OG protocol backstabs Ethereum? MakerDAO builds a new chain, is it good or bad?

Original author: encryption researcher Ann

Original compilation: Baize Research Institute

The latest crypto industry soap opera is on.

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

My initial reaction was that Vitalik might not be too keen on real world assets (RWA), a sub-sector of the crypto industry where MakerDAO and its stablecoin DAI are the leading protocols.

However, what really happened was something I would not have imagined in a million years, and so did many other members of the crypto community - which is why many people are upset.

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

Unless you are a “local” who regularly follows the crypto industry, you have no idea how big this situation is.

Solana, the biggest “Ethereum killer”

Maximalism (emphasis on more is more) is one thing in the crypto industry that I'm not proud of - although I am often fascinated by it. Every Layer 1/smart contract platform has its own die-hard fans who like to bicker with each other and argue about who is the strongest.

Sometimes it's just a healthy dose of banter, with people excitedly discussing whose technology is superior, most decentralized, etc. But most situations tend to devolve into a violent "online brawl" where each group insults the other.

During the last bull run, the L1 war took center stage in the crypto market. I think this is a time when ETH maxis are constantly losing their minds as their beloved Ethereum's spotlight and liquidity is stolen by the most beloved L1s of the time.

However, among the various "Ethereum killers", Solana is the most famous. For ETH maxis, Solana is a nightmare. Why?

First, it was backed by SBF, the crypto giant and great entrepreneur at the time (now in jail). Having an SBF is not enough. Among Solana’s enthusiastic supporters is Su Zhu of Three Arrows Capital.

Second, Solana is cool and powerful—it claims to handle forty thousand times more transactions than Ethereum.

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

After this, the Solana community became arrogant and arrogant.

But no one hates Solana more than Ethereum supporters.

MakerDAO Shocking Proposal

On MakerDAO's governance forum, Rune suggested rebuilding the MakerDAO protocol by building a new blockchain using the Solana codebase.

MakerDAO is the OG of Ethereum DeFi, and they are the “bluest” of blue chips. Maker has been an important part of the Ethereum community since its early days (2014). In 2017, they launched the stable currency DAI, which soon grew into the largest algorithmic stable currency in the encryption market, and is an alternative to the centralized stable currency USDC and USDT.

In short, Maker is so entrenched as Ethereum's OG that Rune's proposal is so shocking that it feels like the worst "betrayal" event Ethereum has ever seen.

Of all the blockchain and smart contract platforms, why should you choose Solana? !

This slap is far louder than the time when decentralized trading platform dYdX moved from Ethereum to Cosmos as its main chain. At least dYdX chose Cosmos, a blockchain respected by Ethereum proponents (including Vitalik).

But Solana? The humiliation suffered by Ethereum supporters will appear even worse.

**Why Solana? **

Rune believes it has the most efficient, high-performance technology stack. He also takes into account Solana's bustling developer community, which means he'll never be short of talent to help him build with the Solana codebase.

Full proposal:

What’s interesting about his proposal is the subtle shadow he casts on Ethereum. MakerDAO has so much technical debt, I wonder if he is implying that the debt exists because the platform MakerDAO is based on (Ethereum) also has a lot of technical debt.

To resolve these debts, he is considering starting over.

dYdX also agrees with the idea of upgrading to a new chain rather than building on the old chain. This comes down to one thing: Ethereum is difficult to scale and simply does not allow ambitious DApps to achieve their goals. (In the case of MakerDAO, they are targeting a supply of 100 billion DAI.)

Another shadow that Rune brings to Ethereum: rampant MEV rent-seeking. The emergence of MEV was due to a lack of foresight in the early days of Ethereum. At the time, who would have thought that bots would take advantage of simple swaps on such a scale that most transactions are now done by these rent-seeking bots? MEV is Ethereum’s eternal technical debt.

In short, Rune wants to completely upgrade to a new chain, a new stablecoin, and a new governance token, enabling massive scalability. Start over and correct some of the mistakes of the past. He didn't have many choices. One was Solana and the other was Cosmos. He chose the former.

“The biggest difference between Cosmos and Solana is that Cosmos is not as efficiency-focused as Solana, which means that the cost of maintaining and maintaining high performance will be higher. Cosmos also does not have as powerful a centralized foundation organization as Solana. That could be a good thing or a bad thing." — Rune

Reaction from the Ethereum community

As if selling $MKR wasn’t enough of a “vent of anger,” Vitalik briefly mentioned the possibility of “MakerDAO going in weird directions” on Discord.

To be honest, Vitalik's reaction was pretty classy compared to the various "ngmi" (not gonna make it) comments posted by frustrated Ethereum supporters on Twitter.

Rune’s proposal is a big slap in the face for Ethereum. MakerDAO is Ethereum's OG protocol and has the second-largest liquidity in all of the DeFi space. This only exacerbates the severity of the existential crisis already taking place on Ethereum. A while back there was a discussion about the security of Rollups and how they are actually neither secure nor decentralized.

What if other OG protocols follow suit? It’s not good for Ethereum, and it’s not good for the wallets of Ethereum supporters.

Conclusion

With this proposal, the multi-chain topic is buzzing again (after the L2 Summer narrative we just went through). Choosing Ethereum or another blockchain is a complex question, and every decision involves some trade-offs.

I personally think it's a good idea if more protocols try to fork from Ethereum. (It's just that Rune didn't choose Cosmos)

We like to think about what would happen if we built Ethereum DApps on other chains. Will it work? Will it expand? Or will the catastrophic event that people often like to theorize happen? Unless someone is out there building it and taking the risk, we'll never find out, and for that, I applaud MakerDAO for being the latest trailblazer.

Translator's Note:

The above items and opinions should not constitute investment advice, DYOR. According to the "Notice on Further Preventing and Dealing with Speculation Risks in Virtual Currency Transactions" issued by the central bank and other departments, the content of this article is only for information sharing and does not promote or endorse any business or investment behavior. Readers are requested to strictly abide by the laws and regulations of their region and do not Engage in any illegal financial practices.