Ten thousand words long article takes you to review Ethereum's 2021: layer2, core agreement, creator economy, Dao

Published on 1/18/2022   497 views   0 Comments  

Author: Josh stark & amp; Evan Van Ness

Block Unicorn

Original title: Ethereum's 2021

Ethereum is the foundation of digital civilization

It is solid, safe and reliable, and it is the cornerstone necessary to support the digital city built on it. These cities are developing rapidly. Since Ethereum is open to everyone, many different users have found reasons to build on it:

  • The market uses it as a financial infrastructure
  • Artists use it to give permanence to their works
  • The asset uses it as the settlement layer
  • The community uses it to manage shared resources

This year, Ethereum apps have exploded into public awareness. As the world began to understand the vision of a more decentralized Internet based on Ethereum, the old term "Web3" became popular again.

As in 2018, 2019 and 2020, our goal is to shrink and show a larger picture. We think,The most important development of Ethereum this year is:

one The arrival of layer 2 - after years of development, L2 protocol has started and expanded the capacity of Ethereum on the main network.

two The creator economy has become the mainstream - NFT is everywhere, and artists use Ethereum to earn billions of dollars.

three Core agreement upgrade - Ethereum R & D community has carried out a number of upgrades to prepare for the transition to proof of interest.

four Dao crosses the critical point - Dao becomes a viable tool for community autonomy, accumulating billions of assets and attracting new users.

Before discussing the above topics, let's stop and take stock of Ethereum's growth. Over the past few years, we have tracked different core metrics that try to put Ethereum in context. This year, some of these indicators have crossed important milestones.

A. Which blockchains do people pay for?

Ethereum has become the blockchain with the largest demand in the world for the second consecutive year.

The figure shows the total transaction cost of the selected L1 blockchain. This is the sum of all fees paid using each L1 - send transactions or interact with smart contracts. In general, they represent the value of the total "blockspace" of the blockchain - the total transaction capacity of the blockchain in a given year.

The total transaction cost is only an indicator. Individually, they can not perfectly represent the value of the blockchain or its utility to users. However, it does show us the comparative value of each blockchain to its users. In a well functioning market, the price people are willing to pay is worth it.

If we expand the comparison to include applications, L2 networks and other L1, we will see the following:

Each pink entry is an application built on Ethereum, such as uniswap or ENS. For these applications, the total fees here are not blockchain transaction fees, but other types of fees paid by users for using the applications (such as fees paid to exchange liquidity providers).

Incredibly, by 2021, the value paid for using Ethereum based applications will exceed the total value paid for using all other L1 blockchains.

As the demand for Ethereum blockspace continues to exceed all other blockchains, we can find meaningful comparisons elsewhere. This year, we can compare the fees paid using Ethereum L1 with the revenue of payment networks such as visa and stripe:

The total transaction costs are not completely comparable to the company's revenue (the revenue of visa and stripe comes from sources other than the fees paid by direct users, while Ethereum can do many things that stripe can't do). However, they show the scale and market value of Ethereum.

B. How much value has Ethereum moved?

One of the simplest use cases of blockchain is to transfer assets,How much value has been transferred on Ethereum this year?Since surpassing bitcoin in mid-2020, Ethereum has continued to become the blockchain that settles the world's largest asset flows.

Ethereum data includes all major erc20, with a transaction volume of more than $500 million. Bitcoin data includes usdt on Omni. Because we did not calculate all the assets on Ethereum, this chart underestimates the total transaction volume of Ethereum. Data from visa (ANNUALREPORT. Visa. Com) and coinmetrics (coinmetrics. IO),

Ethereum moved about $1one6 trillion this year, this is more than visa and more than twice as much as bitcoin.

C. Value locked in defi

Finally, we can track the total value of all assets locked in the defi protocol. "Locking assets in defi" means that users deposit some funds into the agreement, usually in return for the agreement to use their assets - for example, as liquidity.

Ethereum's defi division continues to have the largest number of locked assets, and the range is large.

Once again, we must look for comparable data outside the blockchain ecosystem. In 2021, the total value of defi locked on Ethereum ($153 billion) exceeded the assets managed by Robin Hood ($80 billion) and Bridgewater associates ($140 billion).


one Reach level 2


After years of research and development, the technology of extended Ethereum will be put into use this year. Ethereum's trading capability is no longer a simple Ethereum layer 1 capability.

On the contrary, the capacity of Ethereum L1 plus the capacity of all "layer 2" protocols inherit the security of Ethereum.

L2 data is incomplete due to restrictions on public information. All data here: https://docs.google.com/spreadsheets/d/1-Is51Do_AgatnUsoxo-Iy7B0clCyxf1VN_gDt8mtly4

The figure shows us the total cumulative transactions on Ethereum in 2021, including L1 and Ltwo In 2021, Ethereum L1 will conduct about one2 million transactions per day (or about 15 transactions per second). With the launch of layer 2 protocol, the effective capacity of Ethereum began to increase and the comprehensive transaction rate (at the top of the chart) began to bend upward.

All L2 protocols are still in the early stages of deployment, and some have not removed all temporary trust assumptions (see l2beat for more information). There are also significant differences between the technologies grouped here. For example, starkex chains are technically valid, which means that their proofs are stored outside the chain, not on the chain.

As the L2 protocol matures and gains market share, the L2 part of the figure will grow until it far exceeds the trading capacity of Lone "Ethereum" no longer refers to a single agreement, but refers to an agreement community sharing a public Lone

You may have read that Ethereum is expensive or slow, but it's just because people make the wrong comparison. Ethereum is the first blockchain mature enough to build multiple production ready L2 on it. Although the cost of gas is still high for some use cases on L1, 2021 marks a turning point in the future. Most users only interact with Ethereum through Ltwo

Currently, the largest share of L2 transactions is done on an application specific L2 protocol called "ZK rollups". These are L2 dedicated to certain types of applications, such as transactions or simple token transfers.

ZK rollup ecosystem based on Ethereum has made progress in 2021:

  • Loopring launched zkrollup decentralized trading platform as early as 2020. They completed the release of V2 in early 2021 and increased their support for NFT casting and trading in August 202one
  • Matter labs launched payment summary (zksync) in June 2020, which is integrated into wallets such as argent and applications such as gitcoin (and continues to develop "zksync two0" with EVM compatibility).
  • Aztec launched private payment summary ("ZK. Money") in March 2021 and increased support for Dai stable currency in April.

Several projects have launched validium using starkware's starkex platform,include:

  • Devorifi (decentralized trading platform) launched the summary in June 2020.
  • Immutablex (NFT trading platform) launched the summary in April 202one
  • Dydx (defi trading platform) launched the summary in April 202one
  • Sorare (a dream football NFT project) launched the starkex summary in July 202one

L2 data is incomplete due to restrictions on public information. All data here: https://docs.google.com/spreadsheets/d/1-Is51Do_AgatnUsoxo-Iy7B0clCyxf1VN_gDt8mtly4

This year, two important new members of the rollup ecosystem emerged:Arbitrum and optimization.

Arbitrum and optimization are the first generalized summary put into production. This means that each summary runs like a natural extension of Ethereum - they are "EVM compatible". Users can easily migrate Ethereum based assets to them, developers can deploy their own solid contracts and applications to the summary, and users can interact with them.

L2 data is incomplete due to restrictions on public information. All data here: https://docs.google.com/spreadsheets/d/1-Is51Do_AgatnUsoxo-Iy7B0clCyxf1VN_gDt8mtly4

Arbitrum launched on the main network on May 14 and deleted their white list on August 3one A few months later, there was optimism, which was launched on the main Internet on August 19, and their white list was deleted on December 16.

With the development of L2 ecosystem, users will deposit more and more funds into it. At the time of writing, there is about $6 billion in the L2 protocol.

Summary in context

Over the past decade, the encryption community has been committed to expanding the blockchain using "layer 2" technology. Bitcoin payment channels were discussed as early as 201two Although channels will eventually be put into production on Ethereum as a relatively niche expansion solution, they cannot expand smart contracts.

In 2017, vitalik and Joseph Poon proposed a new solution called plasma. The basic idea is to extend Ethereum by creating independent blockchains, which will be anchored to Ethereum and inherit security through ingenious code and economic mechanism.

This research direction has led to a new technology called "aggregation". Based on the idea of plasma, rollups extends Ethereum by creating a unique L2 blockchain, which can be used cheaper and faster, while still inheriting the security of Lone

The application exists on the summary chain, and users interact directly with the summary chain. In the background, the protocol bundles ("summarizes") everyone's transactions and stores their records on Ethereum Lone These records ensure that these transactions benefit from Ethereum's strong security.

However, there are two different ways to do this, resulting in two different types of summary design: optimistic summary and zero knowledge summary.

In zero knowledge aggregation, cryptography is used to prove that the transaction is valid and store the proof on Ethereum. Most of the data can be discarded (which means you don't need to store it on the chain), leaving only a small amount of data. But it is enough to mathematically prove that the transaction is effective.

There are many application specific summaries today, which we introduced above. However, the generalized ZK (zero knowledge) summary is still in progress, which is composed of matter labs, starkware, polygon HERMEZ, scroll tech and Privacy & amp; Built by the scaling explorations team and other teams.

To simplify a complex topic: ZK aggregation works by converting the code running on the aggregation into special mathematical equations. This equation provides us with a concise proof stored on the main network.

When possible inputs are limited, it is much easier to define such an equation. For example, if we only intend to make a simple token transfer. These application specific equations are easier to design.

In contrast, it is much more difficult to define an equation that can accept any possible code input and create a proof from it. This is the challenge of creating ZK summaries that can be used for general arbitrary code.

This "generic" Computing (also known as "EVM equivalence") is easier to implement through optimal rollups.

Using optimal rollups, L2 aggregation chain leaves bundled transactions on Lone However, in most cases, the "proof" to ensure that these results are valid does not actually run. The protocol is optimistic - it assumes that each block is valid, but we reserve the right to always prove it when necessary.

Because optimal rollups needs to save data so that someone can run the certificate in the future, they need to publish a large amount of transaction data to the chain (rather than the small certificate that has been verified with zero knowledge technology). However, because there is no need for new cryptographic innovation, fully universal optimal rollups (such as arbitrum and Optimization) already exist in the production environment today.

In either case, this means that you are very confident that your summary transaction is final. If someone sends eth to you in the summary, the proof of the transfer exists on Ethereum. If necessary, you will always be able to extract the ETH to Lone

The long wait for tier 2 is over. It's here now - just very unevenly distributed. Applications, exchanges and wallets take months to support L2 and help users transition.


two The creator economy of Ethereum has become the mainstream


In last year's blog, we noticed that Ethereum's "creator economy" is showing signs of growth. Cryptoart's trading volume rose sharply in December. There are signs that more and more artists are trying to use the tools provided by Ethereum to capture the value of their works, which exceeded expectations in the next year.

In 2021, artists, musicians, writers and other creators earned a total of $three5 billion using Ethereum. This sum up makes Ethereum one of the largest global creator platforms.

Note: due to the limitation of public information, Ethereum data is 2021 and all other data are 2020. All data recorded here: https://docs.google.com/spreadsheets/d/1-Is51Do_AgatnUsoxo-Iy7B0clCyxf1VN_gDt8mtly4/

In 2021, Ethereum earned more income for artists and musicians than onlyfans or patreon, almost as much as the world's largest creator platform.

What is the creator economy?

Ethereum's "creator economy" is a set of tools, services and markets that enable creative people around the world to use Ethereum to make money from their work.

So far, the "creator economy" of the Internet has been dominated by large-scale centralized platforms. Most of them use a similar model. Platforms such as YouTube or spotify earn revenue from advertising or subscriptions, and then transfer a small part of the revenue to creators.

This business model turned spotify into a $40 billion company. But this has always been unsatisfactory to most artists, who earn a small part from each stream. In 2020, only 13400 artists earned more than $50000 from spotify (from one2 million artists on the platform).

More artists work for free by posting their works on instagram or twitter, artists get paid through "exposure", and the platform gets value.

Ethereum provides creators with new tools to profit from their works. One tool stands out in particular: NFT. A digital certificate representing the ownership of any digital file, including art, music, photography, video or game projects. In 2021, platforms such as opensea, rarible, foundation, Zora and mirror enable artists to create, sell and trade NFTs.

The NFT ecosystem is at a very early stage. Remember, a year ago, the NFT market hardly existed. Today, the vast majority of transactions and users are concentrated on one platform (opensea). However, there are many projects dedicated to launching competitors, including decentralized exchanges. As we have learned from the history of decentralized exchanges ("DEX") and the incredible growth of uniswap, decentralized projects that give ownership to users can compete meaningfully with centralized existing enterprises.

The rapid expansion of NFT market has aroused mainstream interest. Steph curry, Eminem and Shaquille o' Neal acquired bored apes. Adidas did the same. They also bought digital land and released their own NFT series. The CEOs of Budweiser, Paris Hilton, Trey songz, Drake bell and Shopify all registered ENS names and put them in their twitter handles.

