We need to talk about ETH…
Welcome back to your latest journey through Cryptown as we dig our teeth into some of the hottest and most pressing issues in this space. Today is an important one for the future of decentralised finance… Today, we need to talk about Ethereum (ETH).
ETH has built on the principles of BTC and flourished onto an ecosystem of it’s own with fancy smart contacts and as if this week is reported to settle $1.6 trillion of transactions. This level of transactions has been achieved through a robust DeFi ecosystem where ordinary people can access a range of financial instruments such as lending and borrowing in a decentralised way. Recently, the DeFi system built on ETH’s back has been booming! But there’s one thing we need to talk about… fees.
Fees on Ethereum
Since the DeFi summer of 2020, DeFi tokens have been one of the most rapidly appreciating tokens in the space. Tokens like Uniswap (UNI) and Aave (AAVE) have made massive gains throughout the second half of 2020, attracting investors’ attention. With the increased awareness of DeFi, the system’s pressure has increased, leading to a spike in fees which has only continued as we moved into 2021.
Currently, gas fees are so high the financial instruments, supposedly available to all, are now reserved for whales, the deep pocket swinging cowboys and gals or those with enough disposable income to pay the outrageous fees. So what can be done about it? Is there any light at the end of the tunnel, or we wait until Ethereum comes out with a fix quickly. CryptoBanditz sees some ideas that will help in the meantime.
xDai is a side chain of Ethereum that is accessible through the ominbridge. A cool tool to help you migrate your tokens on the Ethereum mainnet to the xDai side chain. Their governance token is STAKE and they have a stable coin called xDai. Fees on xDai are dirt cheap. You can send many transactions that can end up costing you less than ten cents. You can swap your tokens on xDai through HoneySwap, where you can also provide liquidity and farm with Honeyfarm. Bao Finance (another great project) is currently migrating to xDai, bringing more users and awareness to xDai.
Loopring (LRC) is an exchange that also has a swap and a token you can hold. They were the first to zkRollup on Ethereum and have grown and adapted in recent months. More recently, they released Loopring Smart Wallet, which uses the speed and effectiveness of a zkRollup to bring reduced fees, increased speed and a simple yet intuitive user interface. They also offer a unique Ethereum identity for your wallet that, in ways, replaces traditional private keys.
Polkadot (DOT) compliments and competes with Ethereum due to what it does. Polkadot enables cross-blockchain transfers of any data or asset, not just tokens. So once fully realised Polkadot could be the glue for one homogeneous world of connected blockchains. That may be some way down the line, but for now, there are projects about to be deployed, such as PolkaSwap (PSWAP) and others offering fast transaction times and low fees.
So does ETH have a bright future?
Ethereum currently has its challenges, but its future is bright! Once Ethereum moves from PoW to PoS, we believe Ethereum will be back to its glory days with cheap fees, fast transactions and great dApps. For now, there are ways to escape the enormous fees with some of the projects mentioned above. Stay safe and we wish you a fee-less journey home!