Is Ethereum the Future of DeFi? What about "Cardano" and "Bolcadot"?
Ethereum is the first cryptocurrency after Bitcoin.
The Ethereum project continues to struggle to improve scalability and reduce costs and fees.
But it is not only Ethereum that offers the advantages of supporting decentralized financing protocols, but there are also similar and competing projects, including the strongly upcoming "Bolcadot" and the stubborn "Cardano" project.
Many crypto market leaders are wondering about the limitations of the Ethereum network and whether the project will be the future of “Defi” decentralized financing.
Decentralized Finance and Dapps are the markets targeted by Ethereum and other blockchain platforms that support smart contracts.
Currently, the “DeFi” decentralized financing space is intrinsically linked to Ethereum, with the vast majority of the largest “DeFi” protocols running on the Ethereum blockchain.
However, despite Ethereum's popularity as a platform for decentralized financing applications, DeFi, the explosive growth in both the number of decentralized financing applications and the number of users of decentralized financing DeFi has put pressure on the Ethereum infrastructure, resulting in a number of challenges faced by many Ethereum users. right Now.
Ethereum problems:
As mentioned above, the limitations of Ethereum continue to be exposed due to its lack of scalability and the high costs involved.
The Ethereum blockchain is currently capable of only processing approximately 10-14 transactions per second (tps), or just over 30 if the blocks are fully optimized.
The extremely limited throughput with Ethereum transactions has led to major problems with most DeFi applications, most of which are related to high fees.
The situation is getting tense as interest in DeFi has boomed and the number of users has tripled in the past year alone.
The main benefit of the many Ethereum-based DeFi decentralized financing applications is highly dependent on achieving fast transaction turnaround.
With Ethereum pushing the boundaries of scalability and cost, the DeFi scene is now too expensive to use.
Analyst Lark Davis commented about it on Twitter, saying:
Ethereum fees are crazy at the moment
Decentralized financing on Ethereum at the moment unfortunately is a game for whales only.
The second layer is really necessary for a program like "Uniswap".
The “Uniswap” platform requires users to call a smart contract and due to Ethereum's restrictions, fees rose to record highs, averaging $ 16 per transaction in mid-January.
Therefore, it is possible for Ethereum's competitors to take advantage of these obstacles and restrictions to highlight their services and to capture the users of Ethereum.
Polkadot and Cardano:
polkadot and Cardano are two competing platforms that offer smart contract service, and they both carry the:
"The Ethereum Killer."
Cardano (ADA):
Cardano's team has done a great job over the past year.
The Cardano ecosystem has evolved tremendously, and is still developing until now.
Where the proof of shares mechanism was introduced, and the price of the ADA digital currency increased by more than 300% due to the new update in 2020.
Cardano launched its flagship network, Chile, in 2020, as part of the development of its blockchain network.
While functional smart contracts have not yet been launched on the Cardano blockchain, the Shelley release remains a major achievement for the Cardano blockchain, and has led to an increase in positive sentiment around the ADA digital currency.
In March, Cardano is scheduled to undergo a “Goguen” update which is supposed to see the release of functional smart contracts.
When smart contracts are in effect on Cardano, large-scale decentralized financing protocols and other decentralized applications will be able to run on the Cardano blockchain, giving the blockchain additional benefit and value.
Researchers at the Academy of Binance confirmed the matter and indicated in a published report, which stated the following:
As of December 2020, functional smart contracts cannot be published on the Cardano platform.
As part of the roadmap, this will be rolled out as part of the “Goguen” update.
The Goguen Update, which is part of the Basho Modernization, promises to improve scalability and interoperability, and paves the way for the introduction of the Voltaire Update that carries the treasury system to address governance.
Cardano's price saw a 104% growth in 2021 alone.
The digital currency "ADA" advanced in the ranking and surpassed both "Bitcoin Cash" and "ShineLink", to become the sixth largest cryptocurrency by total market capitalization.
The ADA is trading at 0.42 at the time of writing this article.
PolkaDot (DOT):
Polkadot is seen as one of Ethereum's main competitors.
The project was initiated by "Web3 Foundation" with the aim of interoperability between blockchain networks to operate the decentralized Internet in the future.
The "Polkadot" blockchain is a new generation of blockchain networks that connect both private and public blockchain networks through a multiple protocol, called "parachains", which allows other blockchain networks to communicate as side chains.
The Ethereum network is often criticized as struggling with the scalability and speed issues that its community believes will be completely resolved once the ETH 2.0 update is completed.
However, the "Bolcadot" protocol is receiving wide attention since it currently has the ability to handle thousands of transactions per second, which made it compete directly with "Ethereum" in the eyes of some analysts.
The digital currency "DOT" has seen impressive growth this year, rising almost 100% but has now fallen with the rest of the market and is currently trading at $ 17.33.
Ethereum at the moment:
At the moment, it seems unlikely to phase out Ethereum in the short term, as Ethereum has a very clear and strong advantage over its competitors.
As Ethereum not only enjoys the highest dominance in terms of total market value, but it also outperforms competitors in several key factors, among these factors:
*Number of active users.
*Ethereum's ERC-20 is the most widely adopted standard for newly released cryptocurrencies.
*Third-party dependence on Ethereum and its integration into the infrastructure.
*Network security in general.
Ethereum is currently trading at $ 1426.56, according to "Coingecko".