A big Ethereum problem that is fixed by Drivechain

While reading the following paragraphs, assume Drivechain itself will be a “smart contract platform”, like Ethereum. And that it won’t be used to launch an Ethereum blockchain copy, but instead each different Ethereum contract could be turned into a different sidechain under BIP300 rules.

A big Ethereum problem

Anyone can publish any “contract” to Ethereum. Often people will come up with somewhat interesting ideas and publish them. Since they want money they will add an unnecessary token and use that to bring revenue to themselves, gamify the usage of their contract somehow, and keep some control over the supposedly open protocol they’ve created by keeping a majority of the tokens. They will use the profits on marketing and branding, have a visual identity, a central website and a forum with support personnel and so on: their somewhat interesting idea have become a full-fledged company.

If they have success then another company will appear in the space and copy the idea, launch it using exactly the same strategy with a tweak, then try to capture the customers of the first company and new people. And then another, and another, and another. Very often these contracts require some network effect to work, i.e., they require people to be using it so others will use it. The fact that the market is now split into multiple companies offering roughly the same product hurts that, such that none of these protocols get ever enough usage to become really useful in the way they were first conceived. At this point it doesn’t matter though, they get some usage, and they use that in their marketing material. It becomes a race to pump the value of the tokens and the current usage is just another point used for that purpose. The company will even start giving out money to attract new users and other weird moves that have no relationship with the initial somewhat intereting idea.

Once in a lifetime it happens that the first implementer of these things is not a company seeking profits, but some altruistic developer or company that believes in Ethereum and wants to see it grow – or more likely someone financed by the Ethereum Foundation, which allegedly doesn’t like these token schemes and would prefer everybody to use the token they issued first, the ETH –, but that’s a fruitless enterprise because someone else will copy that idea anyway and turn it into a company as described above.

How Drivechain fixes it

In the Drivechain world, if someone had an idea, they would – as it happens all the time with Bitcoin things – publish it in a public forum. Other members of the community would evaluate that idea, add or remove things, all interested parties would contribute to make it the best possible incarnation of that idea. Once the design was settled, someone would volunteer to start writing the code to turn that idea into a sidechain. Maybe some company would fund those efforts and then more people would join. It’s not a perfect process and one that often involves altruism, but Bitcoin inspires people to do these things.

Slowly, the thing would get built, tested, activated as a sidechain on testnet, tested more, and at this point luckily the entire community of interested Bitcoin users and miners would have grown to like that idea and see its benefits. It could then be proposed to be activated according to BIP300 rules.

Once it was activated, the entire pool of interested users would join it. And it would be impossible for someone else to create a copy of that. There would be no token, no one profiting directly from the operations of that “smart contract”. And everybody would be incentivized to join and tell others to join that same sidechain since the network effect was already the biggest there, they will know more network effect would only be good for everybody involved, and there would be no competing marketing and free token giveaways from competing entities.

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