As DeFi projects flock to Ethereum, experts warn the network is not yet ready to support this frenzy.
Martin Froehler, a mathematician, former hedge fund manager and founder of Austrian cryptocurrency trading platform Morpher, told Cointelegraph that while Ethereum is “the best [blockchain industry] that DeFi has, the current capabilities of the network are not enough:”
Ethereum can only process around 15 transactions per second and has a blocking time of 15 seconds, which is in the economy eternal. As planned, everyone who interacts with it needs ether. This is a major barrier to collective construction and adoption. ”
Froehler considers Ethereum to be the most decentralized smart contract platform. But since there were still problems on the Internet, the developers had to search for solutions to face them.
“There is an encrypted guide to everything that happens in the Ethereum side chain. (…) People can shop without needing Ether. They pay no fees, have a one-second settlement time and are completely independent of the congestion diversity on the Ethereum network.
Many industry players believe that Ethereum did not anticipate the DeFi hype, and even with the upcoming Ethereum 2.0 upgrade, the network is still not ready for DeFi.
Ethereum 2.0 should improve performance, but high gasoline prices can scare new users away. Sergei Kuntz, CEO of a 1-inch decentralized exchange, said at Cointelegraph China DeFi Marathon on September 3 that the Ethereum infrastructure lacks the capacity to host the DeFi environment:
“You have to reconsider everything. You can turn smart contracts into token, but they don’t scale. In order to scale, you need to create standards and implement new protocols based on a new fragile architecture like NEAR, which is similar to Ethereum 2.0.”
In the same event, Mounir Benchmeld, Founder and CEO of ParaSwap Intermediate Level, noted that the difficulty in explaining how Level 2 works to end users “and the risk of not being able to pay these users immediately” is a matter of great concern. Benchemled also said that not all DeFi projects will migrate to Ethereum 2.0:
For this to work, all applications must migrate to one platform. There may be agreement on large projects. But for other projects that have their own plans, this can be difficult. New bridges will be built to provide interoperability. ”
Despite the challenges facing the Ethereum blockchain, Morpher’s Froehler joins other voices of DeFi supporters in the “DeFi’s Go Nowhere” ad.