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Ethereum needs to fix its problems.
As DeFi projects flock to Ethereum, experts warn the network is not yet ready to support the frenzy.
Martin Froehler, a mathematician, former hedge fund manager, and founder of Austrian crypto trading platform Morpher, told Cointelegraph that although Ethereum is the âbest thing [the blockchain industry] hasâ for DeFi, the current capabilities of the network are not enough:
âEthereum can only handle about 15 transactions per second and has a block-time of 15 seconds, which is an eternity in finance. By design everyone interacting with it needs Ether. That is a huge barrier to entry and mass adoption.â
Froehler considers Ethereum the most decentralized smart contract platform. But because the network still has issues, developers have had to look for solutions to counter them.Â
Froehler added:Â
âThere is cryptographic proof for everything that happens on the sidechain on Ethereum. (âŠ) People are able [to] trade without needing Ether. They donât pay any fees, enjoy a settlement time of one second, and are completely independent of the many congestions on the Ethereum network.â
Many industry players feel Ethereum did not anticipate the DeFi hype, and even with the upcoming network upgrade, Ethereum 2.0, the network is still not ready to service DeFi.Â
Ethereum 2.0 should improve performance, but its high gas prices may scare off new users. Sergej Kunz, CEO of decentralized exchange 1inch, said during Cointelegraph Chinaâs DeFi Marathon event on Sept. 3, that the Ethereum infrastructure lacks the capacity to host the DeFi environment:
âYou have to rethink everything. You can migrate smart contracts to the code but itâs not scalable. To be able to scale, you have to create standards and bring new protocols based on the new sharded architecture, such as NEAR which is similar to Ethereum 2.0.â
At the same event, Mounir Benchemled, founder and CEO of middleware layer ParaSwap, pointed out that the complexity of explaining how layer-2 works to end-users âand the risk of not being able to pay the funds immediately to these usersâ cause the most concern. Benchemled also said that it is not practical for all DeFi projects to move to Ethereum 2.0:
âFor it to work, all applications would need to move towards one single platform. Major projects might have consensus. However, for other projects who have their own agendas, it might be hard. New bridges will be built to allow interoperability.â
Despite the challenges ahead for the Ethereum blockchain, Morpherâs Froehler joins the other pro-DeFi voices in saying, âDeFi is here to stay.â
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