What is global consensus? Which products or functions are suitable for building on Ethereum?

The active member of the Ethereum community, Polynya, wrote about the concept of global consensus and provided examples of applications that are suitable for public blockchain adoption, while suggesting other tools for applications that would benefit from different solutions, aiming to create more comprehensive products and reduce costs.

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Should You Use Ethereum?

Ethereum founder Vitalik recently shared a process flowchart on Twitter here to assist developers in determining which development tools to use for their products. He emphasizes the importance of developers not blindly following market trends or choosing hot technologies like zero-knowledge proofs, and instead, focusing on the needs of their products.

Vitalik encourages developers to consider what tools to use based on the demand flowchart in the upper part of the diagram, rather than focusing solely on the technical aspects in the lower part.

Interestingly, the first question in the flowchart is "Will your application benefit from global consensus?" If a blockchain is needed, then it is recommended; otherwise, other tools should be considered.

What is global consensus? How can you evaluate which applications are suitable for technologies based on global consensus? The active members of the Ethereum community, Polynya, have further defined strict global consensus, which aligns closely with Vitalik's perspective, and provides several examples to illustrate.

Introduction to Strict Global Consensus

To answer this question, one must understand what strict global consensus is. The term "strict" demonstrates that public blockchains can achieve objectivity, where every person in the global network must strictly agree on a set of objectively verifiable outputs, such as transaction information. This makes using a public blockchain appropriate and meaningful.

Most Applications Do Not Require Strict Global Consensus

Several examples where strict global consensus is not needed include:

• Data storage: In almost all cases, not everyone worldwide needs to agree on all stored data. Depending on the importance of the data, there are various storage options ranging from cloud storage providers to decentralized options like IPFS or BitTorrent, making it unnecessary to store everything on Ethereum.

• Governance: Governance is largely subjective and complex. While public blockchains can assist in some aspects, such as AAVE's governance modules, trying to fit complex governance variables into restrictive objective frameworks is inappropriate.

• Legal contracts: Law is also complex and subjective, with different cases requiring various considerations and constantly evolving. Apart from the simplest contracts, blockchains are not suited to handle legal matters.

In fact, almost everything is unsuitable for strict global consensus. As Vitalik mentioned in the flowchart, if strict global consensus is not required, there are plenty of cool technologies outside of public blockchains that can provide assistance.

Objective Value is Suitable for Strict Global Consensus

Objective value is where consensus matters. Values that rely on consensus among numerous nodes globally for access and settlement require global consensus protection. Currently, there are only a few cases that are more suitable:

• Objective currency: A demand that existed since the emergence of Bitcoin 15 years ago and still remains a primary use case. Objective currencies or values take various forms and are used in frameworks like DeFi, NFTs, DAOs, etc. In contrast, subjective currencies like credit are not suitable for public blockchains.
• Objective identity: Although most identities are subjective with various issuing authorities and standards, identity and reputation are complex variables. Limited forms of objective identity can be achieved on public blockchains, such as ENS or POAP.
• Legal compliance and regulatory gap filling: USDT and USDC serve as prime examples, both being centralized and filling regulatory gaps using public blockchains for needs like fast cross-border payments. However, these gaps are not permanent, as a well-designed USD CBDC could easily replace this use case in a more efficient and decentralized manner.
• Other niche demands: Such as collaborative storytelling. However, the primary use cases remain objective currency, objective identity, and regulatory gap filling.

Additionally, some applications are deployed on public blockchains that do not necessarily require strict global consensus but may indeed make sense for incentive or tokenomics. However, Polynya emphasizes a focus on applications with long-term, sustainable, and potential product-market fit over such applications.

Functional Thinking over Product Thinking

When mixing the functionalities mentioned above, information requiring global consensus can be put on Ethereum, while other information can be stored and executed off-chain, creating a more complete product.

Decentralized community media platform Farcaster serves as an excellent example, using public blockchains for objective currency and identity storage and execution, while handling all other tasks off-chain, such as community content storage.

The Unique Selling Proposition of Blockchain

As described by @randomishwalk here, the unique selling point/proposition (USP) of blockchain is global consensus. Anything beyond this value should be done with other tools, which are better suited for blockchain or the product itself.

Future products are expected to utilize tools of varying degrees of decentralization based on functional needs, with functions requiring global consensus separated out and executed using blockchain to maximize product performance and blockchain value.

For example, the computational execution of gaming products may use centralized servers, while frontend interfaces are stored on IPFS. However, settlement records for player identities and NFT items are still stored on Ethereum.