Ask HN: Does CryptoKitties network congestion prove smart contracts can't work?

Two weeks ago transactions went through in seconds and now I'm sitting here trying to transfer some ERC20 tokens and 10 minutes later the tx is still listed as pending. The idea that a single smart contract that has 1000-5000 users can grind the network to halt really makes me question the entire concept of smart contracts as viable for anything other than basic account tracking and updating. Am I wrong here? What projects exist that you believe have solved or are trying to solve this [different] scalability problem?