The efficiency of Ethereum has become an obstacle restricting the further development of DeFi?
Decentralized finance (DeFi) has quickly become Ethereum's "killer app," according to a number of analysts recently. And DeFi is now known as a sub-industry, containing nearly $1 billion worth of locked value, as well as some of the most prominent investors and innovators in the industry.
Jacob Horne, a product manager at Coinbase, said at the DeFi conference late last year: "DeFi or decentralized finance is an important part of an open financial system. DeFi tools are censorship-resistant, unbiased, programmable and available to anyone with a smartphone." People. For this hackathon, we are committed to bringing DeFi to the world.”
And recently, the adoption trend of DeFi seems to have been picking up speed.
Just last month, $4 million worth of the DAI stablecoin was minted when an investor staked millions of dollars worth of bitcoin tokens in the MakerDAO protocol. The transaction is notable because it marks the largest case of BTC usage in DeFi to date.
“4M Dai minted to WBTC in just one transaction. This really shows underlying demand for non-ETH assets, the start of a broader trend of DeFi as a financial product that will eventually attract nearly all of Ethereum’s value”, MakerDAO Founder Rune Christensen wrote in a recent tweet.
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Ethereum’s killer app is leveling off
Multicoin Capital managing partner Kyle Samani published an extensive blog post on June 4 outlining why DeFi “faces some real challenges” and thus may stall in the short to medium term.
The leading cryptocurrency and blockchain fund is no stranger to DeFi: the firm invested in the space, making their comments targeted and not serving their own interests.
Samani explained in the post that currently, there is a significant “latency” issue in the DeFi space, limiting its wider adoption.
"You just can't build a global-scale transaction system for many users on the POW chain. It just doesn't work. Because high latency causes all kinds of negative effects. Therefore, I think that before the core latency problem is solved, ETH (not In terms of DeFi measured in US dollars), we are currently in a near plateau.”
This is mainly in reference to Ethereum’s block time of about 13 to 14 seconds, which means that traders can only conduct decentralized transactions during this time at the fastest.
For most consumers, that's fine. But for power users who transact large sums of money, this delay can have a significant impact on their bottom line, hindering DeFi adoption.
Relatively high Ethereum transaction fees also hurt DeFi adoption in the short term.
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DeFi is currently at some risk
Even some of Ethereum’s biggest supporters are currently skeptical of the decentralized finance space.
Adam Cochran, a partner at Metacartel Ventures and an adjunct professor of information science at Conestoga College, explained in April that the DAI stablecoin poses an “existential threat” to DeFi.
Don’t get Cochran wrong, he’s actually bullish on Ethereum and DeFi, despite his observations that there are obvious problems with how many of these applications work right now.
The original text comes from bitcoinist, compiled by the BluemountainLabs team, the English copyright belongs to the original author, please contact the editor for Chinese reprint.
The original text comes from bitcoinist, compiled by the BluemountainLabs team, the English copyright belongs to the original author, please contact the editor for Chinese reprint.