In addition to soaring NFT valuations and celebrity interest, the emergence of Ethereum's creator economy marks a quiet revolution in our community.

For most of the history of the encryption industry, most of the people who can make a living using these technologies belong to only a few categories: investors, developers or people who work for encryption companies.

But in 2021, things changed.

This year, more people from new and very different professional backgrounds began to use Ethereum to support their finances. By 2021, people can use Ethereum to make money without any pre-existing capital, technical skills, financial or investment background, or working in an encryption startup.

These creators are not just ordinary users, but core members of the Ethereum community who rely on it and have important interests in the ecosystem. This change has led to the influx of new people, ideas, communities, talents, views and concerns, changed the ecosystem of Ethereum and affected its future.

Most notably, many new Ethereum users are worried about the energy consumed by workload proof. Fortunately, they are joining a community that shares these concerns. Since 2014, the Ethereum community has known that workload has proved to consume too much energy and has been trying to end it.


three Core agreement upgrade


In 2021, Ethereum community made steady progress in the transition to proof of rights and interests, and carried out two main network upgrades, bringing new charging market and many small optimizations.

The research, development, coordination and implementation of these upgrades are carried out by independent teams around the world through open research and collaboration. As usual, Ethereum is a market, not a cathedral.

Most of the work is done by the team that builds and maintains a single client. Ethereum is the only blockchain with multiple independent teams actively building and producing client software.

User diversity has always been a priority for the Ethereum community, although it remains challenging in practice. Client diversity helps prevent errors in a particular client that may undermine its monetary value, but it can also serve as a check on the governance captured by the core developer group. Ethereum is a "specification first" blockchain, which means that the rules of the protocol are independent of any specific software or the collection of individuals maintaining the software. Anyone can implement specifications and build their own clients to compete with existing ones.

This year, the user team and the larger R & D community made two substantive upgrades to the Ethereum main network: Berlin in April and London in August. These upgrades include several changes. The most noteworthy is eip-1559, which has reformed the Ethereum fee market (discussed in depth below), but also includes key changes such as eip-2929, which improves Ethereum's defense against DoS attacks.

Teams also upgraded "Altair" to "beacon chain" - a chain of proof of interest that has been running in parallel with the Ethereum main network since December 1, 2020. Altair upgrade not only enables light clients to reach a consensus, but also updates slashing and vitality incentives.

The background of all this work is the continuous progress towards "merger" - the moment when Ethereum's work proof system will be closed forever and turn to support proof of interest (discussed in depth below).

Even in this period of change, the Ethereum main network continues to continuously process and protect billions of dollars.

Eip-1559 - fee market reform

On August 5, eip-1559 was launched on Ethereum main network. This upgrade has made several reforms to Ethereum's "charging market", which is a set of rules that define the market where users pay to record their transactions in Ethereum blockchain.

Eip-1559 has multiple objectives:

  • Reduce the likelihood that users will overpay for their transactions.
  • Reduce the transaction blocking rate.
  • The protocol security is enhanced by reducing the possibility of reorganization and making DoS attacks more expensive.
  • Burning part of the cost can add value to Eth and improve the economic security of Ethereum.

Like most Ethereum protocol upgrades, this is the result of years of research, development, testing and debate in the Ethereum community.Vitalik shared early ideas in a blog post published in 2014, followed by an ethesear in July 2018 Ch article, and the draft EIP ("Ethereum improvement proposal") in 2019. This was followed by two years of analysis and discussion, including by Tim lavgaden.

The adoption of eip-1559 has not been completed. Some wallets, exchanges and other applications need to upgrade their software to take full advantage of the new charging market.

Source: pintail( https://pintail.xyz/posts/gas-market-analysis/ )

This figure shows the breakdown of Ethereum "type 2" (TX using eip-1559) and "legacy" transactions. By the end of 2021, about 35% of transactions on Ethereum are still using "legacy" transactions. However, even legacy transactions can benefit from eip-1559 because it improves the way gas estimates are generated.

Many wallets and exchanges have enabled eip-1559 transactions, including metamask, rainbow, mycrypto, frame, trezor, brave, coinbase (and coinbase wallets), blockfi, FTX, etc.

