The continuous proliferation of decentralized finance (DeFi) applications on the Ethereum blockchain is arguably seeing a retracement, owing to the network’s obvious flaws. For those conversant with transactions using the Ethereum network, it can be attested that sending a fund worth $50 can incur a transaction fee above $15, defeating the unique attraction of cheap transactions blockchain technology is known for.
According to the crypto tracker, The State of the DApps, as many as 3,000 decentralized applications run on the Ethereum network today, a situation that increases the congestion of the open-source platform. The network witnesses about 225.08k transactions involving smart contracts are made daily with an estimated 84.88k daily active users.
As robust as this is, it is gradually becoming unattractive to new projects who prioritize customer’s fee concerns over any other acclaim the underlying network may have. Ethereum is on track to lose on this front, a scenario that is already becoming obvious.
Emergence of Worthy Competitors and Imminent Bridge Crossing
Besides Ethereum, there are other blockchain networks upon which DApps have been built over the years. Some of these include EOS, Tron Network, and Blockstack to mention a few. These networks however have been unable to give Ethereum the needed nudge, as the Binance Smart Chain (BSC) is proving to do. BSC is a relatively new blockchain network for building decentralized finance protocols.
The emergence of the Binance Smart Chain in many ways offers on a platter what users around the world are struggling with on the Ethereum Blockchain, and that is the transaction throughput and very low gas fees. To send a $300 on the Binance Smart Chain will cost just about $0.01, a fee that positions it as the best alternative to what Ethereum currently has to offer.
Based on this, decentralized exchanges such as 1Inch exchange has integrated Binance Smart Chain on their platform so that users can have a flexible alternative to carry out their exchange activities.
Additionally, projects are proliferating on the Binance Smart Chain with PancakeSwap, JulSwap, BakerySwap amongst others coming off as the most successful thus far. The problem with the Ethereum Network has stirred a meteoric growth of BSC, a trend that might make the former network obsolete if urgent measures are not put in place to place it back onto winning ways.
Implementation of EIP 1559 Upgrade to Make the Difference
In a bid to find short-term palliatives to return the Ethereum back to its basics, the network’s development Foundation is on track to implement the controversial EIP 1559 upgrade scheduled for July. With the upgrade, the Ethereum network will eliminate the ability for each user to set their network fee by introducing a base fee charged per transaction.
This is poised to remove the likelihood of the skyrocketing gas fee in the space. Additionally, Ether will be burnt anytime it is being used for transactions, increasing the appeal of the digital currency to holders and users alike.
While pressing to roll out the Proof-of-Stake model dubbed Ethereum 2.0 in full, the Ethereum blockchain is doing all it can to keep its network as attractive as possible, and the implementation of the EIP 1559 upgrade may make all the difference in the short term.