The dangers and opportunities brought by Ethereum 2.0

With the rise of DeFi (decentralized finance), the activity and market value of Ethereum once again show steady growth, and the price of Ethereum has started to rise from the low point in 2020. Although on-chain activity and off-chain activity have risen rapidly, due to DeFi activities, the gas price on Ethereum has risen, which has brought new opportunities to other public chains to a large extent.

Gas fee is the unit of Ethereum transaction fee, which is the transaction cost required for decentralized application or smart contract computing resources. For any transaction activity on Ethereum, including sending Ethereum to others, you need to pay Gas fees.

When you decide how much Gas fee you want to pay for each transaction, in the POW system, the miners decide which transactions should be processed first, so a lower Gas fee may mean that your transaction cannot be processed in time-Gas fee is compensated by the Ethereum network A way of miner fees.

With the emergence of decentralized financial applications based on Ethereum, the gas fee of Ethereum has reached a record high. Investors who hope to get a lot of benefits from liquid mining are willing to pay an astonishingly high Gas fee to ensure smooth transactions. As a result, the price of Ethereum Gas fees has increased by more than 20 times this year. This has led to the situation: users originally only paid $1 for Ethereum operations, but now they need to pay $50 to complete the same operation.

Throughout the ICO years from 2017 to 2018, Ethereum’s rapid growth in gas fees shows that Ethereum is prosperous and has gathered many technical talents in Ethereum. On the other hand, it also shows that due to the rapid increase in users, Ethereum The square is getting more and more congested.

In particular, the outbreak of DeFi this year has caused non-DeFi companies to close or close due to rising gas fees. UniLogin was closed because of the rise in Gas, it had to pay $130 for new users. Publish0x is a platform that pays writer fees in Ethereum tokens. In order to avoid high gas fees, it had to postpone the payment by one week and switch to a monthly rather than weekly payment method.

If every transaction or action on Ethereum takes a few dollars to be realized, then many different decentralized organizations and applications will not survive. For example, because a game needs to spend several dollars to perform certain operations, it is difficult to build something meaningful, and for game users, playing the game becomes very expensive.

In many respects, the increase in gas fee prices "increased the cost of experimentation" and congested decentralized exchanges, resulting in a decline in transaction volume between different tokens.

However, as Ethereum is transitioning to the new 2.0 architecture, it has also created a need for new solutions. Some people rely on so-called layer 2 solutions and side chains to avoid these high gas fees, which will help increase the trust and security of Ethereum, thereby stratifying the scalability of layer 2.

However, the ultimate problem to be solved by this challenge is that innovators think about how to build a variety of different decentralized applications after the layering of Ethereum.