Four months after the change took effect, eip-1559 is achieving the goal of improving Ethereum user experience:

Source: pintail( https://pintail.xyz/posts/gas-market-analysis/ )

In this figure, the blue line shows the median gasoline price of traditional transactions, and the orange line shows the gasoline price of type 2 (eip-1559) transactions. After implementing eip-1559, type 2 transactions are lower than traditional transactions on average.

Source: pintail( https://pintail.xyz )

The figure shows the benefits in more detail. The blue line shows the gas price difference between the two transaction types since eip-1559 was launched (the higher the line, the more savings). The cost of traditional transactions is always 10-20 Gwei.

Eip-1559 also seems to reduce the possibility of transaction blocking without requiring users to pre emptively pay excess fees for inclusion (as many users accustomed to stuck transactions have been doing). If you are interested in learning more, please refer to this article of pintail, coinbase and blocknative.

Feel burning

Eip-1559 also introduces a change that a portion of the fee paid by each user for using the agreement is destroyed ("burned"). This means that each transaction removes a certain amount of eth from the total supply.

This creates a mechanism to add value to eth - an important part of the broader vision of making Ethereum the safest blockchain in the world.

Ethereum's consensus mechanism depends in part on the value of eth. Under pow, this is because the miners get eth compensation to protect the network, while under POS, this is correct, because the pledgers not only get eth compensation to protect the network, but also because they need to mortgage eth to provide this security.

Burning a portion of the fee will establish a relationship between the use of the agreement (transaction costs) and the value of eth itself (by reducing supply). Since August, one32 million eth have been destroyed in 202one

The yellow bar represents the days and weeks of negative issuance, in which Ethereum is heavily used - and paid enough fees - the burning from eip-1559 exceeds the new issuance in each block. Remember, these are the results of the current POW system. Switching to POS next year will reduce the circulation.

merge

The migration from proof of workload to proof of equity has always been the earliest vision of Ethereum community. Although the work proved to be necessary to start the first experiment of blockchain design, it was obvious that a better design was possible in the intervening 12 years. The design is safer and does not consume too much energy, so as to produce strong economic security.

Ethereum's proof of interest system is the crystallization of more than 7 years of research and development. Why did it take so long? Since the beginning of this process, the Ethereum community has been reluctant to compromise on decentralization.

Although there are different proof of interest systems in other chains today, most of them have made significant concessions in decentralization. They rely on some form of delegation, which means that the actual role of block verification is concentrated in the hands of a few pledgers.

Ethereum innovated while some communities settled。 New technologies and advances in new technologies make Ethereum decentralized and secure to the greatest extent. The progress of BLS signature used in Ethereum POS enables thousands of nodes to participate in consensus, which means that Ethereum POS does not need entrustment. Thousands of individual verifiers are involved, not a few professional pledge organizations.

At the same time, Ethereum's design maintains low technical requirements for stacking. It is low enough that anyone with a consumer laptop can pledge at home and is in a similar position to professional pledge services.

Ethereum's proof of interest system has been launched - but it has not been used to protect any user activities. Beacon chain - Ethereum's proof of interest mechanism - has been online since December 1, 2020, and there are no major problems in operation.

Last year, users pledged more than 8 million eth on the beacon chain, with a value of about US $26 billion:

Source: @ carvas( https://dune.xyz/queries/252741/473336 )

The remaining work is to merge the existing Ethereum L1 into its new proof of equity infrastructure to replace the proof of work.

Source:( https://twitter.com/trent_vanepps )

With the buzzing of beacon chain, Ethereum community passed the merger of several milestones:

  • In April, the Rayonism project witnessed developers crack the simulated combined test network and some early fragment designs together.
  • In October, the customer team gathered in Greece for the amphora retreat, which produced a short multi client test network.
  • In November, kintsugi test network continued to cooperate with the long-term multi client test network based on the latest specifications.

Once the specification is finalized and the new test network is widely used by end users and application developers, the existing test network will be used for the trial operation of merge.

Assuming these trials are successful, the focus will shift to the last step: perform consolidation on the main network and end the workload proof forever.

Client diversification

Ethereum has many client implementations, and each client has a different share in the total number of verifiers participating in proof of stack. Today, customer diversity is far from optimal:

Source: https://twitter.com/sproulM_/status/1481109509544513539

Ideally, no client should have more than 33% of the network. If each individual client is below this percentage, the risk of errors found in the client affecting the network can be reduced.

