Talking about the harvest of EthCC 2023: the cost of the protocol layer has dropped, and consumer applications are ushering in an explosion

Author: David Hoffman

Original source: Bankless

Compilation of the original text: Deep Tide TechFlow

![Talking about the harvest of EthCC 2023: the cost of the protocol layer has dropped, and consumer applications have exploded] (https://img-cdn.gateio.im/resized-social/moments-7f230462a9-bcddf983a5-dd1a6f-7649e1)

So... halfway through 2023, where are we now?

We took some time to reflect on the numerous conversations that took place during EthCC 2023, summarizing some key reflections and takeaways.

Protocols are turning into commodities

With the Dencun upgrade just around the corner, the Ethereum community is preparing for a hard fork that will eventually introduce a massive scalability upgrade in EIP 4844 (also known as Protodanksharding), making Ethereum’s Rollup available on L1. A cheaper form of block space called "blobspace". This long-awaited upgrade makes these L2s finally the most scalable version available.

This upgrade marks a moment in the evolution of cryptocurrencies where we are approaching a theoretical nadir in the cost of resources in the crypto economy. Not just Ethereum, many different protocols seem to be approaching final form where they already minimize the cost of accessing optimized resources.

"Data Availability" is the main category, resource type addressed by EIP 4844 and other data availability solutions. Ethereum block space is cheap for the first time! But Ethereum is not the only protocol optimizing data availability. Celestia, Avail, and EigenDA are all data availability protocols outside of Ethereum that increase the scalability of blockchains to levels we never imagined a few years ago!

This is not limited to data availability. Espresso s received a warm welcome at the largest EthCC side event, the Modular Summit. Working with Eigenlayer through their shared ordering test network, Espresso no longer waits for L2 to each build their own shared ordering system, but instead focuses on one thing: optimizing shared ordering.

In the zkRollup world, a "prover" is a key component that enables end users to verify zk-proofs that extend zk-rollup. zkSync released their "Boojum" upgrade, claiming it's proven to run on mid- to high-end gaming graphics cards. The big implication here is that provers are now able to run on consumer-grade hardware, rather than highly specialized enterprise-grade machines, which means that zk-proofs can more meaningfully decentralize these networks.

Protocol integration and verticalization

Aave, as a money market, now has the decentralized stablecoin GHO. MakerDAO, as a decentralized stablecoin, now also has a money market "Spark". Frax has developed its own stablecoin-money market-LSD ecological vertical field in the past more than a year. These three protocols are converging towards the same basin, and all now compete in the same areas: TVL, stablecoin supply, and most importantly, fees.

Just look at the launch of UniswapX, a free market competition based order execution protocol designed to facilitate optimal decentralized order execution while also serving as a cross-chain abstraction layer allowing the free market to choose its own solution To perform a cross-chain DEX exchange - that is, I have token A on chain 1 and want to get token B on chain 2, so who can give me the fastest and best exchange rate?

UniswapX complements Uniswap's Automated Market Maker (AMM).

Each version of Uniswap has added complexity; with the introduction of Hooks in version v4, the homogeneity of the Uniswap AMM pool is less and less guaranteed. As the number of chains hosting potential Uniswap deployments also increases, the order routing optimization problem becomes too complex to be governed by a rigid on-chain smart contract system. UniswapX builds a new vertical that handles any complexity that Uniswap v1-v4 may introduce by allowing order execution and fulfillment to be done off-chain, with minimum viable proofs of correctness.

Even after all of this, the L2 ecosystem has been successful with the rapid incorporation of similar design patterns.

• We have OP Stack from Optimism;
• Then Orbit from Arbitrum;
• zkSync released ZK Stack;
• Finally, with the launch of Polygon 2.0, we now have Supernets.

Like L2 itself, they are all different. Each of them has its own strategy. But they are all effectively pursuing the same vision that eventually the number of chains spawned from Ethereum will equal the number of web pages spawned from HTTPS

So, which criteria will promote the chain-producing Cambrian explosion?

In this regard, Optimism is unquestionably in the lead, with three large chains and a few smaller ones. Polygon has ImmutableX. Arbitrum owns Nova (albeit internally generated), and ZK Stack, while still finding its first mass adopters, has already been reported by quite a few startups to choose ZK Stack to build their custom ZK chains.

