Think about it this way: 99% of these protocols are DeFi related. In all of those protocols, you ultimately have makers and takers, regardless of whether the protocol is literally an orderbook or an AMM (automated market maker) or something else entirely. The point is, you have two sides: someone making and someone taking. But blockchains, even the fastest ones, are still multiple orders of magnitude slower than TradFi. We're talking milliseconds vs nanoseconds. Remember, there's three orders of magnitude of microseconds between the two also. Anyways, it's basically impossible to update your quotes fast enough as a market maker on a blockchain to not get picked off. It's hard enough to do this in TradFi nanosecond land, let alone on chain. Yes, there are differences. Yes, it's nuanced. But market making on chain is fundamentally very hard and 99.9% of people who try, fail, or they "succeed" but eventually realize they would've made more by just bagholding the collateral they posted to make markets. So the liquidity (market makers) in all of these protocols eventually dries up. At which point the protocol is useless because no taker can come and trade. At which point the protocol is abandoned. At which point, if deployed immutably (this is the only truly trustless way), there's nothing you can do. If NOT deployed immutably, you can just close the program and recoup the money, could be thousands of dollars, you posted as rent to upload it in the first place.
Years ago, we went through a DeFi summer where a ton of protocols were built. Then, multiple years of nothing as the summer ended.
Since then, many of the protocols condensed into a few very very active protocols. Turtle has $1.1B deployed in only two campaigns. AAVE has $55B. Morpho has $10B. There are tons more protocols doing just fine.
Say you're participating in a lending protocol utilizing some form of on-chain price oracles (ie smart contracts exposing updating data), such that gaming of some particular third decentralized exchange would manipulate the pricing data and could thereby affect your position (triggering liquidation or whatnot).
Say you're holding some on-chain stablecoin backed by other tokens. Issues with contracts of those tokens could tank their value and thereby affecting your stablecoin value.
It all comes down to introduction of points of trust in interconnected systems. Tale as old as time.
As for upgrades, some protocols are immutable and can't be updated, however, most complex protocols implement some kind of upgrade mechanic.
Smart contracts cannot change their code once deployed, but you can implement a proxy pattern that delegates calls to an implementation contract, and swap out implementation contracts as needed by updating the pointer on the proxy. Some protocols have simple single owner systems for updating the implementation. Some are owned by multisigs and may require a 5 of 9 (or whataver arbitrary majority configuration) committee to sign off on the upgrade. Others require a vote by the token holders of the protocol to approve an upgrade.
If it's an upgradeable protocol then it can be EOLed, otherwise it lives forever onchain.
When businesses with their use cases start using something like this, I'd say watch out, but the reality is it might just be invisible and just print the same receipt we're used to.
It's not that bad, though. The Ethereum chain is about 1.4TB right now.[1] Growth is roughly linear. Bitcoin is under half a terabyte. Those are manageable numbers given current disk sizes.
The size of the Solana blockchain is claimed to be only 10MB. That's tiny. Where is the data stored?
From the article: "Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards." Right. That's Coinbase trolling for clicks.
[1] https://ycharts.com/indicators/ethereum_chain_full_sync_data...
Based on this answer[1] it was 100TB in 2022.
[1] https://solana.stackexchange.com/questions/146/whats-the-cur...
It's not deleted in the sense that all of its history is still on the blockchain. But it is deleted in the sense that the account storing the Solana program no longer exists / is empty and you cannot interact with it. In fact, if you haven't immutably deployed a Solana program, you are heavily incentivized to delete it if it is unused, because then you can recoup the Solana you posted as rent to upload the program in the first place.
charcircuit•6mo ago
12% and 25% is higher than I would have predicted since I'd suspect most to fail.