Tezos Has A Credible Path To Be #1 (No, Seriously)
First, before I discuss this I’d like to offer a little Tezos Therapy (something that often gets passed around in the Tezos chatrooms — supposedly there exists a dedicated Tezos Therapy channel in one server):
It has been a long hard slog for those of us who have been in-it-to-win-it since the 2017 Tezos crowdsale. The main source of frustration for many has been witnessing technologically inferior blockchains such as Cardano steal the lion’s share of the marketcap and limelight. But Gevers and his insanity, Reuters and their lies, and Evan Van Ness and his fud were also frustrating obstacles — though thankfully they strengthened our community resolve.
However ladies and germs, I believe these downtrodden days may not be downtrodden that much longer, that salvation is somewhere on the horizon and that Tezos will emerge as perhaps the #1 blockchain. The 2014 Tezos position paper states:
“While the irony of preventing the fragmentation of cryptocurrencies by releasing a new one does not escape us, Tezos truly aims to be the last cryptocurrency.”
And if you are the last one standing you are #1 as well.
Tezos Therapy Goer: Ok, though I am a mentally damaged Tezos trader/investor and such a statement could probably lead me to get my hopes back up and if they are dashed yet again I may break into a thousand pieces, I will bite: why do you think this might happen?
Me: In a nutshell because Tezos is the only chain positioned for a vertically integrated scaling solution. And this technological victory will be so massive that crypto at large will no longer be able to ignore it (as they have for other Tezos tech advancements/integrations) and their only logical conclusion will be to join the Tezos bandwagon. The age of the exponential growth of Tezos will begin.
Tezos Therapy Goer: That sounds great. But I’ve suffered so much with Tezos that where I should see victory I only see a mushy black hole filled with miniature Charles Hoskinsons only three feet tall, thousands of them and they do not stop talking, boring me to death and leaving me unable to trade crypto or even enjoy Tezos spoils if it does become the blockchain of the future.
Me: Hey, snap out of it! Repeat, “It isn’t my fault”
Tezos Therapy Goer: It isn’t my fault.
Me: Louder!
Tezos Therapy Goer: It isn’t my fault! It isn’t my fault!
Me: Good.
Tezos Therapy Goer: I’ve been in a dark place. But I am feeling better now. Let’s talk crypto: first off who has the best scaling solutions?
Me: Ethereum and Tezos. They are modular chains that will be able to transition into a rollup-centric world. The monolithic chains such as Solana were VC pump parties but centralized hardware is an inferior scaling solution when compared to scaling via software/math. (Their centralized properties also make them poor blockchains from a censorship resistance point of view which is the main purpose of a blockchain in the first place.)
Tezos Therapy Goer: So then what about Ethereum? Won’t it have a better scaling solution than Tezos?
Me: They are doing the best they can. But they have their hands full trying to get their chain to finally be proof of stake. And their scaling solution is not vertical integration, it is horizontal outsourcing.
Tezos Therapy Goer: What is the benefit of horizontal outsourcing of scaling?
Me: For Ethereum maximalists, not much. But horizontal outsourcing is great news for the VCs and the influencers able to get their hands on these privately funded “L2” tokens. Tezos protocol rollups by contrast will be tokenless — thus the unique Tezos form of non-rent-seeking scaling will be born. But for the L2s associated with Ethereum that is where the value lies…in those L2 tokens (and the early private angel/VC days of investing). L2 tokens will give some value back to Ethereum but these L2s are not Ethereum itself — they are new chains — and in the long run will be extractive and exert an opportunity cost — that opportunity being scaling that could have been done by Ethereum not a contractor and value that could have flowed to the native token ether and not to a proxy: a VC L2 pump token primed for retail dumpage. So this is not great news for the everyman who holds ether, and crypto should be the money of the everyman.
Tezos, because it is integrating vertically, offers that scaling value to the people directly via tez and is able to be the money of the people — not the money of VCs and influencers. It also increases the credible neutrality of Tezos. A vertical solution means that outside forces are not trying to sway decisions like will probably happen with many Ethereum associated L2 chains splitting liquidity and all wanting a say in Ethereum development. Tezos avoids that through integrating at the protocol level all the things that Ethereum will be outsourcing.
For example Ethereum folk could eventually see that the Tezos scaling solution of tokenless protocol integration of rollups is superior (safer, cheaper, better UI/UX, etc) and want to integrate it directly into the Ethereum protocol; but lacking on-chain governance they will have no way to measure the will of the people. And most likely: VCs who have built L2s will not want Ethereum to “pick a winner” through protocol rollup integration and such an EIP would probably go nowhere — or if it did go anywhere probably not for years. Meanwhile Tezos will be a fully integrated solution and offer superior UI/UX due to the lack of tolls/governance tokens. So more devs will probably want to build on Tezos and the Tezos network effects could grow exponentially. This will increase the case that tez is money and the native token of Tezos will grow its moneyness attributes in concert with network growth (as happened with Ethereum’s ether during times of network growth).