Ideal customer diversity is a goal that can be achieved in theory: Ethereum has four excellent pledge customers (lighthouse, nimbus, Prysm and teku), and a fifth candidate (lodestar) has recently appeared.

Before the merger, it would be beneficial if no client had more than 50% of the network. Without too much introduction, in the case of (unlikely) chain bifurcation, clients that remain below 50% will provide security buffer for client developers to solve the problem without large-scale reduction events.

Moving towards better customer diversity is in everyone's interest - even the developers of most customers. It is commendable that prymatic labs recognizes this fact and is trying to reduce their majority.

Pledge ecosystem expansion

Ethereum's proof of interest allows everyone, from amateurs to institutions, to pledge Eth and participate in protecting the network. With the development of stakeholder communities, the ecosystem of services, tools, infrastructure and applications has developed:

  • Rocketpool is a highly anticipated decentralized pledge agreement, which was launched in November 202one Rocketpool is an agreement that allows users to deposit Eth and share pledge rewards without managing any pledge infrastructure. In short, users of the protocol securely store their eth in a single node operator network coordinated by the rocketpool protocol. Decentralized pledge agreement is an important infrastructure to cultivate a healthy pledge ecosystem. At the time of writing, 74k eth was pledged to rocketpool.
  • Lido is also a pledge agreement, but it has additional trust assumptions in its current implementation. By January 2021 (two months after the beacon chain is started), 100k eth will be pledged by Lido. By the end of this year, 33000 independent depositors had bet $13 billion worth of one6 million eth on Lido. Recently, Lido has made good progress in customer diversity in the operator network serving the agreement.
  • At the same time, the ecosystem of pledge instruments is also growing
    • The stakehouse community has released eth Wizard (amateur cli installer) and Wagyu (one click eth2 stacking installer).
    • Existing node hardware providers dappnode and Avado have expanded their Ethereum pledge products.
    • Stereoum launched an open source node setting tool.

Want to pledge your eth? The best starting point is Ethereum org。


four Dao crosses critical points


One of Ethereum's earliest dreams was to enable:Decentralized autonomous organization (DAO),Because Ethereum allows anyone to write any rules in the code, we can use these rules to design the organization or governance system, allowing a group of people to make decisions together through voting or other mechanisms.

Dao ecosystem had a breakthrough in his year. A simple but feasible technology stack is brought together to enable existing Daos to do their work, while new entrants break through the boundaries of what Daos can be and who can be part of them.

The only monthly number of voters participating in Dao on the snapshot grew throughout the year and exploded in November and December:

Source: Snapshot

Today, hundreds of Daos can view daily activities, pay membership fees, build products, and vote on the use of shared funds. Daos on Ethereum jointly manage assets worth more than $16 billion.

But first: what is Dao?

"Dao" is used to describe a wide range of structures. Generally, Dao refers to any group of people who use blockchains such as Ethereum to collectively manage things on the chain. Sometimes it's money (such as tokens in eth or Dao treasury funds), but it may also include the parameters of NFT, makerdao and other chain agreements or all of the above.

Although Dao has existed in Ethereum since 2016, these early experiments are more scientific projects than real products.

But in the past few years, Dao has become a practical necessity。 The first major driving force is the defi protocol, which they want to decentralize credibly - giving control of their protocol to the user group voting with tokens ("governance tokens").

The basic structure created by agreements such as compound in 2020 has become a de facto standard launched by many Daos such as uniswap in September 2020.

In 2021, the growth of Dao is remarkable because it takes place outside the defi protocol as the first major entrants. These Daos began to show the breadth of design space to organizations on the chain.

  • Ethereum naming service (ENS). First launched in 2017, ENS is a decentralized naming protocol that allows users to create a simple user name (yourname. ETH) that can be used as an Ethereum account, receive non eth cryptocurrency (including bitcoin) or as a web URL. In 2021, ENS launched a Dao to manage some parameters of the ENS protocol and a community fund to support the ENS ecosystem.
  • Constitution Dao (people). In just a few days in November, strangers from the Internet collectively raised $44 million to buy a copy of the U.S. Constitution. A total of 17521 different accounts contributed to this work. The project received mainstream coverage and triggered a crazy live broadcast. A group of confused auctioneers are mediating the bidding competition between the representatives of the new organization Internet and the old financial world.
  • Pleasant Dao started with a tweet and soon grew into an investment club. Pleasrdao is exploring different parts of the DAO design space - it is not a mass organization with tens of thousands of members, but a relatively small investment club, with members pooling funds for joint purchases. It is worth noting that pleasrdao has purchased some high-profile cultural assets, such as Doge 1 / 1 or the unpublished Wutang album.
  • Friends with benefits (FWB) is an online social community whose membership appears in the form of $FWB token ownership. The token is used to control access to various online and offline spaces: chat groups, parties, dinners, parties, etc.
  • Makerdao was originally a Dao, but then established some traditional organizational structures in 2018. Maker Dao is the creator of Dai stable coin, which is the first decentralized stable coin on Ethereum and one of the most successful defi projects so far. This year, makerdao completed the promised decentralized return by closing its foundation and transferring control of the maker agreement to the Dao managed by its token holder.

