Su Zhu, the chief executive officer of Singapore-based hedge fund Three Arrows Capital Ltd, said on Nov 21 that he has “abandoned” Ethereum due to high transaction fees, which have alienated new investors.
“Yes, I have abandoned Ethereum despite supporting it in the past,” Zhu outlined in a scathing thread on Twitter. He said that he gave up on Ethereum the same way the blockchain network gave up on its users. The 34-year-old crypto billionaire charged:
Ethereum culture suffers massively from the ‘founders dilemma’. Everyone is already far too rich to remember what they originally set out to do. Perhaps a bear market is needed to remind them, or we must build elsewhere.
Ethereum fee spike
The cost of sending a transaction over the Ethereum blockchain has risen sharply over the last few months. According to data from BitInfoCharts, the average ether (ETH) transaction fee soared 1,360% since the beginning of June to date, rising from just $2.80 to $40.19. Fees peaked at over $62 on Nov. 9.
Fees are paid each time an Ethereum transaction is processed and confirmed by a miner, who pockets the fees, also known as gas, as revenue. Transaction costs are mainly driven by increasing demand for processing transactions through the Ethereum network — itself a result of surging ETH prices.
‘Dangerous rentier mentality’
Accusing early adopters of a “dangerous rentier mentality,” Zhu complained that Ethereum’s high gas fees made it difficult to drive adoption among new users as well as among those looking to deploy smart contracts.
“Users are livid that they’re promised a vision of the future, then told that they have to pay $100 to $1,000 per transaction to enjoy it. This is dystopian and should be treated as such. Instead, it is celebrated because of the fee burn,” he stated.
Zhu took aim at early Bitcoin and Ethererum users, whom he accused of reluctance in driving change to keep transaction fees low.
“The point of crypto is to offer new generations similar opportunities and freedom, not to ask them to bow down and pay us rent, or to marvel at how early we were,” he said. “I don’t know what the solution is. But I do know for the millions of new users coming, they should not be shamed for going to other ecosystems. Neither should developers be shamed for building on them.”
In later tweets, Zhu, one of the biggest crypto investors in the world, admitted that he may have been too harsh in using the word “abandon”.
“[It] was heat of the moment,” he says, but insists that he would have preferred to see developers “focusing on users than holders welfare in upgrades.”
Cheaper blockchains such as Solana, Avalanche, and Ronin have benefited from Ethereum’s gas fee nightmare and Zhu’s Three Arrows Capital is actively looking to move away from Ethereum. Earlier this month, it was announced as one of the contributors of Blizzard, a fund offering over $200 million to developers who build on Avalanche, a proof-of-stake protocol.