Ethereum losing steam: Will V2.0 or other blockchain be the solution to DeFi? 以太坊失去动力：V2.0或其他区块链将成为分散式金融的解决方案吗？
Plutus Chain, is among one of the many alternatives you can look at. 普利拓斯是可取代以太坊的创新区块链之一
The go-to blockchain for decentralized finance has always been Ethereum (ETH) till recently. It has the great advantage of being a first mover, so plenty of investors are already aware of ETH and its use cases. ETH tokens also played a role in the ICO bonanza of 2017 and 2018, and are becoming highly active again in their new role as the backbone of the DeFi market in 2020.
The DeFi market has grown by leaps, increasing the value locked by more than 50 times in the past 12 months. This market, however, is not a single entity but a loose structure of interconnected projects, including lending, algorithmic trading, and yield farming. Projects like Maker and Compound emerged as leaders in the lending market. The Uniswap exchange is the leading hub for automated market making. Yield-farming projects are still competing for a clear leader, but the collection of tokens has grown in value.
It is precisely the scale and rapid growth of decentralized token-based projects that add to the hype of DeFi. Not only are active users growing, but they are also users highly active on social media. This adds to the visibility of DeFi; its outsized yields for some. The problems also don’t remain hidden, especially when it comes to the high gas fees that come with using ETH or sending tokens.
Ethereum Rules DeFi
As of 2021, about 90% of transfers on the Ethereum network come from only the top 10 DeFi distributed apps, showing that Ethereum is mostly solely about DeFi in 2021. The Ethereum ecosystem holds roughly 10 times more projects compared to its competitor, EOS. However, Binance Smart Chain has grew expotentially, replacing projects built on the Ethereum network.
Binance Smart Chain has started hosting DeFi projects and growing both its active users and the value locked. As Binance Coin (BNB) grew in value, so will the value locked on Binance Smart Chain. More projects are joining this alternative blockchain, and Pancake Swap is already becoming a high-publicity trading hub.
It must be noted that Ethereum is still the leader in total value locked. One of the reasons for this is the bull market in Q1, which took ETH above $2,000. The value locked is also instrumental, as it is collateral to lending projects and a source of stability for the DAI dollar-pegged asset.
DeFi Adoption Still Mostly Retail
Institutional interest is still slow to adopt an approach to DeFi. Trading major cryptocurrencies are well known, and there are already platforms that give mainstream retail buyers exposure to price fluctuations. But so far, there are no indications of large institutions backing collaterals or participating in DeFi projects.
One of the reasons for this is DeFi’s reputation as a space for almost unlimited gambling. Liquidations and losses are also sources of extreme volatility, outside the range of traditional investors. But the tools being developed on Ethereum are attracting the attention of mainstream investors. The Ethereum ecosystem is converging on the rising interest in fintech, where pocket investment apps are gathering a new cohort of tech-savvy buyers looking for higher returns.
Ethereum Flaws Persist
Despite the indicators of growth, the Ethereum project still has flaws inherent since its inception. The network is designed to raise its fees with more users. What’s worse, a feature of pre-buying gas to pay fees in the future may be disabled in the summer, leaving Ethereum users open to unpredictably high fees. Vitalik Buterin has proposed to remove the SSTORE and SELFDESTRUCT options, thus closing the opportunity to pay for gas in advance and use it to make a transaction when fees are high.
Because of how gas fees work, Ethereum is not scalable. There may be immense demand from users to dip their toes into DeFi, but it turns out the network is not so democratic, running up fees of hundreds of dollars even for trivial token swaps or transactions.
Will ETH 2.0 be the solution?
The proposed ETH 2.0 network has been promised for years, and it always seems to be 12–18 months into the future. High fees became a hurdle already in 2017, as mainstream interest in crypto made traders flock to the network. In 2021, the fees remain the elephant in the room.
But for now, Ethereum has not managed to transform itself into a proof-of-stake network and still relies on mining. One of the reasons is that miners are putting pressure on the developer team, and may stop updates on the path to ETH 2.0. Hypothetically, miners can simply refuse to mine the new network, and there is a campaign to gather hashrate against EIP-1559, the proposal to drastically cut gas fees. The proposal, if implemented, is one of the ways to solve the gas fee problem.
The potential miner revolt is an unresolved issue in Ethereum, which may affect the DeFi market due to uncertainty. In the most catastrophic scenario, the Ethereum network splits again, with one version supported by miners. This will create immense problems of duplication and legitimacy for all DeFi projects and token-based economies.
One workaround is the latest proposed roadmap to ETH 2.0. In this scenario, the developer team will launch the Beacon Network, which will, for a while, coexist with the current network. Beacon Chain is live, but it has no effect on the current usage of the Ethereum network. It is mostly used to test out propositions and new technologies. Next, developers will deploy shards, or side chains, which will also carry some of the traffic. The most unclear element of Beacon Chain, however, is the Docking stage, when it will have to synchronize with the mined Ethereum 1.0 chain. The estimated date for this event is some time in 2022.
