The Weaknesses of Ethereum VS Modern Blockchains: Interview With Radix

The Weaknesses of Ethereum VS Modern Blockchains: Interview With Radix

If the slew of smart contract hacks that netted attackers over $3 billion in 2022 has taught us anything, it’s that decentralized finance (DeFi) is still an immature industry.

Besides exploits, DeFi still faces scaling issues related to the computational power needed to power complex transactions, and the throughput needed to support the worldwide financial system in the coming years. 

As the current king of DeFi, the Ethereum network is worth assessing to identify the problems and limitations contributing to the industry’s current roadblocks. 

At Consensus 2023, CryptoPotato sat down with Piers Ridyard – CEO of RDX Works – to discuss ways in which Ethereum is not truly optimized for DeFi. He explained some of the better-suited technology underlying modern blockchains, including the newly popular smart contract platform Radix. 

Ethereum’s Clunky Programming Language

According to Ridyard, DeFi in crypto is currently lacking in three major areas: user experience, developer experience, and scalability. 

The first two issues largely stem from the less-than-ideal programming languages for developers to express their ideas for particular financial applications. One such language, he said, is Ethereum’s Solidity. 

“Solidity is like banging your head against a brick wall,” he stated. “If you want to build assets that are highly secure and you want to build financial applications that are highly secure, it’s basically impossible to make it secure in a way that is easy for developers to use.”

Ridyard’s company RDX Works is a core developer for Radix – a DeFi-focused blockchain whose native token, XRD, roared upwards by over 200% from early to mid-April. 

XRD / USD. Source: CoinGecko

Unlike Ethereum and other chains, Radix uses a unique programming language called Scrypto, which is specifically focused on making financial applications easier to build and use.

Underneath Scrypto is the Radix engine which includes primitives that are part of the ledger itself, providing the essential building blocks for developers to build apps without having to start complex development from scratch. 

“You are not creating your own smart contract that then defines what it means to be a token, what it means to be a token transfer and tracking balances,” said Ridyard. “All of that is done by the ledger itself.”

The Radix engine also protects applications on the platform from “reentrancy attacks,”  a common DeFi loophole that lets a hacker continually withdraw from a smart contract until the victim goes bankrupt. Specifically, the engine prevents infinite callbacks that lead to recursive loops which let hackers drain a contract to zero. 

In February, the DeFi protocol dforce lost $3.6 million to such a bug. “A whole host of maybe half a billion dollars worth of hacks that have just been from reentrancy disappear just because of how we’ve implemented the architecture,” said Ridyard. 

Ethereum’s Consensus Mechanism

Ethereum’s “Merge” upgrade in September – which changed its consensus mechanism from proof of work to proof of stake – was widely praised as the greatest technical feat in the history of crypto. However, in 2023, even proof of stake may be proving less advanced of a mechanism than what newer chains can offer – especially on the scalability front. 

For example, Ethereum doesn’t allow for the parallel execution of transactions that would enable massive throughput. All transactions must be ordered, even if they are unrelated to each other. 

By contrast, Radix uses the “Cerberus” consensus mechanism, which obviates the need for ordering. “They can start and end whenever they need to start and end, and you don’t need to agree between them which one came first and which one came second,” said Ridyard.

Radix still comes baked in with a delegated proof of stake system that protects Cerberus. However, Ridyard doesn’t consider either proof of work or proof of stake to be “consensus mechanisms,” but rather “civil protection mechanisms.”

“A consensus mechanism, is how do the nodes come to an agreement. The civil mechanism is about, how do you defend those nodes from being maliciously attacked in the process of coming to an agreement,” he elaborated. 

Piers Ridyard (Right)

Ridyard said he admired proof of stake for its energy efficiency, but noted that proof of work chains – like Bitcoin – solve certain “bootstrapping” and “randomization” problems. 

DeFi and the SEC

Besides technological limitations, DeFi and the blockchains underpinning it are currently under immense regulatory pressure from the Securities and Exchange Commission (SEC). The agency currently seeks to regulate DeFi exchanges under existing securities exchange laws. 

While Ridyard sees a possibility that regulators “kill” DeFi in America for a period, he doesn’t envision the industry dying globally due to the overwhelming benefit it can provide certain economies. Ultimately, he believes “reading the tea leaves” of how regulators will interpret certain enforcement rules is a bit of a distraction, and that DeFi will ultimately adapt to best conform to each country’s political and economic will. 

“What the regulators are trying to do is find the handles in which they can exercise enforcement against what the government and by and large, what the voting public could consider to be the things they want and they don’t,” he said. “There is going to be some give and take.”

The post The Weaknesses of Ethereum VS Modern Blockchains: Interview With Radix appeared first on CryptoPotato.

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