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Go Multi-Chain Or NGMI
Why you should launch on as many chains as possible to grow beyond your wildest dreams
Hey DEFI TIMES community,
There are two kinds of people in crypto:
Those who accept that the future is multi-chain
And those who ignorantly believe that their chain is “the best” and “most decentralized.”
Numer two are mostly Bitcoin maximalists and ETH maximalists. That’s fine and I really get their points. Bitcoin is the most secure chain out there. Ethereum might be the most decentralized one after Bitcoin.
However, that doesn’t mean that other chains will grow as well.
Crypto is all about testing belief systems. And if your best is wrong… crypto punishes you right away!
That’s why is essential to stay as open-minded as possible in crypto.
Why? Because then you cannot go wrong. If you are interested in everything, you are almost guaranteed to win. But if you stay closed-minded and arrogant, you are guaranteed to lose.
Let’s talk about some of the losers of this industry:
Communities and DAOs, which ignore that the future is multi-chain.
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Why Uniswap, Synthetix, etc. go Single Chain
Actions speak louder than words. One of the most interesting observations I’ve made in crypto is whether or not popular DeFi protocols on Ethereum are betting on a multi-chain future. Take Uniswap as an example. Obviously, the Uniswap team knows that the future is multi-chain; however, they are betting on a very unique type of multi-blockchain world: a rollup-centric world!
That means that Uniswap is betting on a world where Ethereum captures the majority of the network effect; A world where Ethereum scales with rollups and sidechains. It’s kind of an interesting bet to take because Uniswap is basically ignoring the flourishing L1 ecosystem outside of Ethereum. With Uniswap’s launch on Optimism, they signaled their belief and trust in the Ethereum ecosystem while ignoring everything that is taking place outside of it. Don’t get me wrong: Uniswap can launch on both Optimism and e.g. Solana, but this is certainly not what they plan to do. Uniswap stands or falls with Ethereum.
Another good example is Synthetix. Back in July 2021, Synthetix announced that it has launched on Optimism. But will Synthetix ever launch on Solana, Avalanche, Cosmos, etc.? I highly doubt it. Why? Because they are an Ethereum native protocol. They grew up in a world where Ethereum was the only chain out there that worked. Uniswap and Synthetix are prime examples of Ethereum maximalism. In my opinion, the bet that they are taking is risky.
But there’s another example of an Ethereum native protocol that decided to launch on any chain that exists: Aave.
Aave’s Long Term Strategy
The difference between Aave and Uniswap is that Aave is chain agnostic. Even though Aave’s initial version launched on Ethereum, the protocol decided not to stay loyal to only Ethereum. In fact, Aave has already launched on many different chains, including Polygon, Avalanche. In addition, Aave plans to launch on most blockchains in the future, which means that Aave will launch on any chain that has sufficient liquidity and activity.
Aave is always looking for the best communities and developer environments to deploy its protocol on. Until now, it worked perfectly fine!
In fact, Aave has surpassed $10 billion in liquidity when you combine their TVL on Polygon and Avalanche.
The question now is: Which strategy is better? What’s the better strategy for a protocol to not only survive but to thrive in the long term?
Capture the Liquidity on Other Chains
Aave is a great example of why it makes sense to deploy your protocol on as many chains as possible. Why? Just take a look at the numbers above. Aave’s liquidity on L1s (excluding Ethereum) has exceeded $10 billion.
That means that Aave would have missed out on billions of dollars in liquidity if it didn’t choose to launch there. That means the decision to launch on other chains simply comes down to one single question:
Do you want to capture more liquidity or not?
To me, the answer is very clear: It makes sense for protocols to be chain-agnostic.
There is lots of liquidity on Solana, Avalanche, Cosmos, etc. - Protocols, independently of their philosophy and vision of the future, should ask themselves whether or not they want to grab a piece of the pie. If they don’t want to, then… well, have fun staying poor!
Your protocol can grow a lot by just deploying it on as many chains as possible. There is one undebatable fact:
There’s lots of money to be made in the interchain world
You can capture it, which is good for the long-term health of your project. But you can also ignore it, which is in my opinion counterintuitive.
There is literally no downside of launching a protocol elsewhere - at least if your protocol was initially launched on Ethereum and you want to deploy it on other EVM compatible chains. There is no cost associated with copying the code and launching it on EVM-compatible chains.
No cost + value capture = moon!
That’s why protocols deciding to stay single-chain are never gonna make it. They will lose their competitive advantage to open-minded, multi-chain communities and DAOs.
In crypto, only the open-minded win! The closed-minded will lose!
And it can happen fairly quickly!
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DISCLAIMER: All information presented above is meant for informational purposes only and should not be treated as financial, legal, or tax advice. This article's content solely reflects the opinion of the writer, who is not a financial advisor.
Do your own research before you purchase cryptocurrencies. Any cryptocurrency can go down in value. Holding cryptocurrencies is risky.