Are There Alternatives to Ethereum?
Over the past few years, multiple projects launched with the aim of becoming the “Ethereum Killer.” Some of those networks indeed boasted higher speeds and lower fees. The list of projects with a similar idea is long, with a few notable networks. At the moment, only BSC looks like it is the closest competitor that can replace Ethereum as the king of dAPP and DeFi protocols. However, we should all know that BSC is a fork of ETH and blockchain evangelists should all know that BSC is not truly decentralised.
NEO, setting out to become “the Ethereum of Asia,” is currently attempting to re-launch for better scalability. Networks like EOS encountered their own problems of scarcity but still managed to become a platform for distributed apps and a nascent DeFi industry. IOST, Stellar, and TRON also line up as widely used networks. All of those networks have dApps that resemble DeFi in some ways, though at a much smaller scale and adoption rate.
So, What’s Next for Ethereum?
The Ethereum DeFi ecosystem has proven exceptionally resilient. Despite liquidations, high fees, and outright scams, the network remains attractive.
But the market has voted with its wallets, as evidenced by the rise of Binance Smart Chain. The approach to DeFi and algorithmic trading is already well known and can be implemented on any other network. Even older projects, like VeChain, Steem, Ontology, and IOTA, are pivoting to build a DeFi component. So while Ethereum is in the lead right now, its competition is thriving. Projects like Binance Smart Chain, purposely built to host DeFi and fast dApps, are even ahead of Ethereum, as they avoided the mining stage and started off with various forms of proof-of-stake. The only element remaining is DeFi investors realizing the same returns can be achieved on alternative networks, so they can abandon Ethereum-based DeFi for newer projects.
About Plutus Chain
Plutus Blockchain is an open sourced technology layer supporting the latest Fintech applications based on decentralised ledger technology (DLT). Plutus Blockchain is built with scalability in mind and supports a myriad of Decentralised Finance (DEFI) applications.
About Plutus Capital
Plutus Capital is backed by a FinTech system built on a public blockchain, where an individual can enforce greater control of his own funds. The Plutus blockchain and token rely on the tamper-proof nature of ledger as well as smart contract and validation to ensure all processes are safe and secure.
Governed by yPLT token holders, PlutusSwap is built by the Plutus Capital dev community. Other than earning rewards on PlutusSwap, yPLT token holders have the right to vote on proposals and decide on future development within our ecosystem. PlutusSwap believes that the key to unlocking economic equality, prosperity and financial freedom lies in developing strong Fintech use-cases on cutting-edge DLT. Most importantly, PlutusSwap is neither a chef nor food. PlutusSwap aspires to bank the unbanked, bringing fundamental financial rights to billions of individuals across the globe. We want to unbank the banked, stripping away the financial prison that many in the first world are enslaved to.
We, are the followers of the great god of wealth, Plutus.
DeFi市场实现了飞跃式增长，在过去12个月中锁定的价值增长了50倍以上。但是，这个市场不是单个实体，而是相互联系的项目的松散结构，包括贷款，算法交易和收益农业。 Maker和Compound等项目成为贷款市场的领导者。 Uniswap交易所是自动化做市的领先枢纽。收益农业项目仍在争夺一个明确的领导者，但代币的价值有所增加。
Binance Smart Chain已开始托管DeFi项目，并增加其活跃用户和锁定价值。随着币安币（BNB）价值的增长，币安智能链的价值也将随之锁定。越来越多的项目正在加入该替代区块链，而Pancake Swap已经成为一个高度公开的交易中心。
尽管有增长指标，以太坊项目自成立以来仍然存在固有的缺陷。该网络旨在增加更多用户的费用。更糟糕的是，将来可能会在将来禁用预购天然气以支付费用的功能，从而使以太坊用户面临难以预料的高额费用。 Vitalik Buterin建议删除SSTORE和SELFDESTRUCT选项，从而关闭提前支付天然气的机会，并在费用高昂时使用它进行交易。
但是市场已经对其钱包进行了投票，正如币安智能链的兴起所证明的那样。 DeFi和算法交易的方法已经众所周知，可以在任何其他网络上实现。甚至更老的项目，例如VeChain，Steem，Ontology和IOTA，都在努力构建DeFi组件。因此，当以太坊目前处于领先地位时，其竞争正在蓬勃发展。专门为托管DeFi和快速dApp而构建的Binance Smart Chain等项目甚至领先以太坊，因为它们避免了挖掘阶段，并以各种形式的股权证明开始。剩下的唯一因素是DeFi投资者，他们意识到可以在替代网络上获得相同的回报，因此他们可以放弃基于以太坊的DeFi来开发新项目。