Ethereum’s main purpose at birth was to usher in the next generation internet. Its inception was based on building a peer-to-peer network without any entity or group in control by positioning the community at the center of the global system.
In 2020, the power of this network has blossomed through innovative and industry-changing projects such as Desire. Finances, Aave, Synthetix, Nexus Mutual and many others. In fact, the top 10 decentralized applications on Ethereum right now attract more than 1 million users per month.
Many successful Ethereum-based projects are committed to or centered around the community and raise funds to eventually share with a variety of stakeholders. But we have also seen the rise of “get rich quick” schemes, locking down collateral. More often than not, community contributions are an afterthought explored in times of great growth.
Can we create a system that community projects continue to benefit from and that is built into the core infrastructure of these protocols?
If we want to create such a network based on the original ethos for Ethereum, the community now needs to look to long-term sustainability that benefits the entire ecosystem rather than quick profits. By 2021, we have the power to deliver long-term solutions using advanced decentralized technology to build financial returns for the network in the infrastructure of our projects.
DeFi’s rise is welcomed, but it comes with complications
DeFi’s meteoric rise in 2020 has brought great promise and even greater investment to the industry. However, the growing interest in making money quickly with new techniques, such as yield farming, has plagued the network with congestion and unsustainable projects. Some users who move large amounts of cryptocurrency are pay thousands in gas costs to Ether (ETH), creating a financial barrier for many who want to use DeFi applications but who do not yet own a massive cryptocurrency.
In some cases, projects have seen a steep rise to glory followed by a sudden decline, mainly due to an unsustainable or short-sighted business model that never really looked beyond the next stock exchange listing, fundraiser, or first coin offering. While an increase in capital and interest flowing into Ethereum-based projects is a positive development, it is counterintuitive when projects cannot sustain themselves over the long term.
Achieve Sustainability: Eth2 and Layer Two Solutions
Many approaches and projects are focused on make the Ethereum network scalable and more efficiently using layer two infrastructure, including zero-knowledge rollups and optimistic rollups.
Such as Ethereum 2.0 is starting to take shapewe need to bring community ethos back to the heart of the network and build financial returns into the underlying design that maintains the network and infrastructure – this is where community-driven layer two solutions become increasingly important.
We can achieve this scalability by creating profitable projects that give back to the community while scaling up and delivering consistent income for one, two or five years – not just after a successful bull run, ICO or fundraiser.
Layer two solutions following a proof-of-donation network not only solve layer-level problems, they also fulfill the original mission that Vitalik Buterin initiated from the beginning.
As a decentralized bidding mechanism, Proof of Donation is reinventing protocols and teams building projects running on top of Ethereum.
This type of mechanism invites network coordinators to bid to win the right to create the next batch and collect transaction fees. A concept like this comes to life when a percentage of the revenue generated by the auction process is reinvested in Ethereum-based community projects.
We need to build these funding mechanisms directly into layer two infrastructure. In this way, the entire community automatically benefits from the network, not just in times of rapid growth or high profits.
Look forward to something
In summary, the Ethereum community should be committed to creating long-term sustainable projects that benefit the entire community and network rather than the quick profits.
The rising price of Bitcoin (BTC) reached one record high of $ 24,000 this month as Ether collected up to over $ 730, which caused the world to notice, as current financial systems continue to disappoint, exploit and exclude.
We now have the resources and ability to create a sustainable network of decentralized applications that empower all of us, not just the elite few. Let’s not pass up this opportunity.
The views, thoughts and opinions expressed here are the sole ones of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Pol Lanski leads ecosystem development at Hermez Network. He is a maximalist of decentralization who is enamored of the potential of these technologies to challenge the status quo for the better. First people, then tech.