDAO, their goal is a supply of 100 billion DAI.)

Another shadow Rune brings to Ethereum: the rampant rent-seeking of MEV (miner extractable value). The emergence of MEV is due to the lack of foresight in the early days of Ethereum. Who would have thought that bots would exploit simple arbitrage trades on such a large scale, to the point where most trades are now carried out by these rent-seeking bots? MEV is Ethereum’s perpetual technical debt.

In short, Rune wants to completely upgrade to a new chain, a new stablecoin, and a new governance token to achieve massive scalability. Start over, correct some past mistakes. He doesn’t have many choices, it’s either Solana or Cosmos, and he chose the former.

“The biggest difference between Cosmos and Solana is that Cosmos does not prioritize efficiency like Solana does. This means that the cost of maintaining and achieving high performance will be higher. Cosmos also does not have a centralized foundation organization as powerful as Solana, which could be either a good thing or a bad thing.” – Rune

Reaction from the Ethereum Community

It seems that selling $MKR is not enough to “vent frustration,” as Vitalik briefly mentioned the possibility of MakerDAO developing in a strange direction on Discord.

To be honest, compared to various “ngmi” (not gonna make it) comments expressed by frustrated Ethereum supporters on Twitter, Vitalik’s response is quite elegant.

Rune’s proposal is a big blow to Ethereum. MakerDAO is the OG protocol of Ethereum and has the second-largest liquidity in the DeFi sector. This will only exacerbate the severity of the existential crisis that is already happening on Ethereum. Recently, there have been discussions about the security of Rollups and how they are neither secure nor decentralized in practice.

What if other OG protocols follow suit? It’s not good for Ethereum, nor for the wallets of Ethereum supporters.

Conclusion

With this proposal, the multi-chain issue is once again making waves (after the L2 Summer narrative we just went through). Choosing between Ethereum and other blockchains is a complex question, and every decision requires some trade-offs.

If more protocols try to branch out from Ethereum, I personally think it’s a good idea. (However, Rune didn’t choose Cosmos.)

We like to think about what would happen if we moved Ethereum’s DApps to other chains. Would it work? Would it scale? Or would the catastrophic events that people often like to speculate about actually happen? We will never find the answer unless someone is there building and taking risks, which is why I commend MakerDAO for being the latest trailblazer.

Translator’s Note:

The above projects and opinions should not be considered as investment advice. DYOR. According to the notice issued by central banks and other departments regarding further prevention and disposal of virtual currency trading speculation risks, the content of this article is only for information sharing and does not promote or endorse any business or investment activities. Readers are advised to strictly comply with local laws and regulations and refrain from participating in any illegal financial activities.

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