When the founding team of Ethereum concentrated for a few months on the famous house known as The Spaceship, in the Swiss city of Zug, many things were discussed, thought and agreed. Most were resolved by invoking the consensus mantra. Others, as usually happens in life, were solved in an authoritarian way.
I did not have the happiness of being part of that select group of visionaries and entrepreneurs, but thanks to "La Maquina Infinita", Camila Russo's excellent book, I have been able to get a very good idea of what could be discussed during that long stay in the Alps.
If there is something that cannot be missing in any discussion related to startups it is how to manage risks. Especially if the group includes people like Charles Hoskinson, who later created Cardano. Before launching any project, team members should list the main risks they may face in the future. As well as the probability that these events will happen, the seriousness of the consequences if they occur and everything that would have to be done to handle the situations.
DeFi spikes commissions on Ethereum transactions
In those meetings in the Alps, one of the risks missed by everyone on the team except Gavin Wood, the project's CTO, was the risk of being a victim of one's own success. By this I mean that the network was designed with a capacity, which, although it was much higher than that of Bitcoin, which was the benchmark at that time, was not prepared to deal with considerable traffic. Gavin expressed his concern about this matter from the beginning, but did not get the support of the rest of the team, considering that it was not something urgent.
The network capacity functioned normally for the first few years, as users were still struggling to understand the real potential of the blockchain and everything that could be done with it. The serious problems came with the emergence of decentralized finance (DeFi). In March of last year, the main projects created on the Ethereum network began to gain momentum. The moment coincided with the end of the crypto winter, a stage that lasted two years. As a consequence, transactions began to flourish, but with such force that the Ethereum platform became a funnel.
Under the principle of supply and demand, the cost of gas transactions soared to levels never seen before. It was the moment when Vitalik deeply regretted not paying enough attention to Gavin's proposal to have launched an Ethereum 2.0 from scratch. That is, in 2016. The launch of version 2.0 of Ethereum, which took place in December last year, occurred, as they say in English: “Too Little, too late”. It was late because Polkadot was already in the market.
Currently, we are in a period where bitcoin has hit all-time highs and many of the alternative cryptocurrencies have followed the trend. In parallel, the price of Gas on the Ethereum platform has also reached all-time highs. In fact, many transactions were so expensive that it was not economically reasonable to carry them out.