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Sam Bankman-Fried believes even ETH 2 can’t handle DeFi’s potential growth

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FTX exchange co-founder and CEO Sam Bankman-Fried believes Ethereum (ETH) is incapable of handling decentralized finance’s (DeFi) growth.

Talking to Camila Russo from the Defiant Podcast, Bankman-Fried says that the Ethereum blockchain is limitin DeFi’s development and the only way around it is to build on other networks:

“At some point, it’s just clear that we weren’t getting around that. Either, we’re going to build it on Ethereum, or we are going to build something that we thought was going to be really exciting, but not both.”

He stated that anytime his team tried to build something new they were excited about, they “immediately exceeded the throughput of Ethereum blockchain by orders of magnitude.”

Bankman-Fried claims to have tested more than 30 blockchains including Ethereum, before deciding to build his DeFi project Serum on the Solana blockchain due to its speed and infrastructure.

Bankman-Fried believes that DeFi could one day be used by one billion people someday, which means that blockchains will need to dramatically expand their scaling capacities in order to support a ten-figure userbase. Even scaling improvements in ETH 2, won’t provide enough capacity for what SBF has in mind:

“Not just 100 times faster than Ethereum, we need like a million times faster than Ethereum.”

During the DeFi boom of recent months the increasing popularity of Ethereum-powered DeFi protocols heavily congested the Ethereum network — spiking fees to more than $15. When fully operational Ethereum 2 could scale up by a factor of 100 to 1000x.

Solana’s CEO and founder Anatoly Yakovenko, who was also on the podcast, echoed Bankman-Fried’s thoughts, stating that the current version of Ethereum is so poorly designed, the hardware requirements for its 15 transactions per second network isn’t much below that needed by Solana, which is currently processing 500 to 600 TPS.

Not everyone is writing Ethereum off, however. DappRadar communications director Jon Jordan told Cointelegraph in June that he believes Ethereum 2.0 will benefit DeFi greatly. He believes the introduction of sharding chains and Proof of Stake (PoS) consensus model will solve some of the most fundamental issues of DApps, considerably increasing transaction speed and throughput.





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Ethereum

Wen? Now! BadgerDAO’s synthetic rebasing Bitcoin, DIGG, goes live

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After weeks of anticipation and a closely-watched series of preparatory steps, BadgerDAO’s synthetic rebasing Bitcoin, DIGG, is now live and claimable for qualified addresses on Ethereum mainnet. 

The release will be eagerly welcomed by a perhaps-overzealous community, one which has been lighting up Twitter with “wen DIGG” for weeks. For all the memes and excitement, however, there’s some serious technical heft behind both the distribution and the maintenance of the newest Bitcoin asset on Ethereum.

Ultimately, however, now that DIGG is in the wild market forces are what will determine the long-term success of the synthetic Bitcoin asset — success that might not be assured.

Fair, flat launch

According to core BadgerDAO contributor and distribution architect Jon Tompkins, the amount of claimable DIGG for each eligible account was determined using a formula centered on an Ethereum address’ activity in the BadgerDAO app. Factors such as total native platform Badger tokens earned, the Badger earned to Badger staked ratio, and total stake days were taken into consideration. 

In order to prevent an overallocation to deep-pocketed “whales,” however, the DAO approved an application of a 1.75 root to smooth the distribution between addresses. As Tompkins wrote in the original DIGG distribution proposal, this root means that, while in a linear distribution the top 100 addresses would have been eligible to receive over 70% of DIGG, they instead will be able to claim just 33%.

Tompkins said that of the 600 DIGG tokens currently available the top address will receive 8.75 DIGG, while the average of the 8517 eligible addresses will be able to claim .07 of a token.

The goal of this distribution was to allow the project to “reward the little guys that are strong badger supporters but not fully disadvantage the whales,” said Tompkins.

Keeping a peg

Now that the token is live, the rebase games begin. 

Algorithmic stablecoins have been a hot topic in DeFi circles over the past few months as one of the most popular trading vehicles. The assets, which are primarily meant to track the price of the US dollar, have “rebasing” features that dynamically expand or contract the total supply of the asset based on preset parameters such as price or time.

So far, however, they’ve proven to be far more effective at enriching users who know how to play the rebase parameters than they’ve been at creating truly stable assets.

DIGG will be possibly the first-ever synthetic rebasing Bitcoin, and certainly the first to feature this distribution method. Out of the gate users will be able to stake their DIGG in a yield-bearing vault, use it to provide liquidity to DIGG/WBTC Sushiswap and Uniswap pairs, hold the core asset in anticipation of a positive rebase, or sell the tokens on the open market.

While there has been speculation as to how DIGG will perform and what the best strategies might be, it’s ultimately unclear to what degree the asset will be able to hew to its intended peg given BTC’s volatility and DIGG’s unique launch.

In a previous interview with Cointelegraph, BadgerDAO founder Chris Spadafora expressed hope that additional forthcoming stabilization mechanisms will be able to help DIGG better track BTC, however.

“What we want to do with our vault system is really at large-scale be the… let’s call it the ‘buy-and-sell’ dictators. So through automated strategies we’re able to buy when the time is right and sell when the time is right to optimize return for the users,” he said.

Forthcoming vaults designed to programmatically play the rebase games are designed to do just that, but given the uncharted game-theoretical landscape it’s impossible to say if the vaults will be sufficient to stabilize DIGG — or what happens after vault incentives dry up. 

In the end, after weeks of anticipation, instead of “Wen DIGG?” BadgerDAO participants lining up to take a spin at the latest rebase casino now must ask themselves, “What’s next?”