The entire process of the most intense annual debate: The tweet from the founder of Three Arrows Capital sparked a collective attack from KOLs in the crypto industry

Author: Hu Tao

Origin

This weekend, a rare large-scale debate occurred in the crypto industry Twitter sphere, with almost all well-known KOLs participating, gradually evolving from personal disputes into a public chain landscape debate.

The argument first arose on Saturday afternoon around 1 PM Beijing time, when Synthetix founder Kain Warwick tweeted, "In this cycle, many people I respected early on have pursued opportunistic gains at the expense of their reputation for profit maximization. Remember this: once L2 scaling becomes inevitable, they will all flock to the Ethereum ecosystem."

This statement may have been directed at many industry KOLs and investment institutions that strongly support public chains like Avalanche, Solana, and Fantom, driving up their token prices and profiting from it.

Half an hour later, Three Arrows Capital founder Su Zhu posted the price chart of SNX/BTC along with a news link about Kain Warwick spending over $30 million to purchase real estate, replying, "You chose the worst scaling solution for users to protect your own ETH position, making your own community effectively poor. Do you still have the audacity to insult anyone who isn't as slow as you?"

Since the beginning of the year, although the Synthetix token SNX had previously risen nearly 300% at its peak, it has only increased about 20% at the current price ($8.67), making it one of the worst-performing mainstream DeFi tokens, with a current circulating market cap of about $1 billion. Three Arrows Capital became one of the investors in SNX back in 2020.

Among mainstream DeFi projects on Ethereum, only a few projects like Synthetix, MakerDAO, and Uniswap have not deployed on L1 public chains outside of Ethereum, while projects like Aave, Compound, Curve, Yearn Finance, and Sushiswap have already deployed on public chains like Avalanche and Fantom.

As the founder of Three Arrows Capital, Su Zhu has invested heavily in ecosystem projects of public chains like Avalanche and Solana over the past few months, with over 70% of his tweets in recent days supporting Avalanche and its token AAVX. Therefore, Su Zhu believes Kain Warwick is too stubbornly focused on the Ethereum ecosystem and that supporting L1 public chains like Avalanche is a very reasonable choice.

"I am working hard to fund and support projects that bring greater economic freedom to the world, and Avalanche is doing just that. You are doing your own thing, which is fair. But you cannot act as if your method is more correct than others without public chastisement."

"It makes me uneasy to see you more focused on ensuring the value of ETH assets rises rather than making reasonable technical decisions for your community. At Avalanche, we have welcomed many DeFi projects that started on Ethereum. I urge you to observe carefully and rethink," Su Zhu continued to reply.

Kain Warwick responded to Su Zhu, saying, "I am actually impressed by how you are stirred by this matter; it almost feels like you are guilty about your choices. Perhaps you should ask your assistant to find you a good therapist?"

Within hours, both sides engaged in at least 10 rounds of dialogue on the aforementioned topic, exchanging fierce criticisms, even reaching the level of personal attacks.

After a brief lull in the argument, Su Zhu retweeted four posts from bloggers criticizing Ethereum or Synthetix, but at this point, the discussion's impact was still relatively limited. It was Su Zhu's intense statements the following day that truly ignited the debate across the entire crypto industry.

Outbreak

Around 8 AM Beijing time on Sunday morning, Su Zhu tweeted, "Although I have supported Ethereum in the past, I have given up on it. Although Ethereum used to support users, it has now abandoned them. Newcomers can no longer afford this chain."

"The Ethereum culture is deeply influenced by the founder's dilemma. Everyone has become too wealthy to remember their original intentions. Perhaps a bear market is needed to remind them, or we must build new truly user-supporting blockchains elsewhere."

In this statement, Su Zhu, as one of the biggest beneficiaries of the Ethereum ecosystem explosion, clearly stated his abandonment of Ethereum, which provoked a backlash from many staunch supporters of the Ethereum ecosystem, including Uniswap founder Hayden Adams, Balancer co-founder Ric Burton, and Ethereum founder Vitalik indirectly responded to the matter on Discord.

Uniswap founder Hayden Adams commented, "This is a very bad approach, incredibly insulting to everyone working on ETH 2.0 and L2s, especially those who have gained extraordinary wealth with the support of Ethereum builders."

Balancer co-founder Ric Burton replied, "Just because you didn't get into the seed rounds of Arbitrum, Optimism, or any decent ZK projects doesn't mean we as a community are sitting there. You are a very insulting supplicant, existing only for the work of others. You have created nothing besides the exit narrative."

Bankless founder David Hoffman replied, "Abandoning decentralization is the biggest sin you have committed in this field." Fixed fees are easier than fixed centralization.

