Crypto Twitter, the heart of web3 discourse, had its most raucous weekend in recent memory.
The clash kicked off with an incendiary tweet from Su Zhu, co-founder of hedge fund Three Arrows Capital, a juggernaut in web3 investment, in response to another tweet by Synthetix founder Kain Warwick, which said people he respected who have “sold out in pursuit of profit maximisation,” will come back to Ethereum when Layer 2 scaling “becomes inevitable.”
“You literally chose the worst scaling solution possible for your users to defend your own ETH bags, thereby making your own community actually poor,” Zhu replied.
Zhu later tweeted separately, “yes I have abandoned Ethereum despite supporting it in the past. Yes Ethereum has abandoned its users despite supporting them in the past. The idea of sitting around jerking off watching the burn and concocting purity tests, while zero newcomers can afford the chain, is gross.”
Zhu is an open supporter and investor via Three Arrows Capital in Solana and Avalanche, among other blockchains. Both blockchains currently offer lower fees than Ethereum, which has long been plagued by gas fees. A simple trade with Uniswap costs $119.28 as of Nov. 22, according to Etherscan.
Real Bad Take
High fees have priced out many users from Ethereum, suprring questions among critics about whether it can really become the permissionless backbone of the blockchain-based economy. After all, if only the rich can use Ethereum, does it really matter that it’s a public network? Still, Zhu’s comments rubbed people the wrong way as they were seen as criticizing a long-time builder of Ethereum and DeFi, the very ecosystems that made Three Arrows Capital huge returns.
“No issue w/ L1s that prioritize immediate scaling over decentralization, many users want this. But this is a real bad take,” tweeted Hayden Adams, founder of Uniswap, in response to Zhu’s post. Uniswap has only deployed to Ethereum and its Layer 2s.
“Incredibly insulting to everyone working on ETH 2.0 and L2s. Especially from someone who gained extraordinary wealth off the backs of Ethereum builders,” Adams concluded.
Eth2 is an ongoing and multiyear process to upgrade Ethereum proof-of-stake consensus mechanism as well as to split the platform into 64 separate chains, called shards. Shards will increase the supply of transactions-per-second which should lower transaction costs.
Investors have also deployed hundreds of millions of dollars to develop Ethereum L2s and decrease the costs of using the blockchain, making Zhu’s tweet hard to stomach for some.
“Just because you didn’t get into the seed rounds of Arbitrum, Optimism or any decent ZK systems does not mean we are sitting around as a community,” replied Richard Burton, a prominent designer in the Ethereum community. Arbitrum, Optimism, and ZK systems all constitute L2s dependent on rollups, a scaling technology which executes Ethereum transactions off the main chain.
L2s have $6.2 in value locked as of Nov. 22, according L2beat.
The discussion rippled into sub-controversies. Was Ethereum really making progress towards lower fees? Was competitor Solana really drawing developer attention away from Ethereum? And of course, people took the time to promote chains with lower fees.
Even Edward Snowden, the famous NSA whistleblower, weighed in, saying, “there is a strain of wealthy VC-guy who pretends to do you a favor by ‘warning’ against Bitcoin (or whatever) while hyping centralized garbage-coins that they coincidentally happen to own an enormous stake in.”
Fundamentally, a tension between builders and traders came to the fore. Zhu, first and foremost a trader, questioned the execution of the builders behind Ethereum. Some people supported Zhu as Ethereum is unquestionably expensive for the average user. Some pushed back, questioning whether Zhu provided any value to the space outside of capital investment.
“Both sides will dig in,” Panic Selling, a pseudonymous investor, told The Defiant. The investor thinks the whole exchange was bullish for the space.
“Builders have a chip on their shoulder and will pivot from venture capital to more bootstrapped fair launches, especially when capital is abundant,” Panic Selling said. “This gives their cause more legitimacy and stronger roots.”
I Love Ethereum
On the other hand, the investor thinks that traders will become more transparent with their investments and track records, swooping in to provide capital wherever a high potential community needs it.
“ETH needs a kick re scaling and L2,” the investor added.
Overall, the weekend’s Twitter battle appears to have calmed down with a dubious truce. “Ok I’ll diffuse a bit,” tweeted Zhu. “I love Ethereum and what it stands for. I would love for it to be available to all, not just the early.”
Still, the tension between the backers of non-ETH Layer 1s like Avalanche and Solana, and Ethereum and L2s has become the defining narrative of web3 right now.
And both traders and builders will surely be watching.