The increasing popularity of DeFi protocols (decentralized finance) on Ethereum (ETH) contributes to this exponential increase in rates:: Just yesterday, commissions of $ 6.87 million were processed, a record.
Cain Warwick, Founder and CEO of Synthetix (SNX) noted in an interview with Cointelegraph how Such high fees are holding back DeFi’s growth:
“In three months, DeFi was no longer expensive and a little slow, but inaccessible to many people for reasons of cost.”
In the last 24 hours The fees for the Ethereum have increased by 100%beating the previous record of $ 3.27 for one-time commission.
Ethereum 3-month transaction fee chart. Source: BitInfoCharts
Indeed, Ethereum’s average commission is higher than the daily salary of many countries in the world. Additionally, the added cost of connecting a smart contract to a DeFi protocol has led some users to do so Face fees of $ 100.
A major obstacle to growth
The race against time to save the YAM protocol Many SNX stakers recorded fees of $ 99 for collecting weekly rewards. On Reddit, user Willy 3380 wrote:
“A fee of $ 99 is way above the ridiculous threshold. This will be a major barrier to the growth of the system if nothing is done to resolve the situation. “
To try to mitigate these exorbitant costs, According to Warwick, Synthetix will bring a layer 2 solution to the market for the scalability of the network earlier than expected: Optimism Virtual Machine (OVM). Tested on testnet at the beginning of this year, The L2 solution also enables a few thousand transactions per second, instead of the current handful of TPS:
“We are focusing on LMOs and I honestly think we will start it before the planned 3-6 months. I think a faster transition than expected will be needed, which is probably one of the top three things we need to do. “
The solution should work with any smart contract on Ethereum.
An opportunity to discontinue Ethereum
Due to the delays in the Ethereum 2.0 release Layer 2 protocols are becoming increasingly important in solving network congestion problems. Qiao Wang, Product manager of Messari, clarified that Ethereum could face tough competition against more scalable blockchain platforms:
“I changed my mind after using a dozen DeFi platforms. A highly scalable blockchain platform could undermine Ethereum by the time ETH 2.0 is published. Paying a $ 10 transaction fee and waiting 15 seconds for the payment to complete is a very poor user experience. “