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It was not too long ago that the key concern regarding Ethereums future was the desperate need for it to scale. High network activity and subsequent gas costs spawned an explosion of layer-2 solutions.

Thus, the most recent developments on Ethereum have been focused on infrastructure and how to reduce the load on the once heavily burdened network. Now, it finally seems to be ready for prime time.

But where did all the traffic go?

The argument was always, well, if you increase throughput by a hundred X, which has happened, then you should increase transactions by a hundred X, but that hasnt happened, says the head of digital asset trading at GoldenTree, Avi Felman.

On the 1000x podcast (Spotify/Apple), Felman says, youve just moved all the transactions from ether (ETH) to Arbitrum, and youve barely increased the overall amount of transactions that are occurring.

Everyone was kind of expecting it to look good on a deflationary basis, Felman says, but thats just not going to be the case as long as activity is mostly on Base, or mostly on Arbitrum or mostly on Optimism.

Goldman Sachs executive director Jonah Van Bourg compares his expectations for Ethereums scaling solutions to the constant addition of freeway lanes in California. Every time they add a new lane, it just brings more cars onto the freeway.

I thought the same thing would happen to ETH, he says, but instead its looking more like the network of pipelines in the Permian Basin in Texas.

Sometimes theres just too much oil, he says. Everythings bottlenecked. So then theres this frenzy of pipeline building, which is effectively a scaling solution for an oil field. And then suddenly theres just way too much pipeline capacity and not enough oil.

Van Bourg explains that scaling solutions were overbuilt during a period of particularly high demand in Ethereums history. Now, capacity is much greater than demand, Van Bourg says, so gas prices are just forced into the toilet.

Read more: Ethereum blockspace on track for first unprofitable month since the Merge

Van Bourg expects the pendulum to swing back the other way hard one day when people realize, he says, we have this thing thats cheaper and better than AWS for our use case and probably more permanent.

But that might be a year off, or six months off, or two years off, who knows.

Van Bourg notes that negative sentiment regarding Ethereum on crypto Twitter might pressure holders to think short term. You read tweets where people who have been ETH-bullish for five years are just like, Its over. Never buying this crap again.

You look at your ETH and you look at these tweets and youre probably saying to yourself, Crap, Im going to get out.

Remind yourself, he says, that in 12 or 18 or 24 months when this thing is gassing higher and its trading $5,000 a token, those very same people will be talking about how ETH is the future, how its going to $50,000 a token, how theyve been long all the way up.

Its a gradient of outcomes, he says. Its not black and white. ETH is not over. ETH is not the future. Its this constantly evolving shade of gray.

You have to filter out the noise.

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Originally posted here:

Ethereum's scaling infrastructure is better than ever. So where's all the traffic? - Blockworks

Lido Finance, the leading liquid staking protocol, faces a minimum penalty of 20 Ethereum before it can withdraw its ETH from validators that were slashed.

On Wednesday, 20 validators associated with Launchnodes, one of Lidos node operators, got slashed from the Ethereum network, recording the largest number of validators slashed within a day this year.

According to an update by Lido, the initial loss to the protocol is around 20 ETH with additional penalties to be believed for inactivity before exiting the network.

Slashing is the process by which validators are forcibly removed from a proof-of-stake network for failing to fulfill their validator responsibilities properly, such as prolonged downtime.

It also involves a slashing penalty of 1/32 ETH for a maximum of 1 ETH per slashed validator that is deducted and burnt immediately. It can be followed by additional penalties.

These penalties are charged over the next 36 days before the validator can withdraw their staked amount, per Ethereum.org. Currently, a validator exit is only possible after November 17.

Launchnodes notified that the problem occurred because of infrastructure and web3 signer configuration issues.

The node operator told Decrypt that "all of Launchnodes' infrastructure is back up and fully operational, and Lido has been reimbursed in full for all losses incurred to date, ensuring that no stETH holder has suffered any loss."

Lido Finance did not immediately respond to Decrypts request for comment.

During the last major slashing event, when 12 validators were slashed at once on August 26, the loss in penalties to each validator was less than 1.10 ETH.

In response to such events, the Lido team also highlighted that the protocol has built a reserve cover fund of approximately 6,200 ETH to help mitigate the slashing impact.

The team is waiting to determine the extent of the losses, which it said cannot be known ahead of time.

The community will later decide whether the Lido DAO cover fund should compensate affected holders.

The rest is here:

Lido Finance Faces Slashing Penalty of More Than $30,000 in Ethereum - Decrypt