The recent post on TechCrunch titled ‘The Collapse of ETH is Inevitable’, by crypto entrepreneur Jeremy Rubin, has caused a major uproar in the Ethereum community. Jeremy in his blog post wrote that a price collapse is soon to follow due to the failure to scale and adopt better and secure contract authoring practices.
Rubin in his post explained about the collapse of ETH through “economic abstraction”, a term which is used to describe the payment of smart contract fees (gas) or transactions through a token native to the contract (based on ERC-20 standards), instead of ETH. Rubin argues that allowing the gas fees to be paid in ERC-20 token would leave ETH to be redundant, ultimately leading to its collapse. Rubin wrote:
“Instead of paying for Gas in ETH, we could make every BuzzwordCoin transaction deposit a small amount of BuzzwordCoin directly to the block’s miner’s address to pay for the contract’s execution. Paying for Gas in a non-ETH asset is sometimes referred to as economic abstraction in the Ethereum community.”
Vitalik Buterin Responds to Rubin’s Views
As Rubin’s word on ETH collapse spread like a wildfire, Vitalik himself responded to it on Reddit. While partially agreeing to Rubin’s views, Vitalik wrote:
“In Ethereum as it presently exists, this is absolutely true, and in fact, if Ethereum were not to change, all parts of the author’s argument (except the part about proof of stake, which would not even apply to Ethereum as it is today) would be correct.”
To address the issue of Economic abstraction, Vitalik wrote that the community is currently considering two proposals wherein “both of which have the property that they enshrine the need to pay ETH at protocol level, and furthermore the ETH gets burned, so there’s no way to de-facto take it out of the loop by making the medium-of-exchange loop go faster.”
This basically means that ETH would be mandatorily needed to pay for the gas. While doing so, they would ensure of having a structure wherein the price of ETH doesn’t spiral downwards. Buterin’s measured response has got some support from the Reddit ETH community members.
Reddit user u/Alzerion said: “Isn’t it better to recognize what’s wrong than living in the illusion that everything is going great? He seems humble enough to recognize what’s wrong with [his] own project.”