Anti-network effects


Back in January Tushar Jain from Multicoin Capital tweeted about anti-network effects, a term I hadn’t really heard before:

"Ethereum is suffering from anti-network effects. Each new user makes the system less usable for other users by crowding them out. For example, it currently costs $100 in gas to trade on Uniswap. Simply sending some ETH costs around $10. DeFi has outgrown Ethereum."

Growth is religion in startupland, and it’s rare that more users is actually a problem. If anything that usually just means scaling & capacity issues, which is a money problem – “where the heck am I going to store all this money?”

But in the real world this kind of anti-network effect is nothing new. Every time I go to a bar or nightclub I am walking a beautiful chicken-and-egg tightrope:

Spectrum from "empty" to "crowded", with each end labeled "bad" and the middle labeled "good"

Basically what I’m trying to say is that the Ethereum club is too poppin. I heard they’re expanding the club, but that takes a minute. Meanwhile I’ve got people sweating on me and bumping my drink, so I’m actively checking out other spots.

Ethereum is New York’s hottest nightclub, but it’s not the only nightclub.