2021 was a great year for Bitcoin (BTC) and crypto in general. However, Ethereum and the decentralized financial (DeFi) sector have outshone other niches in the cryptocurrency space, dazzling the community with tremendous growth in terms of popularity, engagement and volume. The total value is currently around $ 56 billion to DappRadar.
The non-fungible token or NFT space is also seeing unprecedented growth. Many believe that 2021 will be the year of the NFTs. DeFi continues to thrive, however, especially on the Ethereum blockchain, where developer and user activity outperforms any other blockchain.
However, it’s no secret that Ethereum is at a crucial juncture right now. Congestion and high gas charges put a strain on the network, making decentralized exchanges (DEXes) almost impossible for ordinary users looking to do small to medium-sized businesses. Even simple transactions can cost more than $ 10. Banks are no longer so jealous.
DeFi is looking for alternatives
On March 3, SushiSwap, the popular Uniswap fork known for its controversial creation from a vampire mining attack, announced that DEX was adding several Ethereum alternatives to its platform and contracts for xDai, Moonbeam, Binance Smart Chain and Polygon (formerly called Matic) and Fantom.
SushiSwap has received a lot of negative criticism from the community and even from Hayden Adams, the founder of Uniswap, who has expressed little appreciation for the fork and even less for the behavior of its pseudonymous founder, Chef Nomi, who was early on with the project finished with a bag full of tokens to be returned soon afterwards. In a recent Twitter thread, Adams stated:
“I’ve seen tons of comments about Sushi being a highly skilled development team creating a differentiated product. I really wish this was true, but I haven’t seen any evidence of it so far. Just liquidity mining and marketing so far.”
Nevertheless, the project has achieved great success and is the second largest DEX in terms of volume according to Dune Analytics. Now SushiSwap is bringing users new alternatives to Ethereum, allowing them to move away, if reluctantly, from the huge gas fees that have become the norm of late.
It’s not just SushiSwap
It seems that projects in general are looking for alternatives, even though they do not intend to give up Ethereum entirely. While these are not “moving away” from Ethereum, they are adding several alternatives to their platforms, which will make a big change for some of these blockchains, particularly Binance Smart Chain, which appears to be the most popular choice.
Balancer recently announced that it will provide ports on Moonbeam and Polkadot. In addition, the Exchange Aggregator 1inch recently added support for Binance Smart Chain. Users can switch networks with a simple push of a button and enjoy lower fees and faster transaction times.
While 1inch added support for BSC, the team doesn’t seem to be moving away from Ethereum anytime soon. Sergej Kunz, co-founder of 1inch, told Cointelegraph:
“We are not planning to completely move away from Ethereum. Our extension to BSC is just an extension as we have received a lot of inquiries from the 1 inch community as BSC is a lot of money and activity.”
Projects haven’t removed Ethereum as the main option for their platforms, and while Binance stands out from the rest, Ilya Abugov, a consultant at DappRadar, a decentralized application statistics aggregator, believes the future will offer a multitude of options for DeFi users. He told Cointelegraph, “This is an indication that the future is much more likely with multiple chains. BSC projects have achieved so much TVL that it makes sense for new projects to view BSC as a viable ecosystem. “
Binance is certainly the most popular alternative at the moment. Recently, DappRadar also added support for Binance Smart Chain to its portfolio tool. However, there are other projects that are growing and becoming viable alternatives, and these may find more resonance over time. Abugov continued:
“There are also Polkadot, Flow, and a number of others that have viable ecosystems. In the past, projects at ETH almost had to be built, now you have a real choice. This trend should intensify as the bridges develop. “
Layer two options are also gaining in importance
While Ethereum alternatives like BSC and others are becoming increasingly popular, second-tier options are also being integrated at lightning speed. Joseph Delong, SushiSwap’s chief technology officer, noted that the decentralized exchange has plans for further future deployments, including optimism.
SushiSwap would be just one of the newest options. Other projects like Synthetix, a decentralized trading platform for derivatives, are also experimenting with layer two options, the most popular of which appears to be optimism. Synthetix founder Kain Warwick told Cointelegraph:
“Every project currently running on Ethereum has to use a Layer 2 solution. There are fast-paced teams with considerable treasure and highly skilled engineers, and allowing more users to interact with a protocol to quickly move to scalable solutions is a huge incentive. “
Want Ethereum 2.0. Restore trust or will it be too late?
While Ethereum is currently facing scalability issues and is very difficult to use, Ethereum 2.0 is currently in development. Thanks to its staking and sharding functions, the user experience can be brought back to normal for the normal user and many other aspects improved. Not only will the network be able to handle more transactions without congestion, resulting in lower fees, it will also improve the wasteful proof-of-work model of miners having to burn electricity to validate the network.
However, the current issues in Ethereum are opening doors for others to become popular alternatives. This means that Eth2 may not be enough to regain Ethereum’s former market share, according to Abugov: “ETH 2.0 is far from allowing competing blockchains to build their own ecosystems. When ETH 2.0 starts, this will likely be just one of the options for project teams. “
While projects are now exploring other options, Ethereum’s network effect is still strong. Developers don’t seem to be moving away from the blockchain, but they seem ready to look for additional options that will give Ethereum 2.0 developers more time to perfect the upcoming launch and give users new, exciting options for the DeFi- Present interaction.