Dao is a very general toolkit, which can provide a lot of design space. With the help of private key and smart contract, we can design almost any system through which human beings can jointly manage the assets and protocols on the chain.

As a result, we see a wide range of uses for Dao. Soon, it may be difficult to discuss them as a useful category. Dao is a means for the agreement to meaningfully disperse itself away from the control of the founder. It is a tool for online communities to quickly and seamlessly collect funds to achieve common goals. It is a new social network and a new way to collectively fund public goods.

The growth of Dao this year is due to a set of easy-to-use application tools。 Many Daos use a simple combination of tools. For on chain smart contracts, most use a branch of compound system. The voting itself is handled by items such as snapshot. The discussion and debate of individual proposals are held in the forum, just like words.

In 2021, the range of tools available to create and manage Daos will expand:

  • Mirror has launched a set of tools to help people create "media Daos": CO publishing and owning content created on mirror.
  • Coordinatape breaks away from the year community and provides a framework for distributed teams to collaboratively determine the compensation for the work done by Dao members.
  • Rabbithole has introduced some tools to allow new users to join Dao and develop skills and certificates to work for Dao.
  • Visionary governments have developed new legal structures to simplify the formation and reporting of Dao, just like Wyoming.

As Dao expands to meet the needs of millions of people around the world who want to use them, Dao has many problems and challenges to overcome. Several key challenges we hope to make progress in 2022:

  • Today, most Daos use some form of token voting. This means that the decision is based on the ownership ratio of some "governance tokens". Coin voting systems have many known drawbacks. Experiments against witch attacks such as proof of humanity and brightid provide a way to build governance systems based on individuals rather than tokens.
  • Look for management structures and work systems that enable distributed teams to meaningfully build products and coordinate actions.
  • Legal systems may be very slow to adapt to new forms of productive human activities, and Dao is no exception. The lack of a clear legal framework may pose risks to Dao members. This work continues in jurisdictions around the world - see this paper by David Kerr and miles Jennings for recent work in the United States.

New organizations are emerging to address these and other challenges. Dao research collective is such an organization. Its goal is to make it easier for Dao founders to find answers and information about these questions.


5. Start!


As every year, there are too many things happening in the Ethereum ecosystem to be summarized in a blog post. However, Ethereum is much larger than the above four themes - other developments in 2021:

  • Identity: Ethereum name service (ENS) has experienced a breakthrough growth to hundreds of thousands of users, hundreds of integrations and a new Dao community vault ($one9b) to fund the sustainable development of the ecosystem. Proof of humanity and brightid are used as anti witch mechanisms. Logging in using Ethereum standard has gained attraction, and it has become fashionable to have Ethereum identity.
  • Games: the number of users of axie Infinity has increased dramatically to two9 million, becoming the most successful game based on Ethereum. New cryptocurrency organizations such as yield guild have stimulated interest in the game making game ecosystem. Skyweaver was released on polygon, and dark forest released v0 6, and continue to build fanatical followers around its encryption native chain strategy game.
  • Public goods funding: clrfund (a protocol that allows anyone to run their own CLR) completed their trusted setup ceremony and promoted multiple rounds of financing. Gitcoin continued their successful CLR products, raising more than $24 million throughout the year. Optimism conducted an experiment to provide retroactive funding for public goods, and the Ethereum Foundation launched a customer incentive program to sustainably fund customer development and maintenance. A new public goods organization - 0xparc - was established to focus on application level innovation.

2021 is a bullish year for Ethereum community. The ecosystem has passed an important milestone and the workload is proving to be coming to an end.

When the market is good for you, it's easy to feel like a winner and get distracted. But the city won't build itself - we'll see you on the other side of the work certificate.


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