The growing popularity of decentralized financial (DeFi) protocols on Ethereum (ETH) has contributed to a skyrocketing in fees, with the highest total fee processing network of all time of $ 6.87 million. yesterday.
Speaking to Cointelegraph, founder and CEO of Synthetix (SNX), Kain Warwick warned that high fees are impacting DeFi’s growth, stating:
“Over the past three months we’ve gone from an environment where DeFi is expensive to use and a bit slow, until now, [where] for many, it’s too expensive. “
Ethereum fees have risen almost 100% over the past 24 hours as congestion has seen transaction costs break previous highs of $ 3.27.
Ethereum transaction fee, 3-month chart: BitInfoCharts
While the average Ethereum transaction fee is higher than daily income in many countries, the additional smart contract enforcement required to interact with DeFi protocols has led users to report fees of up to 100 dollars.
The main barrier to growth
The rush to bet on coins in the dead YAM protocol has seen many SNX producers report transaction fees as high as $ 99 as they seek to claim weekly participation rewards. Reddit user Willy 3380 posted:
“Asking for a transaction fee of $ 99 is too absurd. This will be a major obstacle to development if someone on the team does not solve this problem. “
To minimize exorbitant fees, Warwick revealed that Synthetix will launch an Optimistic Virtual Machine’s (OVM) layer two Ethereum scaling solution earlier than previously planned. Tested on testnet earlier this year, the L2 solution also allows for a few thousand transactions per second, instead of a handful of existing TPS:
“We’re focusing on OVM and honestly I think it’s going to be ‘three to six months sooner.’ I think we’ll switch faster than that because that’s probably one of the top three things they’re about. I need nails. “
In theory, the solution works with any Ethereum smart contract.
Opportunity to dethrone Ethereum
Layer 2 solutions to Ethereum’s congestion problem are becoming increasingly important due to the delay in the implementation of ETH 2.0. Messari’s chief product officer, Qiao Wang, asserted that Ethereum could face stiff competition from rival blockchains:
“I changed my mind after using dozens of Defi platforms. As long as ETH 2.0 is not fully implemented, there is a clear chance for a highly scalable blockchain to dethrone Ethereum. Paying a $ 10 transaction fee and waiting 15 seconds to settle is just a bad experience. “