Alchemy CEO says that the latest DeFi $8 billion growth is at huge risk of gas fees with the Ethereum network getting congested and netting miners over $500,000 per hour. Defi could be suffering from the latest success as we are reading further in our Ethereum latest news.
DeFi bloated gas transaction fees on Ethereum which would challenge the growth of the industry as the solutions include optimized smart contracts and bundled transactions. ETH 2.0 could help address the scaling issues. Right now, the decentralized finance space is gaining traction with more than $8 billion in total value locked and it is now testing the limits of what Ethereum’s network is capable of.
Contract calls initiated by Externally Owned Accounts (EOAs) has almost tripled since the beginning of the year – from less than 300k to currently over 850k per day.https://t.co/fOXNrdNOFg pic.twitter.com/7XanWFOrhb
— glassnode (@glassnode) September 3, 2020
The growth in demand for smart contracts applications drove the contract calls and gas transaction fees skyrocketing and the miners have even seen the record profits of more than $500,000 an hour for processing transaction fees. This could be good news for the miners but it doesn’t look too good for the DeFi space which could see transaction fees as a huge obstacle for growth. The Alchemy CEO Nikil Viswanathan said:
“Gas is a huge challenge for a lot of our customers.”
Alchemy is a blockchain development platform that is driving projects such as Bancor, Maker, Dapper Labs, and Kyber Network and it is also backed by plenty of investors such as Charles Schwab and Peter Thiel. Jay Z and Will Smith also support Alchemy with more than 70% of the top ETH applications as well as about 50% of the assets locked up in DeFi. He continued:
“One of our main focuses is solving all of the challenges that [developers] have when building these applications, and gas is at the very top of the list. Since we launched a month ago, the amount of money locked in DeFi has 8x’d or something like that. So one of the really, really exciting things about the pace of innovation is the ability for it to be such an open source and open-minded space where people can create applications standing on the shoulders of other companies.”
With the superfast growth of DeFi congesting the ETH network, the issue of the increasing gas costs is a priority for a number of ETH developers including co-founder Joe Lubin who said that scalability issues were the result of technological growth and development:
“I would be really, really disturbed if we weren’t having profound scaling issues at this point. We’re constantly bumping against this ceiling of scalability in different forms, and we need to do that in order to find out what needs to get fixed first. So we’re going to continue to bump up against scalability.”
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