Justin Bons, founder of crypto fund Cyber ​​Capital, believes that as Uniswap moves to L2, Ethereum's fee income will decrease, thereby reducing the amount of ether destroyed, making its deflationary narrative no longer valid. He suggested that Uniswap should become an independent L1.

After Uniswap announced the launch of "Unicahin", a Layer2 network designed specifically for DeFi on the 10th, it immediately sparked heated discussions in the community, discussing whether it is an inevitable trend for Dapp to issue exclusive blockchains, and what potential impact this will have on Ethereum and UNI.

Yesterday (15th), Justin Bons, founder and CIO of crypto fund Cyber ​​Capital, also commented on this, saying that this move will put Ethereum in trouble, and suggested that UNI should stay away from Ethereum as soon as possible. This statement quickly attracted widespread attention from the community.

ETH will no longer deflate

Justin Bons said that one of the reasons why Ethereum is in trouble is that once Unichain is launched, the transaction fee income on Ethereum will decrease, resulting in a decrease in the amount of ether destroyed, which will make the narrative of ether as a "deflationary" currency no longer exist.

Justin Bons cited data from Ultra Sound Money and pointed out that since the successful implementation of Proto-danksharding (EIP-4844) in April this year, the supply of Ethereum has gradually increased and the extent of deflation has gradually narrowed. He said:

This shows that when a user leaves L1, the final cost of entering L1 is significantly reduced, resulting in a decrease in the burn rate. This should have been obvious from the start, now these usages and corresponding revenue are captured by the rent-seeking L2!

This is why it is considered parasitic, as only a small portion of the fees go back to L1, while profit-seeking companies keep the rest. At the same time, these interests are lobbying to keep Ethereum L1 blockspace restricted..

Justin Bons criticized Ethereum’s high fees for stifling practicality and innovation, and suggested that UNI should stay away from ETH as much as possible:

UNI's L2 will have its own validators, so it is entirely possible that they will become an independent L1 in the future, or eventually deploy UNI applications natively on other chains.

The only reason to stay deployed on ETH is security, but in the long run, security relies on revenue. This is also why ETH is gradually reaching a deadlock on its current development path, because all the vitality is sucked away by the second layer.

ETH deviates from its original intention

Further, Justin Bons believes that ETH has deviated from its original vision. He said:

ETH was originally expected to become a global computing platform, a unified state that allows all DeFi to communicate. However, the reality is that ETH has evolved into a fragmented ecosystem dominated by centralized service providers.

He added that what’s worse is that other blockchains such as NEAR and EGLD have successfully implemented sharding technology, and fully parallel blockchains have effectively proved that they can still meet huge demands without implementing sharding. He said that technological advances have reached a balance between decentralization, security and scalability, which makes all the compromises in ETH’s “L2 expansion” strategy completely unnecessary.

However, ETH’s core developers still insist that it is “impossible” to scale L1 while maintaining decentralization, which made Justin Bons bluntly say that this statement is unacceptable.

ETH is losing its dominance

Justin Bons concluded that Ethereum is not only in trouble on an ideological and moral level, but will also face economic decline. Although it still relies on past success to maintain, it is gradually losing its market position, especially in the face of technologically superior competitors. UNI's success is no longer dependent on ETH. He said:

ETH has made itself irrelevant and its decline is inevitable as it continues down this self-destructive path. The future belongs to the countless alternatives that are already up and running!