Long stuck in the shadows of Bitcoin (BTC), Ethereum (ETH) finally took hold of the market in 2020 during the decentralized finance summer. Designed to recreate traditional financial systems with fewer middlemen, DeFi is now being used across lending, borrowing, and the buying and selling of tokens. The majority of these decentralized applications (DApps) are run on Ethereum, which saw activity on the network increase during 2020. This activity also trended upwards due to yield farming, also known as liquidity mining, which enables holders to generate rewards with their crypto capital.
But as activity on Ethereum increased, so too did the network’s transaction fees. In May, it was reported that Ethereum gas fees were skyrocketing. It’s intuitive that engaging in DeFi is only worthwhile when handling capital that exceeds any network fees. Consequently, it soon became clear to users that the blockchain was verging on unusable.
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Without a doubt, Ethereum remains the most active and populated blockchain, but other potential players are popping up, providing a viable alternative to Ethereum. For example, layer one protocols such as Binance Smart Chain (BSC) and Solana (SOL) are attracting billions in assets under management, whereas layer two solutions such as Polygon (MATIC) are capturing Ethereum’s disgruntled users’ attention due to their compatibility with Ethereum-based protocols. This is in addition to delivering low fees and quick transaction speeds. However, despite Ethereum gas fees reaching a high over the past year and the growth of faster networks, none of these chains have killed Ethereum yet.
It’s because of this, as we enter the second half of 2021, that the narrative of “Ethereum vs. the rest” is starting to change — developers are realizing the value of a cross-chain future rather than having to pick one blockchain to build on. It’s no longer a case of creating a chain with a competitive edge, but of ensuring all chains can work interchangeably to improve the industry.
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