Will DeFi "force" Ethereum to speed up the search for scaling solutions?
Editor's Note: This article comes fromGolden Finance, reprinted by Odaily with authorization.
Editor's Note: This article comes from
Golden Finance
Golden Finance
, reprinted by Odaily with authorization.
Since the beginning of this year, the average daily active address and average daily transaction volume of the Ethereum network have shown a steady growth trend, and have soared to the level during the previous 2017-2018 bull market, which shows that more and more people are using the Ethereum network. And many platforms with large transaction volumes come from the DeFi field, such as 1inch.exchange, Synthetix, and Matcha, which is also the main reason why decentralized financial transactions have led to a surge in activity on the Ethereum chain.
But as the activity on the Ethereum chain continues to increase, the network becomes more and more congested. The result of this situation is that transaction costs become higher and more expensive. Generally speaking, miners fill blocks with transactions from the transaction pool, and if transaction holders receive transactions too quickly, users will have to pay a higher fee to push their transactions to the front of the transaction queue. If the user sets the fee too low, then the transaction is likely to stay in the transaction for a long time before being mined by miners. For DeFi traders looking for constant change and chasing the highest yield, this transaction delay can have disastrous consequences for their investment returns.
Therefore, the problem began to be gradually exposed. Thanks to the rapid development of the DeFi industry, the activity on the chain increased. Although it is beneficial to Ethereum, the lower throughput of the Ethereum network itself becomes inefficient and expensive under heavy load. In turn, high transaction fees will hinder the development of DeFi.
The encryption community began to discover that while the DeFi ecosystem was rapidly rising and gradually evolving into an unstoppable new force, the expansion speed of Ethereum’s capacity was not satisfactory, and its limitations were hindering the development of DeFi. Some DeFi projects Already want to "escape" Ethereum.
In order to solve this network bottleneck problem, developers in the Ethereum community have worked hard to try to transfer the network consensus algorithm from proof of work (PoW) to proof of stake (PoS), which is expected to bring more benefits to Ethereum users. Cheaper and more efficient usage experience. But unfortunately, due to the increasing number of on-chain (value) transactions and on-chain activities, the risky transactions of Ethereum-based mortgage tokens have also become very large, and the upgrade of Ethereum 2.0 has been delayed again and again. If the upgrade is carried out smoothly, then TPS barriers will exacerbate transaction costs, and the prosperity of DeFi will undoubtedly be limited to a certain extent.
Just when Ethereum 2.0 was unable to go online, in order to solve the current bottleneck problem, developers launched the "Ethereum 1.x" plan, which focuses on improving the existing network governance while building Ethereum 2.0 in parallel. The availability of this scaling solution will accommodate the ever-increasing activity on the Ethereum network. Several teams are currently working on various proposals related to Ethereum 1.x, including Ethereum improvement proposals EIP-1108, EIP-1844, EIP-2028, and EIP-2200, which can reduce on-chain transaction fees and Build on-chain strengths for implementing off-chain solutions.
In addition, there are currently at least four effective Ethereum scaling solutions, namely: State channels, Plasma, Optimistic Rollup, and zero-knowledge proof.
However, there is a major disadvantage of state channels and Plasma, which is that they do not have strong support for smart contracts, which limits their wide-scale application. Therefore, another option, Optimistic Rollups, began to appear in the market, which can increase the transaction efficiency to 1000 TPS on the basis of supporting smart contracts. Optimistic rollups provide a similar setup to Proof of Stake as an off-chain aggregator that can act like a validator (node). All transactions that occur on Layer 2, such as smart contract interactions, etc., are regularly aggregated by nodes that have mortgaged tokens, and then submitted to Layer 1. Anyone can verify these commits, but as long as the node is found to be performing malicious actions, they lose all staked tokens.
As we all know, Ethereum currently has the largest developer community in the blockchain industry. The reason why developers can converge on Ethereum is mainly because the Ethereum community has a huge user base. So, who is building so many Ethereum scaling solutions?ETHaward.
First of all, the more popular revised version of Plasma and the strategy based on the proof-of-stake consensus algorithm have been used by project tokens such as Matic Network, and such solutions are more potentially valuable for DeFi projects. Raiden Network, Peruen Network, State Channel, Celer Network, Machinomy, FunFair, and Liquidity Network are also building Ethereum state channels, but the niche market for state channels is small and they are not yet widely popular.
Secondly, Optimistic Rollup may be the Ethereum scalability solution that has attracted the most attention from DeFi projects. Among them, Unipig is worth noting, which is jointly built by Plasma Group and Uniswap exchange. Optimistic Rollup is a Layer 2 solution that can extend the interoperable and universal Solidity smart contracts on Ethereum, so that DeFi can be further developed. After the release of Unipig, Synthetix followed suit. The exchange tokenized traditional financial instruments (such as commodities and foreign exchange) and made them available for cryptocurrency trading, and the transaction confirmation time was compressed to sub-second level, thereby ensuring user experience Comparable to other centralized exchanges.
In addition, zero-knowledge proofs in the form of ZK-STARKS were developed by StarkWare and are now also adopted by DeFi projects. ZK-STARKS can enable zero-knowledge proof based on trust-free. A good example is the decentralized exchange Ethfinex, which is also the first decentralized exchange to implement ZK-STARKS. The current transaction throughput can reach more than 9,000 TPS . The company also received $4 million in funding and $6,000 from the Ethereum Foundation.
