DeFi industry was born on Ethereum, but it seems users are looking at alternatives nowadays because of various shortcomings. Some experts believe that Ethereum still has many problems for serving the growing DeFi ecosystem.
High gas fees and network congestion are the biggest burdens in this path. Ryan Watkins, a famous researcher in the crypto industry, believes that ETH DeFi is currently the most hated crypto sector in the industry. He says that all the money has been circulating in alternative platforms recently.
What’s the Solution?
Decentralized financial services are becoming a norm in the crypto industry. People are using decentralized exchanges, staking platforms, and liquidity programs more than ever. But these needs are being answered in platforms that weren’t the first ones in the industry. Ethereum was the first blockchain that hosted DeFi platforms. But nowadays, due to various shortcomings, people are considering other solutions. It’s the reason we see growing numbers in blockchains like BSC.
Ryan Watkins says that big amounts of money were circulating in the DeFi industry in the past months. But very little of it was in the Ethereum ecosystem. He believes that layer-two solutions can be an answer for this situation, but they have problems, too:
ETH DeFi has slowly become one of the most hated sectors in crypto.
Hot ball of money past few months has been pretty much everywhere else but there.
— Ryan Watkins (@RyanWatkins_) August 19, 2021
The crypto researcher points at numerous incentives on other blockchains that are successful in attracting new and old users. Faster transactions, low fees, potential tokens, and many more incentives are available on other blockchains and are currently very successful in attracting users.
The big important caution about recent tweets is that DeFi isn’t losing interest in the market. In fact, DeFi is still growing but on other platforms than Ethereum. Solutions like Polygon, Solana, Luna, and others are grasping users with numerous incentives. The recent spike in SOL and LUNA price shows that these platforms have a lot of potential yet. As Ryan continues:
“Meanwhile, other chains rolling out with heavy incentives plus offering the opportunity to get into all the ETH DeFi equivalents at order of magnitude(s) lower valuations. Much more attractive to apes.”
Some experts believe that Ethereum 2.0 can be a good answer to all the problems we see today in this blockchain. But still, there is not a big sign of improvement in this network. Still, alternatives are more successful in attracting users. Anyhow, lower transaction fees are still big incentives for newcomers and are somehow beating Ethereum platforms.
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