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StellarX Co-Founder Details Why ICOs Shouldn’t Be Held on Ethereum in New Research Paper

A StellarX co-founder has released a new research project that describes why ICOs shouldn’t be held on the Ethereum network.

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‘The Great Filter’

The blog post kicks off by stating that Ethereum itself is not a bad technology but entrepreneurs have applied the platform to the wrong applications. The co-creator, who remains anonymous beyond the first name Christian, believes that if these projects don’t specifically adapt to Ethereum’s strengths, they will end up perishing.

According to the report, all of the data was collected by the co-creator and his team, which spent $13,000 running an “at-scale” app for 10 hours on the Ethereum network. Additionally, all of the team’s work, results and methodology can be found on their Github . Here are the results:

Ethereum’s Strengths

According to the report, Ethereum is a great choice if developers are building a distributed computer program that doesn’t need a sole owner or centralized decision-making apparatus.

In addition, the co-founder says that most blockchain companies are only looking to issue digital tokens and process transactions, which is where, he believes, Ethereum will let users down. For example, if a company desires to issue a token, let users trade and experience transactions in real-time, the StellarX team presumes that Ethereum is the wrong choice.

Ethereum’s Weaknesses

According to the StellarX co-founder:

“It’s slow and it’s really f’ing expensive, and it fails to act like you want in both the ‘one account doing a lot’ and the ‘many accounts doing a little’ cases.”

Problem One: User Experience

The first problem the StellarX team discovered was Ethereum’s method of queuing transactions, which was considered miserable for enthusiastic users. Christian goes on to explain the intricacies of Ethereum’s queuing process, overall comparing it to the “please take a number” system users experience at places like the DMV.

Unlike people working at the DMV, however, miners running the Ethereum network aren’t accountable for the next “number” in line.

According to the co-creator:

“Miners like these will let block space go unused before filling it with something from your queue.”

The co-creator goes into great detail about the tests they ran on Ethereum but ultimately boils it down to the user experience. The more people using the Ethereum app, the slower it goes. This is excactly what happened to Cryptokitties, the first blockchain-based game to launch on Ethereum that completely halted the system and caused a backlog of nearly 30,000 transactions.

Christian explains that per his tests, after just three hours, transactions are now taking eight hours to confirm. This performance issue, he says, if a fundamental part of Ethereum. Improvements to the network like Casper and sharding are promising but will be complex fixes that are layered over Ethereum’s almost “maximal” complexity.

The co-creator explains that a skyscraper is usually built on bedrock, not on top of another skyscraper. This is how the team at StellarX describes Ethereum’s scaling solutions.

Problem Two: Cost

Cost is another issue that Ethereum faces, according to StellarX. The Ethereum app’s per-user costs, for example, go up extremely quickly when it adds more accounts–seeing a 7,000 percent price spike , in some cases, when multiple users try to use the network across a number of accounts.

One StellarX experiment, which cost $1,445 for a single hour when Ethereum’s gas prices were low, saw the team run several basic tests that completed 8 transactions per second. At that rate, those basic tests would cost $12.6 million a year.

The team then compared these transactions to both the traditional PayPal model and a model where the company was built on Ethereum. Had the latter been true, StellarX concludes that 21 percent of the company’s net income in 2017, $380 million, would have gone to Ethereum network feeds.

StellarX’s Solution?

While more than 50 percent of ICO projects launched on the Ethereum network have completely disappeared after their token sales, it’s no surprise that the StellarX co-founder recommends Stellar’s network as the solution.

He explains :

“It’s not Ethereum’s fault that developers are asking from the tech what it was never meant to deliver. It’s the people chasing last year’s ICO dollars, regardless of what’s actually the right tool. Ethereum’s problems all start with misguided entrepreneurs. Don’t become another one of them.”

The co-founder concludes that if developers and entrepreneurs want to “build a business that sticks around,” they should build on the Stellar network, which he claims is optimized to issue digital assets and handle high-volume transactions.

The post StellarX Co-Founder Details Why ICOs Shouldn’t Be Held on Ethereum in New Research Paper appeared first on CryptoSlate .

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