Looking at competition between chains from the perspective of economic complexity

Author: Lightning HSL

The call for surpassing Ethereum is getting louder and louder this year, especially Sol and btc ecology, I don’t think they can do it.

Economic complexity is an economic concept, which can be simply understood as a country doing everything, and these economic behaviors are intertwined. The higher the economic complexity index, the more secure the country's economy is and the more innovative it is.

This is easy to understand. It is the national version of the theory of putting eggs in multiple baskets. Just like China, it can do everything, manufacturing, agriculture, service industry, high-tech, low-tech, zero-tech, food, entertainment, troublemaking... everything is available, then the entire economy can withstand huge disasters .

Just like Evergrande’s bad debt of ¥2.4 trillion, such a large amount of money would have long turned into a nationwide systemic financial crisis in other countries. Well, this matter is not particularly serious in China, although many families and Evergrande suppliers who bought unfinished buildings in Evergrande are miserable.

Another case is Huawei. As the world's largest military and economic power, the United States has mobilized its entire country to sanction Huawei. After Huawei released the Mate 60 mobile phone last year (2023), it revitalized a large number of Huawei's supply chain merchants. It can also be said that these suppliers saved Huawei.

Huawei and these suppliers are intertwined with each other. This means sharing weal and woe, and everyone can work together. Last year, there were a lot of related reports on how various mobile phone supply chains are advancing and retreating with Huawei. In fact, this is not a relationship between love for one's country, but a relationship between a community with a shared future. If Huawei collapses, it will be difficult for these suppliers to make a headway.

The more complex the supply chain becomes, the more intertwined and bound everyone is to each other, and the more stable the economy becomes. This means that everyone has a community with a shared future.

The reason why I believe that the Ethereum ecosystem is currently able to cope with the challenges of the sol and btc ecosystems is that the core point is that Ethereum has formed a very complex economic ecology. Various ecological projects are intertwined and bound to each other, forming a highly complex economy.

Last year, the boss of curve.fi pledged a large amount of crv coins to borrow money, and crv fell to the point where it was about to be liquidated. The entire DeFi ecosystem does not want curve.fi to collapse. Many people have extended a helping hand to the Curve boss and bought a large amount of CRV coins from him through OTC, helping him avoid a liquidation.

This kind of scene cannot be seen in other chains. On the contrary, there is a project on other chains that is about to die. What everyone wants is for you to die quickly. If you die, I will take over.

This scene has happened in the BCH ecology. In 2022, the price of BCH fell, and a certain large investor who mortgaged bch to do long bch was liquidated, and he was There are industries in the bch ecology (but these are not on-chain behaviors, so there is not enough evidence like crv). As a result, in the BCH ecology, what everyone thinks is that when a whale falls, all things will prosper.

How to analyze the complexity of the economy on the Ethereum chain? Why do I say that the economic complexity of the Ethereum ecosystem is much higher than that of the Sol and Bitcoin ecosystems?

I am a DeFi enthusiast and often use multiple DeFi products, so I observe a large number of transactions on the ETH chain.

In the same block of Ethereum, there will be a large number of interrelated contract transactions. For example, a transaction involves uniswap, aave, and makerdao at the same time. This Three contracts.

Almost every Ethereum block contains a certain number of transactions involving multiple contracts.

We can say that a contract is an independent economy, and a transaction involves multiple contracts at the same time. These contracts are intertwined and bound to each other. . None of them want other contracts to die.

On Sol, it is rare to see a transaction associated with multiple contracts at the same time. More often, it is the users of each project party who play by themselves. (However, I am not an in-depth user of Sol. I have only used a few projects for money, so my observations may not be reliable. If I want to give an accuracy, I think 80% is reliable.)

But on Bitcoin, there is no such transaction at all.

The economic ecology of sol and btc is also like a whale falling, and all things are prosperous. If Grayscale encounters a crisis, everyone is willing to see it die, unless you use leverage to do long Bitcoin.

Perhaps, if there are people who are good at mathematics, they can build a mathematical model of economic complexity for the blockchain.

Just observe how many transactions in a block span multiple contracts, or what proportion of 10,000 transactions span multiple contracts.

Use this data as an indicator of the economic complexity of the blockchain.

There is another parameter which is the gas fee for a single transaction. The gas fee is positively related to the complexity of the transaction.

This indicator may serve as a blockchain robustness index and can be used to speculate on coins.