Thread.
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
Thanks to the awesome @0x12Y4N from @NFTLlama Discord for helping me see this.
HEADS UP. Most people in NFT-land believe something really important and really false.
Think gas is high because <x> and will go down? Think again.
Gas is never going down.
Here's why. https://t.co/mkMnIfkZOu
Let's start with an analogy. We'll build on the "gas" idea.
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
Transacting NFTs on Eth (L1) is like calling up a tanker truck to refuel your car. Tanker trucks will remain essential in the future, but gas stations (L2s) are where you should refuel your car.
The gas station then uses the tanker truck network to order gas in batches to make sure there's enough to go around.
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
Right now we're all ordering tanker trucks to refuel our Smart cars and wondering why it's so expensive.
Wrong tool for the job.
But it gets worse.
Ethereum is not just "poorly suited for NFTs because of high gas fees". It's actively DESIGNED as an oil tanker truck network. It's being ACTIVELY DEVELOPED in that direction.
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
It's. Not. Going. To. Get. Better.
Most people in the NFT space are pinning their hopes on Ethereum 2.0 and Proof of Stake. I was until I understood this, this morning. (Thanks again @0x12Y4N !).
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
Proof of Stake will not make things better for you as a car operator/NFT trader. It's designed to make things better for the oil tanker operators.
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
Maybe in the distant future execution shards will have an impact on gas, but the plans for how that will be done aren't even done, let alone any decision as to when it might happen.
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
So wake up.
Eth 2.0 is not the rainbow-pooping unicorn pony which will solve the gas problems.
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
Eth 2.0 will not solve the gas problems.
Every time you hear someone on Discord saying "I can't wait for Eth2.0 to solve the gas problem"... tell them.
Eth 2.0 will not solve the gas problems.
Ethereum doesn't care about your gas fee problems. They're trying to solve the scalability trilemma without compromising security or decentralisation. More info here if you wanna geek out: https://t.co/8Zm5xLF5cE
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
Want evidence of tangible things that Ethereum has done in this direction? The London Hard Fork, which just happened in August. What was its purpose? Not to reduce gas prices - but to make them more consistent, less volatile.
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
You know, for the oil tanker operators.
The trade-off? Gas price volatility is down, but instead, we have a steadily rising floor of gas prices.
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
A month ago, a good low-gas day was 39 gwei.
Today it's 79 gwei.
Next month? 159 gwei?
The month after, 319 gwei?
I don't know. But it's only going one way.
Ethereum's long term plan is not to make it easier for you to trade jpegs. They're building the network for the oil tankers.
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
At the moment, these oil tanker operators are mostly new and fresh-faced and a bit rough around the edges. IMX, Arbitrum and (sort of) Polygon.
So what does this mean, concretely, to you, as an NFT investor or project owner, as someone invested either emotionally or financially in this space?
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
It's really quite simple: any plan that's counting on gas prices going down for any length of time is dead in the water.
If you're a small/new project creator and you're waiting for gas to come down before you launch your project on Eth, or hoping gas will be down when you launch your project soon, or otherwise counting on gas being low for <reason>... you're ngmi.
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
The only way gas is going down is if demand goes down. And if demand goes down, because everyone's moving off Ethereum to other chains... well, wtf are you doing launching on Eth?
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
Plan for 80+ gwei gas forever. And for that number to keep rising relentlessly.
If you're a blue-chip project owner... you can probably wait. No one buying an ape for 40 eth is going to care about a $200 gas fee. But you should probably still be keeping an eye out and thinking about which chain you'll eventually migrate to.
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
If you're an investor and you're waiting for the market to recover once gas prices finally come down...
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
WAKE. UP.
It's not coming down. The London Fork reduced gas fees variability, but in exchange, gas doesn't spike down anymore in periods of low usage.
If you care about your projects/investments, start asking them for their plans to switch to a suitable alternative chain. Let them know the unicorn fairy is not going to come and make gas prices low again, because that's not what Eth-L1 is meant for.
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
I believe NFTs are the future. Call me an NFT maxi if you wish. But the current Eth-based NFT fantasy land is built on quicksand. And the reality that Eth is not built for this is going to catch up to everyone eventually. Projects are going to drown in neverending high gas.
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
We can debate till kingdom come as to what is the right chain to build on. That's still very much in play.
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
Advocates of Ethereum will point out that Cardano and Solana likely solve the Decentralisation/Security/Scalability trilemma by compromising on decentralisation and security, so they prefer Eth L2s like IMX, Arbitrum...
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
Advocates of other networks will point out maybe security and decentralisation are not the most important thing.
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
Those are almost religious debates at this point. But either way, there's one thing that's not the solution to your NFT gas issues: Eth 2.0. Understand this.
TL;DR: Gas is likely only going up from here. Eth2.0 won't change that for years.
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021
Think about what it means for any project you're in when a "low gas price day" is 500 gwei, and act accordingly.
<EOT>
— Daniel Tenner (swombat.eth) (@swombat) October 14, 2021