As DeFi projects flock to Ethereum , experts warn that the network is not yet ready to support this frenzy.
Martin Froehler, a mathematician, former hedge fund manager and founder of the Austrian crypto trading platform #Morpher, said that although #Ethereum is “the best thing [the blockchain industry] has” for #DeFi, the network's current capabilities are not enough, Cointelegraph reports:
“ETHEREUM CAN ONLY HANDLE ABOUT 15 TRANSACTIONS PER SECOND AND HAS A BLOCK TIME OF 15 SECONDS. THIS SOUNDS LIKE ENDLESS IN FINANCE. BY DESIGN, ANYONE INTERACTING WITH THE NETWORK NEEDS ETHER. THIS IS A MAJOR OBSTACLE TO MASS ADOPTION. ”
Froehler sees Ethereum as the most decentralized smart contract platform. But as there are still problems with the network, developers have to look for solutions to counter them:
“THERE IS CRYPTOGRAPHIC EVIDENCE OF EVERYTHING THAT HAPPENS IN ETHEREUM SIDECHAIN… PEOPLE CAN TRADE WITHOUT NEEDING ETHER. THEY DON'T PAY ANY FEES, ENJOY A ONE-SECOND DEAL TIME, AND ARE COMPLETELY FREE FROM THE MANY CONGESTIONS IN THE ETH NETWORK. ”
Many people in the field feel that Ethereum is not expecting DeFi hype. Even with Ethereum's 2.0 update on its way, the network is still not ready for DeFi service.
"Ethereum lacks the necessary capacity"
While ETH 2.0 improves performance, high gas prices can scare new users. Sergej Kunz, CEO of the decentralized exchange 1inch, said that the Ethereum infrastructure lacks the capacity to host the DeFi environment.
At the same event, Mounir Benchemled, founder and CEO of ParaSwap, drew attention to the complexity of explaining to new users how Tier 2 works and the risk that funds may not be paid out immediately to those users. Benchemled also said that it is impractical for all DeFi projects to move to Ethereum 2.0:
“ALL APPLICATIONS HAVE TO BE MIGRATED TO A SINGLE PLATFORM TO WORK. BIG PROJECTS CAN HAVE CONSENSUS. HOWEVER, IT CAN BE DIFFICULT FOR OTHER PROJECTS. NEW BRIDGES WILL BE BUILT TO ENSURE INTEROPERABILITY. "
Despite the challenges facing the Ethereum blockchain, Froehler says he is pro-DeFi, saying, "DeFi is here to stay."