ETH/BTC exchange rate keeps falling, perhaps the most important thing is being overlooked
Written by: Mu Mu
Since the beginning of this round of market, Bitcoin has been soaring, making Ethereum and some old "value projects" increasingly weak. ETH/BTC once hit the bottom, which has become the strongest "dissatisfaction" for a group of veteran crypto enthusiasts, without a doubt.I have experienced both bull and bear markets, but I still can’t let go of the slump in ETH. CryptocurrencyCommunityDissatisfaction with ETH appears to have reached its peak.
encryptionCommunityA large number of complaints about Ethereum began to circulate
Has Ethereum’s original intention changed?
Although ETH and BTC have different paths and there are not many direct conflicts, most people who have held ETH for a long time since the bear market began hope that ETH can outperform BTC, that is, ETH/BTC can have a good return. Based on the experience before this round of bear market, ETH can still outperform BTC most of the time.
Similar to the Ethereum community’s mentality of holding coins to outperform BTC, Ethereum’s original intention may be a differentiated development strategy, taking a path that the Bitcoin community has not taken and thinks is difficult to take:based onBlockchainIntelligencecontractApplication platform, and plans toBlockchainThe exploration of capacity expansion will bring scalability and performance, and develop decentralized applications beyond digital gold.
Similar to some of the “copycat” projects that had emerged at the time, they all wanted to improve Bitcoin, differentiate their strategies, or become a more successful Bitcoin.
Screenshot of the Ethereum Foundation’s earlier official website
If early crypto users paid attention, they must have seen the background picture of the Ethereum Foundation's official website, which looks "big".There is a slogan clearly written on it:BlockchainApplication platform was also the most accurate positioning given to Ethereum by the Ethereum community at that time.其背景图片似乎是一个拔地而起的高楼，或预示着对区块链的扩容和建设。
nowXiaobai NavigationSome people think that the original intention of Ethereum has changed since the Ethereum consensus mechanism was merged with POS. Perhaps because the price could not rise, they attributed the decline of Ethereum to the switch to the POS formula mechanism, and believed that such a drastic shift from POW to POS was a huge mistake.But in fact, the conversion of Ethereum to POS appeared in the early design roadmap from the beginning, and it was not a temporary change later.contractThe choices and plans made by the public chain platform account model under the needs of blockchain expansion and expansion.
Recently, one of the biggest Bitcoiners on social media posted a chart showing the inflation rate after the Ethereum merger, which showed that the inflation rate of Ethereum has risen rapidly in the past six months, in an attempt to illustrate the wrong path of the Ethereum merger. But the Ethereum community user soon released the full picture of this statistical trend chart, and compared it with the annual inflation rate of Bitcoin (the ratio of newly issued to circulating quantities), which made the picture even clearer.
At first, many people scoffed at the unlimited issuance of Ethereum.It is believed that Ethereum will definitely issue unlimited amounts of new shares. The reality is that Ethereum merges EIP1559 through POS and does not affectSafetyIt not only controls the inflation rate, but also keeps it far below the current inflation rate of Bitcoin, and it also has a larger gap than other well-known POS public chains.
Ethereum has firmly established itself as the second largest cryptocurrency and has become a “differentiation target” for a number of new public chain projects. The goal of many projects is to become a better “Ethereum”.It can be said that the Ethereum route has not changed much except for adjustments in the details of the implementation plan, and the original vision has been gradually realized.
Recently, Vitalik responded to the foundation's shipment questions on social networks, and attached 9 pieces of information related to ETH fundamentals.
Vitalik:
The ETH Foundation is paying researchers and developers for the following work:
(1) Ethereum no longer loses 5 million ETH to the Proof of Work (POW) mechanism every year
(2) Your current expenses are low
(3) Your transaction will be
(4) zk technology allows people to use ETH while maintaining privacy
(5) Account abstraction technology will allow ordinary people toSafetyUse ETH without a seed phrase or SBF-style central point of failure
(6) Local ETH events around the world, many of which barely mention the Foundation’s name
(7) Since 2016, ETH has never been shut down due to DoS attacks and consensus failures
(8) VariousSafetyWork (internal development and grants) prevented many funding losses
(9) Libraries in various codes you use (wallet, DeFi applications…)
From another perspective, the reason why Ethereum exists and is given a market value of more than 300 billion US dollars is thatIt is not necessarily just about how much gas fees are captured, but more about the expansion and innovation of the encryption field., in order to continuously take over the value overflow of Bitcoin. Therefore, in the first two bull markets (2018 and 2021), ETH/BTC was relatively high, which is one of the main underlying logics for Ethereum's long-term outperformance.
In this round of market, although Ethereum has good fundamentals, I foundMany people only mention issues such as the on-chain liquidity fragmentation of the Ethereum ecosystem and the competition it faces from new public chains, but ignore the most important thing, which is the Ethereum ecosystem's acceptance of the overflow of Bitcoin's value.
Is Bitcoin’s own unresolved problems an opportunity for Ethereum?
In terms of design, Bitcoin is undoubtedly a "god-level" work, but such a system does not mean "perfect". After all, many project designs want everything and take everything into account. They seem perfect but are actually complex and full of loopholes, making it difficult to break through quickly.
Satoshi Nakamoto left some unsolved problems or regrets for Bitcoin, waiting for future generations to optimize. For example, the contradiction between the decreasing issuance and ecological development threatens the sustainability of the Bitcoin system.
Simply put,As Bitcoin continues to reduce production until it reaches its upper limit, the decreasing inflation rate will drive the scarcity of Bitcoin into a favorable factor for price increases, but this may not be the case for the Bitcoin system.，因为减产不可避免的导致 POW 矿工的收入减少，也会降低矿工的积极性，随之也可能影响系统的Safety性和稳定性。
Of course, the Bitcoin community has proposed another solution, which is to develop the Bitcoin ecosystem. When the halving in the future leads to insufficient income for miners, the prosperity of the Bitcoin ecosystem can be used to compensate for the reduction in system rewards, and miners can continue to be incentivized to provide strong system protection.This is also the experience learned from the Ethereum community's blockchain expansion route.However, the high prices and transaction fees, as well as the low efficiency of the main network, pose considerable challenges to the sustainable development of the Bitcoin ecosystem.
The problem of Bitcoin is still on the "table". There is only one solution at present, that is to let Bitcoin continue to rise, and there will be no problem naturally. But this is obviously unlikely. So when capital pushes Bitcoin near the bottleneck, the value will overflow to other blockchains.At present, the only large-scale project that can carry most of the value overflow of Bitcoin in the future is Ethereum, and there is no other.
Bitcoin L2 and Ethereum L2 Already on the same boat
The current Bitcoin ecosystem is developing rapidly, and many teams have brought a lot of expansion solutions, especially the Layer 2 solution borrowed from Ethereum.It can be said that EthereumLayer2Leading the exploration of these expansion solutions for Bitcoin Layer2.Bitcoin Layer2 and Ethereum Layer2 have the same goal, and some people say that Ethereum is the largest test network for Bitcoin.
当然，目前比特币 Layer2 尚存在一些难题，比如难以继承比特币的Safety性，比特币自身出块速度慢影响 Layer2 交易的结算效率等等。Therefore, if currently idle BTC wants to participate in DeFi, it will still choose to cross to the Ethereum chain for reliability and security.
Image source: CryptoFlows
According to CryptoFlows data, Bitcoin has exported approximately $3.8 billion in assets to Ethereum, mainly through stablecoin bridging and other methods, and this does not include Layer2, the inflow of Ethereum mainnet accounts for the vast majority of Bitcoin cross-chain output, which shows the recognition of Ethereum by on-chain funds. In the future, with the continuous development of BitcoinFi, the Ethereum ecosystem is bound to obtain more inflow share.
In fact, let's change the angle.In the era of multi-chain interconnection and chain abstraction where Web3 applications are being implemented on a large scale, the large crypto ecosystems are interconnected and interoperable seamlessly. Isn’t Ethereum currently on the road to becoming the largest side chain or generalized Layer 2 of Bitcoin?The best DeFi protocols on the Ethereum ecosystem are helping to activate dormant Bitcoin funds.
Whether it is the scaling solution on the same ship or the cross-chain flow of funds, the future of Bitcoin and Ethereum seems to be getting more and more deeply tied together.
summary
From the current perspective, Ethereum’s original intention has not changed, and what should be achieved has been achieved. It has only changed because the “fickle” holders could not resist the temptation. In the context of the depletion of liquidity in the overall environment, the crypto narrative has shrunk, and it is understandable to chase Memes (the economy is bad, and people gather at the village entrance to try their luck).However, the subsequent global interest rate cut cycle will lead to the gradual release of liquidity, which may bring about changes. Don’t forget that the adoption of crypto assets and the practical value of Web3 applications will eventually return.
As the first and second largest crypto assets, Bitcoin and Ethereum, which are bound to each other in the future, are not hostile to each other, nor are they black and white. No matter which camp the crypto community stands in, it should stop internal friction and "eating and smashing the pot" behavior, and move towards the next generation of the Internet with broader mass adoption. I hope that the other ETH will not disappoint us in the future.
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