In 2020, during the summer of decentralized finance, Ethereum (ETH) finally took over the market. Bitcoin (BTC) had been in the background for a long time. DeFi was designed to make traditional financial systems work again with fewer middlemen. It is now used for lending, borrowing, and the buying and selling of tokens. There are a lot of decentralized apps (DApps) that run on Ethereum, which saw a lot of activity on the network in 2020. Also, yield farming, also known as liquidity mining, has helped this activity rise in popularity. This allows people to make money with their crypto assets.
But as more people used Ethereum, so did the network’s transaction fees. In May, it was said that the cost of gas for Ethereum was going up a lot. It’s obvious that DeFi is only worth it if you have enough money to cover any network fees. As a result, it soon became clear to users that the blockchain was close to being unusable for them.
A related question: Is the future of DeFi going to be with Ethereum or with Bitcoin? People who are experts say what they think
There is no doubt that Ethereum is the most popular and active blockchain, but new players are emerging that could be a good replacement for Ethereum. Some layer one protocols, like Binance Smart Chain (BSC) and Solana (SOL), are attracting billions of dollars in assets under management. Layer two solutions like Polygon (MATIC) are catching the attention of Ethereum’s disgruntled users because they work well with Ethereum-based protocols, like Polygon (MATIC). Besides low fees and quick transaction speeds, this is also what they do. Over the last year, Ethereum gas prices have risen and faster networks have been built. However, none of these chains have killed Ethereum yet.
It’s because of this that the story of “Ethereum vs. the rest” is starting to change as we enter the second half of 2021. Developers are starting to see the value of a cross-chain future rather than having to pick one blockchain to build on. No longer is it enough to make your business stand out, but to make sure that all chains can work together so that the industry can grow and be better.
Related: A multichain future will help innovators and entrepreneurs be more successful.
What are the benefits and drawbacks of a multichain world?
Because of its popularity and long history in the market, Ethereum has the first-mover advantage and is still the most important blockchain in the DeFi ecosystem as of Q1 2021. When other chains start to gain popularity, it’s these alternatives to Ethereum that are providing faster transaction speeds and much lower fees.
Even if you’re a big fan of Ethereum, adding other chains isn’t always a bad thing. After all, a multichain ecosystem allows more room for new protocols to come in, each with a large group of people who use them already. Each new chain also creates a new community, a need for services, and a unique culture and identity.
There is also the question of whether it was a little too late. Ethereum is losing ground in DeFi to other blockchains.
Because some blockchains require unique programming languages to run, this could be a problem for people who want to write programs for them. This could make it hard for people who want to write programs for them to get started. At the same time, different coding languages can give developers a new way to solve a problem that they haven’t thought of before. As the blockchain space moves closer to multichain, it may inspire developers to come up with new ideas and projects because they see how many viable blockchain projects there are. It’s because of this that projects that don’t change could be seen as lagging and abandoned by their fans.
Separated blockchains, on the other hand, create innovation “silos,” which slows down progress and adoption. Joining the multichain future together can be seen as seamlessly connecting these groups of people who are very different. This might be hard to do in the traditional tech world. Cryptocurrency and blockchain are taking on these existing infrastructure monopolies, and this industry has the power to build an ecosystem that works together instead of against each other.
It’s also interesting to look at what other layer-one blockchains are doing for DeFi.
More blockchains mean more value.
It’s almost certain that projects will connect multiple blockchains in the future, making the transfer of information from one chain to another as easy as possible. In fact, the cryptocurrency market and multichain adoption isn’t as bad as it’s often said to be. In fact, as the future of multichains becomes more clear, it will become more and more obvious that the extra functionality, use, and scalability it brings is encouraging more people to join.
San Francisco is no more. The Ethereum blockchain is the new San Francisco, and it’s a lot like it.
Because there is a multichain future, it should not be viewed with doubt. Every smart contract platform in the crypto world has a big impact on the blockchain space in terms of accessibility, economic viability, and innovation. There are a lot of different smart contract platforms in the crypto world. Blockchains may be spread out right now, but in the end, everything will come together to make a network of protocols that works together and is fast enough to meet our daily needs. In this case, we won’t have to think about how we’re going to do business or what we’re going to do, because it won’t matter.
Once the crypto industry gets a lot more people to use it, it will be impossible to stop. We’re still a long way from achieving interoperability. If a project doesn’t adapt to a multichain future soon, it could get left behind.
This article does not give you advice on how to invest or what to do. When making an investment or trading decision, readers should do their own research to make sure they’re making the best choice.
People who write here don’t always agree with or agree with Cointelegraph’s views and opinions on everything.
People who work for Pocket Network are called Michael O’Rourke. He is also the co-founder and CEO. It took Michael a long time to learn how to make apps for the iOS system and the Solidity system. This isn’t the only thing he was a part of in Tampa Bay. He was also a part of the start-up of Blockspaces, a company that specializes in teaching Solidity to developers. It was the University of South Florida that he went to school at.