Encryption Scale Law: Exploring the Limits of Decentralized Finance Development

The scale law in the field of large models seems to be surpassing Moore's Law in the chip industry, rapidly consuming its growth potential. If there is a limit to the scale effects across various fields, then the blockchain industry is no exception. As Ethereum Layer 2 enters the token issuance phase and Layer 1 regains focus, we might as well draw on the scale law to explore the development limits in the field of cryptocurrency.

Hard Limits on Full Node Scale

Starting from the scale of full node data, we can see the differences between various public chains. Solana currently has about 1,500 nodes, seeking a balance between decentralization and consensus efficiency, and its 400TB of full node data is the largest among public chains/L2. In contrast, Ethereum has only around 13TB of full node data since its inception in 2015, far lower than Solana. Bitcoin, on the other hand, strictly controls data growth beneath the hardware expansion curve, with a data volume of 643.2GB that can be considered a work of art.

The development in the hardware sector is also facing bottlenecks. The progress of CPU, GPU, and storage technologies is slowing down, which means that the underlying hardware of public chains may remain stagnant for a considerable period. In the face of this challenge, Ethereum focuses on ecological optimization and restructuring, while Solana continues to pursue extreme performance, but the 400TB node scale has already become burdensome for individual participants.

The Limits of the Token Economic System

Based on Ethereum, we can roughly estimate the upper limit of the public chain economic system to be around 300 billion USD. This is not an absolute upper limit, but rather the optimal solution in the current market. By introducing the concepts of superlinear and sublinear scaling from the book "Scale", we can observe these two phenomena in the price trends of Ethereum.

The DeFi yield also shows a certain pattern. From UST's 20% APY to the current around 5% for some stablecoin projects, the yield capture capability of DeFi is declining. It is worth noting that the on-chain inclusion of trillion-level RWA assets may further reduce the average yield of DeFi, in line with the sub-linear scaling law.

Conclusion

Over the past decade of blockchain development, the differences between public chains have not yet been fully bridged. Bitcoin is increasingly disconnected from the on-chain ecosystem, and the immaturity of on-chain reputation and identity systems has led to the over-collateralization model becoming mainstream. Stablecoins and RWA are essentially leveraged on-chain representations of off-chain assets, reflecting that off-chain assets still possess higher credibility.

Under the current on-chain scaling laws, we may have reached some form of growth limit. Whether it is the boom of Decentralized Finance or the birth of Ethereum, they have only experienced a short period of a few years. How blockchain technology will overcome these limitations in the future remains a question worth paying attention to.