DT Context: Whilst we will take a more forward focused approach this year, we still believe you need to understand the past to help address the future. Justin Bons shares the good word...

Justin Bons@Justin_Bons


This year has been one of constant progress

Despite the negative headlines, cryptocurrency development thrives!

From sharding, enshrined roll-ups, PBS & the Merge

Away from the exuberance of the bull market, diamonds are created under pressure

A retrospective on 2022:


We have seen a lot of progress in on-chain scaling:

As cryptocurrencies such as EGLD, NEAR & more are making massive strides in the development of execution sharding

A technology I consider vital for the development & further mass adoption of cryptocurrency in the world


As execution sharding allows for horizontal scalability

Allowing us to scale to meet demand without it being an exponentially harder problem to solve over time

Sharding allows us to add more shards over time instead of hitting the wall we are now all too familiar with


Even though I am a vehement supporter of on-chain monolithic scaling such as the before-mentioned sharding

The development of roll-ups in the ETH ecosystem is still incredibly significant for the entire design space

Though maybe not for the reason most people think;


I do not entirely agree with the direction that ETH is taking in terms of its scaling roadmap;

Relying purely on others building out an open ecosystem of L2 solutions

This, in my view, will inevitably lead to a terrible UX & excessive fragmentation


As each individual L2 has different trust & security trade-offs

This is why I will continue to advocate that ETH pivots back to its original plans of execution sharding

However, roll-ups themselves are still extremely compelling from the monolithic scaling perspective


What is required is an “enshrining” of specific L2s by the L1

This would transform a roll-up-centric approach from modular to monolithic

As using the technology of roll-ups as a type of sharded scaling approach makes a lot more sense


As “enshrining” roll-ups in this way solves the UX & fragmentation issues of the L2 modular approach

I hope that ETH will be able to pivot and adopt this approach instead of the course it is currently on

In the absence of that pivot; we do have blockchains such as XTZ:


XTZ is piggybacking off ETH's research in this area & is enshrining their roll-ups natively into the L1

This form of scaling has comparable trade-offs to straight monolithic execution sharding

Unlike the roll-up centric modular scaling, which I am so critical of


A less well-known but critically important development is PBS (Proposer Builder Separation)

Currently exclusively developed within Ethereum & Polkadot, as far as I am aware

This is another technology we should expect all high-quality blockchains to adopt in the future


PBS makes blockchains far more censorship-resistant by separating the roles of validation & TX ordering into separate entities

This shift can be compared to the historical separation of miners & nodes in the early days of Bitcoin's history

When all nodes were miners


As ecosystem roles become increasingly specialized & efficient in that process

This is important because it removes the compliance demands on validators by separating this out into a new class of entity

Solving what we have witnessed in the form of OFAC regulations


As OFAC regulations were forcing ETH validators to create compliant blocks

Even though this has not led to any actual censorship at all, exactly as it was designed to behave

A strengthening of censorship resistance is still very welcome in the face of that potential risk


As censorship resistance has always been a critical aspect of a cryptocurrency's value proposition

It is important to consider that this vulnerability is inherently present in all blockchains

ETH was just the first where this was noticed due to high economic activity


The Merge has proven to the entire world that Ethereum’s new security & economic model works!

Solving the long-term security dilemma of BTC while making any asset applying this model far more scarce & secure

Resolving one of the biggest problems in the blockchain space!


This is achieved by combining a tail emission (supply inflation) with fee burning

This ensures that the ETH blockchain remains secure during periods of low & high economic activity

While making the ETH token more scarce based on the underlying usage of the ETH token


The best of both worlds Striking a perfect balance between security & scarcity

A problem other chains, such as BTC, are still facing & are unable or unwilling to solve, creating a clear divide between winners & losers

All cryptocurrencies should now follow this standard


We should not view failures such as FTX, 3AC, & Celcius as failures that are endemic to cryptocurrency

But instead, as failures that are endemic to centralized systems

This is why we have the financial regulation that we do within our world;


These laws come from a long history of jurisprudence over more than a century of financial history

We see the same failures occurring over centralized “cryptocurrency companies"

Because they are not different from the traditional system, except for the lack of regulation


True cryptocurrency-based financial systems do not require oversight & regulation as the protections against such fraud are inherently built-in

This is why we have to create a strong distinction between centralized “cryptocurrency companies" & decentralized systems


As decentralized finance is the solution to the woes of centralized financial institutions

Like the failures, we witnessed again in the collapse of FTX, 3AC & Celcius

That is the irony, when cryptocurrency is dragged down by the very systems it was invented to replace


This last year has been a tumultuous one, to say the least

Nonetheless, from a Fundamental Analysis perspective:

We can easily make a case for constant progress as cryptocurrency's technology & governance keep improving

Regardless of the boom and bust cycle


Historically some of the most important technologies & projects have been developed during bear markets;

This year has been no exception to this phenomenon

Fundamental breakthroughs often go unnoticed, only appreciated years after their invention


The same is true for cryptocurrency, as 2022 was filled with huge leaps in capability

Preparing us to continue to take the world by storm as this cycle inevitably reverses.

Our belief in cryptocurrency is founded on the fundamental merits of this technology:


Requiring a token of value for existing in a permissionless & decentralized state:

The most valuable quality of any cryptocurrency is enabling massive utility with tangible & measurable economic benefits by removing middlemen

This is why I focus on value investing


Progress is not going to slow down & is likely to only accelerate into the new year

As a cryptocurrency researcher;

I understand that we are still just scratching the surface of the potential we are gradually unlocking in this field


I am sure that just like the internet in 1996, cryptocurrency will continue to exceed the imaginations of what is possible

What I can already see was enough reason to dedicate most of my remaining life to this movement

While it continues to exceed our expectations;

Justin Bons@Justin_Bons


In sometimes unexpected ways Of course, there are pitfalls, unexpected problems & failed experiments

But that is part of what makes it such an exciting movement to be a part of

In that sense, we are all blessed to be a part of making this cryptocurrency history together

OG link


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