In yesterday's article, I attempted to analyze the business model of Ethereum.
This assessment method is still very rough, and I can only provide approximate estimates for many details. There are certainly many imperfections and even errors in the details.
But this direction must be persisted.
I strongly agree with two statements by Duan Yongping: do the right thing and do things right.
I believe assessing Ethereum through its business model is "doing the right thing"; using various methods to evaluate is the process of trying to "do things right". Although this attempt process will inevitably involve various mistakes, continuously improving and correcting will gradually approach "doing things right".
From the business model discussed yesterday, for Ethereum to reach an intrinsic value of $2 trillion in the future, the number of ETH burned daily would conservatively need to be around 20,000.
However, from the current ecosystem perspective, it seems difficult for Ethereum to achieve this scenario—according to current data, Ethereum only burns around a hundred ETH daily, which is still far from the target.
To realize such a scenario, from the most intuitive understanding, Ethereum's future ecosystem must be quite extensive, specifically manifesting as:
- Must have numerous layer-2 extensions mounted on Ethereum
- Must see the rise of multiple (not just a few) layer-2 extensions with robust ecosystems
This form, in turn, requires Ethereum to be secure and decentralized. Otherwise, if Ethereum encounters problems, its mounted layer-2 extensions would be wiped out, and the entire ecosystem would face catastrophic destruction.
Is this scenario possible?
If we consider the problem in reverse, Ethereum's achievement of this goal seems not a matter of whether it can, but that it must.
Over a long time, the only two layer-1 blockchains I've understood and learned about are Bitcoin and Ethereum.
My expectation for layer-1 blockchains is that they can recreate an entirely new on-chain ecosystem and on-chain economic entity. To realize this vision, this layer-1 blockchain must possess two basic conditions:
- Be a Turing-complete system
- Be as decentralized as possible.
Between Bitcoin and Ethereum, Bitcoin has a better consensus, but lacks the first condition. Theoretically, if Bitcoin could supplement this shortcoming, its prospects would be quite brilliant.
Unfortunately, after the past two to three years of practice and exploration, Bitcoin has not substantially succeeded in the first condition. So among these two layer-1 blockchains, only Ethereum remains with the conditions to realize this vision.
Ethereum's future must develop a more diverse ecosystem and attract more diverse builders.
A reader asked:
Is economic globalization the most favorable environment for blockchain, especially for public chains like Ethereum?
The current situation is that economic globalization is beginning to end to some extent, and the traditional alliance between the US and Europe is developing cracks, with the future world likely to be more fragmented than today.
However, global communication and interaction cannot be blocked, especially in economic aspects. Blockchain public chains can precisely serve as an intermediary for such communication and interconnection.
In this situation, I believe decentralized, more neutral, and more impartial public chains have more favorable conditions. I can hardly imagine a public chain with strong institutional or national characteristics playing such a role.
Therefore, I believe Ethereum can play such a role.
UBS, Switzerland's largest bank, testing tokenized gold trading on Ethereum's layer-2 extension is a typical example.
The above are speculations about the future. If we return to current reality, Ethereum's daily transaction volume of merely burning around a hundred ETH is clearly mismatched with its current market value. Its current market value is obviously overestimated.
From this current scenario, the only two outcomes I can imagine are:
- If in 4 years (or perhaps less), Ethereum's ecosystem (including layer-2 extensions) still lacks a brilliant new ecosystem breakthrough, then Ethereum's price will definitely drop significantly.
- If within 4 years, Ethereum breaks out with a new ecosystem, it will make substantial progress towards the imagined vision.
I believe the second scenario will occur.