This news, coupled with the expected launch of the Base mainnet in early August, sets Ethereum up for the L2 Summer we've been waiting for since 2021.

Consumer-centric

If you've read this far, hopefully you've realized how far our protocols and infrastructure have come. I declare that the protocol and infrastructure problems of cryptocurrencies have been solved. Of course, there is still a lot of work to be done in this area, but exploring and pioneering this field has become a science. The leading edge of cryptocurrency protocol development, for the first time in the history of cryptocurrencies, has reached a level of maturity sufficient for us to see the end goal.

So now, now that we've solved all these big problems...doesn't anyone want to develop some apps?

L2 already offers more block space than ever before! Data costs are near the lowest! Latency and responsiveness are better than ever! Time to build the app again! Who will consume all the L2 block space? Now that we have plenty of cheap and secure block space, let's start utilizing it. However, we shouldn't stop at blockchain applications! Let's take it to the next level and start productizing these systems! Has no one thought about the consumer?

Let's build the consumer facing application. Let's hire those extremely talented UX/UI designers whose job it is to serve people who don't have private keys or only have funds deposited on Coinbase or Kraken. Let's build applications for those users who have never touched the blockchain.

Our protocols become cheap enough that their usage can be subsidized through user acquisition. As block space gets cheaper, new revenue models can start subsidizing user transactions on our increasingly cheap L2.

A small number of people are already aware of the meta phase we are in, and I hope this post will highlight that and make others realize that our protocol is ready. Let's get down to the hard work of user research, clever abstractions, and consumer-facing applications.

Want some examples on this? Check out Gnosis - they launched Gnosis Pay and Gnosis Card on EthCC.

![Talking about the harvest of EthCC 2023: the cost of the protocol layer has dropped, and consumer applications have ushered in an explosion] (https://img-cdn.gateio.im/resized-social/moments-7f230462a9-a39b6fe5e2-dd1a6f-7649e1)

In the Gnosis ecosystem, there are now:

• Gnosis Safe (your high security encrypted vault);
• Gnosis Chain (a high-speed L2 zkEVM chain based on Polygon Supernet);
• Gnosis Pay (payment chain built on Gnosis Chain);
• Gnosis Card (fintech payment built on top of Gnosis Pay).

With Gnosis, we now have a world where traditional payments are on the front end and cryptographic protocols are on the back end. This is actually something that has been discussed since the inception of Bitcoin. Gnosis needs to turn this into something uniquely competitive with traditional payments, but it's worth noting that our infrastructure is now able to bridge the Web3/TradFi gap.

At the same time that Ethereum is entering the consumer age, cryptocurrencies are battling some of the biggest regulatory battles we’ve ever seen.

Once we get through all these regulatory trials...once we finally beat Gary Gensler, change the SEC, win the right to issue tokens fairly, and get quality legislation through Congress, crypto will be at its highest level ever Friendly regulatory status. Right now, cryptocurrencies are "doing the hard thing" when it comes to regulation. We will never be accepted by the larger players until we go head-to-head with regulators and lawmakers and gain buy-in.

Modular Summit Vs EthCC

The Modular Summit, which takes place on the Friday and Saturday after EthCC, is large enough and informative enough that "EthCC side event" isn't an appropriate description.

EthCC has been a popular place for the Cosmos ecosystem and the developers it attracts. That same energy has evolved into the modular aspect of cryptocurrencies, Ethereum is both part of it and different from it.

I refer to this corner of the cryptocurrency ecosystem as the "barely aligned" cryptocurrency space, where modular infrastructure naturally finds a useful place in Ethereum's context, but if Ethereum doesn't fully occupy that Many of these platforms would be more than happy to sit on the currency throne, given their position (Celestia, Cosmos).

Interesting to see different archetypes find a home and resonate stronger with the modular community than with the 100% pure ethereum crowd. It's also interesting to see these communities come together naturally because the technology fits so well. Ultimately, Ethereum will absorb all useful modules produced by the modular community - the essence of the system is to aggregate all useful open source code into a single superstructure.

There is no doubt that the modular ecosystem has entered new technological frontiers faster than any other field in the cryptocurrency space. This makes sense - modularity means focusing resources on a single problem, rather than spreading them out trying to solve multiple domains at the same time. The intellectual rigor expressed in this cryptocurrency field has attracted all the brightest minds in the field. I think you can expect great things to come from modularizing this corner.