Ethereum’s problems are slowing down its DeFi success and three experts explain why the DeFi team is moving to other blockchains as we are reading more in our latest Ethereum news today.
The debate over the feasibility of using ETH as the leader in the crypto space is only heating up again now that gaming, NFTs, and Defi are all seeing a surge in popularity. The outlook is not very positive considering the current state of affairs and the high fees, long confirmation times, and the slow updates are only starting to worry the retail users and bigger investors. Faced with the difficulties of delivering a user experience that will satisfy the needs, Ethereum developers are beginning to move to other rival blockchains that capitalized on the app migration and expand their reach while also increasing their own market capitalization.
Blockchains like Avalanche, Binance Smart Chain, and Solana all saw some significant increases in 2021 and only prove to be as more efficient alternatives to ethereum and its upgrade to a proof of stake which is not quite there yet. According to Nicholas Merten who created DataDash on YouTube, Ethereum’s advantage of being the most used blockchain is losing its ground as time goes on. In a Twitter thread, Merten explained all of the arguments in favor of ETH which could not hold up over time but he thinks that L2s scalability solutions are not really practical and generate almost no incentive for adoption:
“ L1 should be much cheaper. The cost reduction potential of roll-ups (L2) can’t be fully realized until more users move from L1 to L2. We need major players in the space to sponsor the cost of bridging for existing users and reward programs for LPs who move to L2, etc.
— Nicholas Merten (@Nicholas_Merten) November 20, 2021”
For example, he claims that people are willing to pay $0.01 in Solana Fees rather than paying $0.04 to transact on Polygon which is the cheapest L2 solution on Ethereum. Ethereum’s problems should be solved and the developers should focus on solutions to make the L1s more efficient. As smart contracts are becoming more complex, people have to pay more fees. Merten believes that Ethereum needs better marketing and there should be a whole new team capable of keeping the community together.
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