Recent /r/bitcoin top post: “BYE BYE ETHEREUM … RSK IS COMING SOON!!”

Obnoxious caps aside, it is reasonable to ask: how do new blockchains (based on the Ethereum virtual machine (EVM) or otherwise) impact the value of the original public Ethereum blockchain (ETH)? One thing is clear: the ETH chain never sought, and never will have, a monopoly on the EVM. Rootstock is coming; Ethereum classic and Expanse are here already. Are these new blockchains a zero sum game with ETH, competing to the death, or do they complement each other and enhance each other’s value? and, why should the ETH chain survive if there are other ways to execute smart contracts on the EVM?

Let’s consider these questions in more detail.

What gives ETH value?

At a basic level, let’s assume that the value of the ETH chain is directly correlated with the value of the DAPPs that run on the ETH chain. These DAPPs include complex applications e.g. Augur, but also the basic DAPPs of P2p money and store of value.

So to determine whether the ETH chain can survive and even continue to grow in a multichain world, we should ask will new DAPPs continue to be built and supported on the ETH chain? Why would a DAPP be built for the ETH chain if it can be deployed easily on another EVM-compatible chain?

There are several forces that should motivate developers to deploy a DAPP on a chain:

Access to users Confidence that the chain provides secure, fast, reliable, and cheap access to the EVM that executes the DAPP code. Confidence that the chain can scale effectively if the DAPP grows in popularity and achieves mainstream adoption. Access to other supporting contracts or DAPPs on the chain that facilitate the execution of the code.

Therefore, it should be clear that chains running the same EVM have several ways that they can differentiate, create network effects, and compete with each other to become the chain of choice for developers to deploy valuable DAPPs.

Multichain Deployment

But does a developer really have to choose? Why not deploy the DAPP to all EVM chains to reach the most users? And if all DAPPs did this, wouldn’t all the chains be worth essentially the same amount? Some developers have already announced this intention and for some simple DAPPs, and this could well be a good strategy to increase reach. However, for a complex DAPP, such as Augur, that depends on its own internal, liquid market for optimal function, the stronger incentive is to deploy on a single chain and enable users from other chains to participate on the host chain through services such as BTC relay.

Therefore, simultaneous multi-chain deployment is generally a positive factor for all EVM-compatible chains: it will enable ETH users, for example, to utilize some simple games or other DAPPs created by developers from other chains, but individual chains will still compete with each other for deployment of more complex projects particularly ones that require their own internal economies that benefit from a single ledger.

Summary

Overall, the emergence of other smart-contract platforms is a likely to be a positive for the ETH chain. Progress made on DAPPs on other chains is likely to advance the tools and development innovation that will ultimately provide a mutual benefit for all smart contract platforms. Nevertheless, there is competition and the ETH chain must attract sufficient development talent to sustain itself. In this regard, there are three key success factors: