Long-term trapped in the shadow of Bitcoin (Bitcoin), Ethereum (Ethereum) Finally occupied the market during the 2020 decentralized financial summer. DeFi aims to rebuild the traditional financial system with fewer middlemen, and is now used for lending and token trading.Most of these decentralized applications (DApps) are running on Ethereum, which sees activity on the network Increase During 2020.This activity is also on the rise due to Yield agriculture, Also known as liquidity mining, it enables holders to use their encrypted capital to generate returns.
But with the increase of Ethereum activities, the transaction fees of the network also increase. In May, it was reported that Ethereum Gas bills soar. Intuitively, participating in DeFi is only worthwhile when dealing with capital that exceeds any network cost. Therefore, users soon knew that the blockchain would soon be unavailable.
There is no doubt that Ethereum is still the most active and most populated blockchain, but other potential participants are emerging, providing a viable alternative to Ethereum. For example, first layer protocols such as Binance Smart Chain (BSC) and Solana (SOL) attract billions of assets under management, while second layer solutions such as Polygon (MATIC) attract Ethereum due to their compatibility with Ethereum Dissatisfied users’ attention is based on agreement. In addition to providing low fees and fast transaction speed. However, although Ethereum’s gas fees have reached high levels in the past year and the network has grown faster, none of these chains have killed Ethereum.
Because of this, when we enter the second half of 2021, the narrative of “Ethereum vs. Others” begins to change-developers are realizing the value of cross-chain in the future without having to choose a blockchain to build on. This is no longer about creating chains with a competitive advantage, but ensuring that all chains can work interchangeably to improve the industry.
Advantages and disadvantages of a multi-chain future
Due to its prominent position and long-term existence in the market, Ethereum has a first-mover advantage. remains As of the first quarter of 2021, the most important blockchain in the DeFi ecosystem. But as other chains gain momentum, it is these Ethereum alternatives that provide the benefits of faster transaction speeds and significantly lower fees.
The introduction of other chains is not necessarily a bad thing, even for Ethereum fans. After all, the multi-chain ecosystem has brought additional space for the entry of new protocols, and each protocol has a strong user base. Each new chain will also create a new community, service vacancies, and personal identity and culture.
Not only that, a separate blockchain will also create an island of innovation, challenging progress and adoption. Connecting multiple chains in the future can be seen as seamlessly connecting these professional groups. This may be seen as an elusive goal in traditional technology, but cryptocurrency and blockchain are challenging these existing infrastructure monopolies, and the industry has the ability to create a cohesive rather than competitive ecosystem.
More blockchain, more value
In the end, the project will inevitably connect multiple blockchains so that information can be seamlessly transferred from one chain to another. In fact, the cryptocurrency market and multi-chain adoption are not a zero-sum game as people often mention. Moreover, as the future of multi-chain becomes more obvious, the additional features, usability, and scalability it brings will help new users join, which will only become clearer.
Instead of looking at the existence of the multi-chain future with suspicion, it is better to look at it positively. There are many different smart contract platforms in the crypto ecosystem, all of which have affected the blockchain space in terms of accessibility, economic viability, and innovation. Blockchain may be separate now, but in the end everything will be integrated to create an interoperable fast protocol network that meets our daily needs. The advantage of this is that we don’t have to worry about how we trade or what we trade, because it doesn’t matter.
We are far from the ultimate goal of achieving interoperability, but once mass adoption is achieved, the encryption industry will be unstoppable. Moreover, with the continuous development of the industry, the project found that they must adapt to the multi-chain future as soon as possible, otherwise they may be left behind.
This article does not contain investment advice or recommendations. Every investment and trading action involves risks, and readers should research on their own when making a decision.
The views, thoughts, and opinions expressed here are only those of the author, and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Michael O’Rourke Co-founder and CEO of Pocket Network. Michael is a self-taught iOS and Solidity developer. He also works at the grassroots level of the Bitcoin/cryptocurrency gathering and consulting company Blockspaces in Tampa Bay, focusing on teaching developers Solidity. He graduated from the University of South Florida.