Ethereum is not yet ready for DeFi, some critics say

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As DeFi projects flock to Ethereum, experts warn that the network is not yet ready to support the frenzy.

Martin Froehler, a mathematician, former hedge fund manager and founder of the Austrian crypto trading platform Morpher, told Cointelegraph that although Ethereum is the “best thing. [the blockchain industry] has “for DeFi, the current network capabilities are not enough:

“Ethereum can only handle around 15 transactions per second and has a block time of 15 seconds, which is an eternity in finance. By design, anyone who interacts with it needs Ether. This is a huge barrier to entry and mass adoption. “

Froehler considers Ethereum the most decentralized smart contract platform. But since the network still has problems, developers have had to look for solutions to counter them.

Froehler added:

“There is cryptographic proof for everything that happens on sidechain on Ethereum. (…) People are capable [to] trade without the need for Ether. They pay no commission, enjoy a settlement time of one second and are completely independent from the numerous congestions on the Ethereum network “.

Many industry players believe that Ethereum did not anticipate the DeFi hype, and even with the upcoming network update, Ethereum 2.0, the network is not yet ready for the DeFi service.

Ethereum 2.0 is expected to improve performance, but its high gas prices may scare off new users. Sergej Kunz, CEO of the decentralized 1-inch exchange, said at Cointelegraph China’s DeFi Marathon event on Sept. 3, that Ethereum’s infrastructure lacks the capacity to host the DeFi environment:

“You have to rethink everything. You can migrate smart contracts into code but it’s not scalable. In order to scale, you have to create standards and bring new protocols based on the new sharded architecture, such as NEAR which is similar to Ethereum 2.0 “.

At the same event, Mounir Benchemled, founder and CEO of ParaSwap middleware tier, stressed that the complexity of explaining how tier 2 works to end users “and the risk of not being able to pay funds to these users immediately” causes the more worry. Benchemled also stated that it is not practical for all DeFi projects to switch to Ethereum 2.0:

“For this to work, all applications would have to move to a single platform. Big projects could have consensus. However, for other projects that have their own agendas, it may be difficult. New bridges will be built to allow interoperability. “

Despite the future challenges for the Ethereum blockchain, Morpher’s Froehler joins other pro-DeFi voices by saying, “DeFi is here to stay.”

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