Ethereum needs to fix its problems.
Martin Froehler, a mathematician, former hedge fund manager, and founder of Austrian crypto trading platform Morpher, told Cointelegraph that although Ethereum is the “best thing [the blockchain industry] has” for DeFi, the current capabilities of the network are not enough:
“Ethereum can only handle about 15 transactions per second and has a block-time of 15 seconds, which is an eternity in finance. By design everyone interacting with it needs Ether. That is a huge barrier to entry and mass adoption.”
“There is cryptographic proof for everything that happens on the sidechain on Ethereum. (…) People are able [to] trade without needing Ether. They don’t pay any fees, enjoy a settlement time of one second, and are completely independent of the many congestions on the Ethereum network.”
Ethereum 2.0 should improve performance, but its high gas prices may scare off new users. Sergej Kunz, CEO of decentralized exchange 1inch, said during Cointelegraph China’s DeFi Marathon event on Sept. 3, that the Ethereum infrastructure lacks the capacity to host the DeFi environment:
“You have to rethink everything. You can migrate smart contracts to the code but it’s not scalable. To be able to scale, you have to create standards and bring new protocols based on the new sharded architecture, such as NEAR which is similar to Ethereum 2.0.”
At the same event, Mounir Benchemled, founder and CEO of middleware layer ParaSwap, pointed out that the complexity of explaining how layer-2 works to end-users “and the risk of not being able to pay the funds immediately to these users” cause the most concern. Benchemled also said that it is not practical for all DeFi projects to move to Ethereum 2.0:
“For it to work, all applications would need to move towards one single platform. Major projects might have consensus. However, for other projects who have their own agendas, it might be hard. New bridges will be built to allow interoperability.”