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As Ethereum's popularity for everything from DeFi lending to NFT minting has grown, so has the cost of doing business on the network: gas fees, the amount of gwei (a fraction of ETH) charged per transaction, have steadily risen. That has periodically promoted fierce debates over the network's usability, and has given Ethereum challengers like Solana, Avalanche, and Polkadot a chance to pitch themselves as cheaper, faster alternatives.
The ongoing debate over Ethereum gas fees reached a boiling point again last month, highlighted by a tweet from crypto investor and Three Arrows Capital cofounder Su Zhu that railed: "Yes I have abandoned Ethereum despite supporting it in the past. Yes Ethereum has abandoned its users despite supporting them in the past."
But Joe Lubin, a cofounder of Ethereum and the CEO of ConsenSys (which provides funding to the editorially independent Decrypt), waves off gas fee concerns.
"High gas fees are a measure of success," he said in an interview with Decrypt onstage at Dcentral, an event in Miami last week to kicked off Art Basel. "They're a growth pain, they're something that can't be avoided. When a new technology becomes successful, it always has scaling issues. So whether it's CPU cycles, or screen real estate, or memory, you're basically going to have software engineers max out the capabilities of the technology. And it turns out we're seeing consumers max out the capabilities of the technology."
Lubin added that Ethereum 2.0, which he says should arrive by "Q2 or possibly slipping into Q3 next year," will help address both transaction costs and energy use. He also had friendly words for Ethereum competitors, though he noted that those networks are not immune to rising gas fees either.
"We're already seeing scalability happen at Layer 2, and at Layer 2 we're seeing hundreds and soon tens of thousands of transactions per second that are actually very inexpensive—they're Solana-inexpensive, Avalanche-inexpensive," Lubin said. "Those are both cool systems, by the way, Solana and Avalanche, and as they get more utilized by consumers, we're seeing transaction fees creep up to $1 and $2 for those technologies. Ethereum is going to be the blockchain of blockchains. It's going to be the major digital asset settlement layer, it's going to be the coordination layer for many different Layer 2 technologies."
Lubin said that Ethereum these days is approaching 200,000 validators on the network, and that with Ethereum 2.0 and the shift to a proof-of-stake mechanism, that number will grow exponentially: "The barrier to entry is very low, so anybody will be able to do it."
"FOMO'ing at the mouth"
Finally, Lubin had a lot to say about institutional adoption of crypto, days after ConsenSys announced a $200 million fundraise that values the business at $3.2 billion.
"Entities like JPMorgan, Goldman Sachs, et cetera, in my opinion are FOMO'ing at the mouth to get into our ecosystem," Lubin declared. (FOMO, of course, stands for fear of missing out, increasingly used in an investing context.) "But they're massive regulated banking institutions, so it's not going to be easy for them to do that sort of thing. And some of those investors, not JPMorgan specifically, have told us that investing in ConsenSys is a bit of a proxy for getting into the ecosystem ... especially with that old money dying, or depreciating quite significantly, with this new sounder money, and soon to be ultra-sound money, growing in value exponentially, and also yielding quite significantly. Institutions, as well as people, like getting yield."