Look at it this way: Tezos is to Tesla as Ethereum is to Ford. If Tezos is like Tesla building its own batteries and software, Ethereum is like Ford outsourcing much of that. Tesla and Ford are both good companies. But Tesla is able to create a product greater than the sum of its parts because it has pursued a strategy of vertical integration.
Tezos Therapy Goer: Well why doesn’t Ethereum use vertical integration?
Me: Without implementing the greatest innovation of Tezos, which is a deeply considered on-chain governance system, this would be difficult for Ethereum. They could perhaps pull it off at some point in the future. But what is probably more likely is that they will continue to outsource. They started the outsourcing of scaling via a sidechain, Polygon. This has been great for Polygon! But Polygon is something distinct from Ethereum (though many seem not to know that). And Ethereum will continue this outsourcing of scaling to the misnomered L2s (misnomered because they are really new chains that will come with their own VC tokens and all).
Vertical Integration of scaling will allow Tezos to grow absolutely massive in size. Tezos will grow to a size that Ethereum will only be able to dream about with all its horizontal outsourcing. Tezos, from settlement to scaling, will capture all chain activity while on Ethereum you will need to travel to a new chain to complete your business. Using Tezos you will not be taking risky travel into new chains: instead you will stay right on Tezos — it will all be integrated into the protocol: safer, better UI and UX, cheaper, better for network effects — the list goes on and on.
Furthermore, The superior UI/UX on Tezos will allow for more elegant dapp creation.
Tezos Therapy Goer: Are there other advantages to vertical integration other than UI/UX?
Me: Sure many — and I think I am just scratching the surface here. But here is another reason: blockchain emissions are there for security. POS and POW emissions = payment for security. The Tezos chain user will be paying much less for security because they will not be paying twice — paying Ethereum security fees via gas and paying for outsourced bridges/scaling.
Here is another reason: You really do not need a bunch of rollups on Ethereum — that just splits liquidity and is a UX nightmare. Tezos will be able to implement perhaps just one rollup at the protocol level and will not be splitting liquidity into tens of competing VC rollups (and probably more as time goes on). This will be great for dapp building (and things like defi) on Tezos. And great for users! More info here:
https://research-development.nomadic-labs.com/tezos-is-scaling.html
Tezos Therapy Goer: It seems to me that Tezos will be the most modular chain because it will truly be one chain — not outsourced tech, and so not many different chains balled into one.
Me: That could end up being true.
Tezos Therapy Goer: Well we talked about Ethereum — what about the other blockchains? What about their scaling solutions?
Me: The Cosmos and Celestia combo is interesting but that is horizontal outsourcing again. Other than that there is nothing out there to speak of. You have to remember that these high-flying VC chains got their network effects via “fake” centralized scaling that will get absolutely dominated by scaling via software, or they got their network effects via dumping hundreds of millions into defi liquidity in order to long-con retail out of billions, or they got their network effects from well executed memes and still need vast amounts of building before they are functioning as top-notch blockchains nevermind have the extra time to work on scaling. Tezos has that luxury because it already built everything from the ground up like a boss (due to the incredible teams that are building on Tezos) and has shown that it has the massive brainpower to confront such an intimidating blockchain problem and conquer it.
Tezos Therapy Goer: As mentioned earlier in the 2014 Tezos Position Paper, I find it fitting that Tezos has a mission of the non-fragmentation of crypto through its governance system by decreasing the probability of a contentious fork…
Me: As we saw with the liquidity baking debate!
Tezos Therapy Goer: Yes, and yet it is also the Tezos governance system that enables Tezos to do this protocol level scaling — and that type of scaling prevents fragmentation as well. Because now there is no need for scaling chains and bridge chains separate from the native chain. The chain stays as one even through a treacherous scaling period where a lot of value can by forfeited to these scaling chains and bridge chains. Tezos will forfeit 0% of its value.
Me: Yup — jeez you should be writing this blog.
Tezos Therapy Goer: Well we are the same person in effect of course.
Me: I gotta get you back into therapy
Tezos Therapy Goer: I wouldn’t have to if the crypto-masses would simply acknowledge that Tezos has the best scaling solution.
Me: We will probably have to wait until it smacks them in the face.
Financial Disclosure: I own tez and tez tokens (and Ether and ether tokens) and even though I think tez will possibly crush all other blockchains by the end of the race, nothing here is financial advice because cryptocurrencies are like fairy dust blown from my lips at twilight and surf on the whims of the memes of alternative financial markets and so are quite risky.