Placeholder founder, a venture capital firm, criticized Su Zhu's public mockery, stating, "If you are an investor operating in private markets, it is unacceptable to publicly humiliate an entrepreneur who is making a sincere effort."

Continue Capital co-founder Pi Ma indirectly expressed support for Kain Warwick on the level of industry development, stating, "It’s not about the technical route, just identity attributes, even though we are multi-chain ecosystem supporters. Any company founder needs to go all in, and the retreat is minimal; the longer it goes, the harder it gets; and capital ultimately optimizes resource allocation but cannot replace projects. Over the years, among the Top 50 world billionaires, how many besides Buffett got there through investment? They are all top company founders. Creating value far exceeds discovering value."

At the same time, Su Zhu's previous statements completely ignored the value of Ethereum's L2 scaling solutions, which also caused dissatisfaction among many. Vitalik indirectly responded to this matter in the Arbitrum Discord community, saying, "I know many people are frustrated with the statements that 'the Ethereum team doesn't care about users,' but you, as the backbone force solving the fee issue, have made great progress and have now secured a withdrawal channel with Binance. We hope to receive more project support in the future (we are about to develop a decentralized cross-Rollup bridge)."

It is evident that most of the critical comments were directed at Su Zhu's statements about "abandoning" Ethereum. Such unreserved expressions put Su Zhu in an extremely unfavorable position in the public opinion arena, with almost no well-known KOLs stepping up to support him.

However, in recognizing the development of L1 beyond Ethereum, many KOLs in the crypto industry still expressed clear support. For example, Aave founder Stani Kulechov stated support for innovation and decentralization across all networks, while YFI founder AC tweeted that Avalanche's consensus mechanism and its implementation are reliable technologies. It will encounter state bloat issues, but so will ETH.

DeFiance Capital founder Arthur stated that from a game theory perspective, the best move for top Eth DeFi applications is to deploy on any legitimate EVM-compatible L1. If not, another team will fork it and magically siphon off billions of dollars in value from you with minimal work. "We are likely to see some SNX forks on other chains achieve higher valuations than SNX, which is really unfortunate."

It is worth noting that Three Arrows Capital became one of the investors in SNX back in 2020. After this debate occurred, it was also discovered that Three Arrows Capital's official website had removed Ethereum and Synthetix from the institution's investment portfolio.

Epilogue

Around 7 PM on Sunday, the event concluded with Su Zhu's apology. Su Zhu tweeted, "I want to soften this point; saying 'give up' is a wrong word. I was too emotional at the time. I apologize."

"I will always be grateful to the Ethereum ecosystem for giving us opportunities from the very beginning. I was angered by a small group of people, and I should have realized they do not represent the larger community."

Additionally, Su Zhu acknowledged Ethereum's L2, stating that there are many excellent teams on L2 dedicated to scaling Eth, and that the strongest L2 product is dydx on Starkware.

But at the same time, Su Zhu defended his previous arguments, saying, "In 2019, the focus of DeFi was to provide banking services for those without bank accounts. In 2016, many Ethereum people criticized Bitcoin for charging $0.05 in fees. Fast forward to now, a large number of users are locked out, their funds are stuck on-chain, and so on."

"I don't know what the solution is. But I do know that the arrival of millions of new users should not make them feel ashamed to enter other ecosystems. Developers should not feel ashamed for developing on their foundations."

"I think both Bitcoin and Ethereum people have too much nostalgia for the past. The point of crypto is to provide similar opportunities and freedoms for a new generation, not to demand they bow down to pay our rent or marvel at how early we were."

Therefore, Su Zhu expressed a greater willingness to see the roadmap for ETH L1 and hopes that Ethereum will focus more on user welfare rather than the benefits of holders during upgrades.

Su Zhu's apology somewhat quelled the anger of Ethereum supporters, but as Kain Warwick said, "At least now the Ethereum community knows his true thoughts. I'm glad I could drive the wolf out of the sheep's clothing." Su Zhu's future relationship with the Ethereum community may take a long time to ease.

For a long time, the competition between Ethereum and various public chains has become increasingly fierce, especially as SOL, AAVX, FTM, and other public chain tokens have recently surged with capital backing. Due to conflicting interests, tensions between various public chain communities are gradually accumulating, and this debate is actually an outbreak of those tensions.

There is no doubt that the cohesion of the Ethereum community was fully demonstrated in this debate, and its leading position as a public chain remains solid. However, issues reflected in this debate, such as Ethereum being too expensive, other L1s being underestimated by Ethereum OGs, and the relationship between VCs and startup projects, are still worth more people’s contemplation.

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