Ethereum (ETH) is Suboptimal for ICOs: StellarX Co-Founder | Crypto Gazette – Daily Crypto News, Articles & Tips

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A co-founder of StellarX has published a new research project explaining why Ethereum (ETH) isn’t the ideal network for ICO launch.

This comes despite the fact that the Ethereum has been the preferred channel for many ICO’s, although possibly only because of its first mover’s advantage and liquidity.

In a tweet by StellarX, the firm states:

While we finish up StellarX, we wanted to share a research project on Ethereum we did earlier in the year. We ran our own at-scale load tests and got scary results. https://blog.stellarx.com/the-great-filter-why-you-shouldnt-ico-on-ethereum/ …

Entrepreneurs are using Ethereum wrongly

The blog post at the beginning acknowledged that Ethereum is a wonderful technology. However, it added that entrepreneurs have applied the platform to the wrong applications.

The anonymous co-founder whose first name is Christian added that if projects don’t adapt to the strength of Ethereum’s network, they will eventually perish.

The post added that all of the data was collected by Christian and his team, with a total of $13,000 spent on running an at scale app for 10 hours on the Ethereum blockchain. The team has uploaded all its work, results and methodology on their Github page.

Ethereum is best for decentralized programs

According to the research paper, Ethereum is an excellent choice for developers that are building a distributed computer program that doesn’t need a sole owner or centralized decision-making apparatus

The co-founder added that most blockchain companies are only focused on issuing digital token and process transactions. It is in this aspect that he believes Ethereum would disappoint.

The team believes that if a company is looking to issue a token, allows users to trade and experience transactions in real-time, then Ethereum isn’t the right choice.

Weaknesses of Ethereum network

Christian wrote about Ethereum’s weakness:

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.

Primary problem – user experience

The primary problem the StellarX team uncovered was Ethereum’s method of queuing transactions. Christian believes it is very miserable for enthusiastic users.

He further explained the intricacies of Ethereum’s queuing process, comparing it to “please take a number” system users experience at places like the DMV.

However, miners running the Ethereum network are not accountable for the next number in line. Christian explained that:

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

He explained further that the tests they ran on the Ethereum network ultimately led to one conclusion, user experience. As more people use the Ethereum app, the slower it gets.

This is similar to what happened to CryptoKitties, which was the first blockchain-based game to launch on Ethereum that completely halted the system and caused a backlog of nearly 30,000 transactions.

The co-founder noted that according to his tests, after just three hours, transactions are now taking eight hours to confirm. This performance is a fundamental part of the Ethereum network, he added.

Even though improvements such as the Casper and Sharding hold a lot of promise, they will be complex fixes that are layered over Ethereum’s almost high complexity.

According to Christian, a skyscraper is normally built on bedrock, not built on another skyscraper. This is how StellarX views Ethereum’s proposed scaling solutions.

Secondary problem – cost

The second problem that Ethereum faces is cost. According to StellarX, as more accounts are added to Ethereum’s apps, the app per-user costs go up by nearly 7,000%, in some cases when several users try to use the network across a number of accounts.

In an experiment conducted by StellarX which costs them around $1,445 for a single hour when Ethereum’s gas prices were low. The team conducted several tests that completed roughly 8 transactions per second.

This means that at that rate and cost, those basis tests would amount to $12.6 million a year.

The team compared their transaction to both the traditional PayPal model and a model where the company was built on Ethereum.

Had Ethereum based company’s expenses are true, StellarX concludes that 21% of the company’s total income in 2017, $380 million, would have been spent on Ethereum network feeds.

What solution does StellarX propose?

After stating all these problems, it is no surprise that Christian recommended Stellar’s network to developers as the perfect solution. So far, over 50% of ICO projects launched on the Ethereum network have completely disappeared after their token sales.

He stated that:

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.

He concluded by saying if developers and entrepreneurs wish to build a business that lasts, they should build it on the Stellar network. According to him, Stellar is optimized to issue digital assets while handling high transaction volumes.

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