“The situation has become so bad that Ethereum has essentially become a blockchain for wealthy users, and Ethereum is becoming less and less able to handle the massive market volatility days without seeing fees just exploding to insane levels.”
Davis remains optimistic, pointing to several scaling solutions that could help in the short-term.
“We are seeing more and more solutions for the high fee issues being taken on by individual protocols on Ethereum. For example, dYdX, the Ethereum-based futures trading exchange that basically allows you to do margin trading on-chain. These guys just announced their Layer 2 scaling implementation.
Trading on dYdX has been basically insanely expensive because of the high fees of Ethereum, but with Layer 2 using the exchange, on-chain transactions will now only be pennies per transaction. That is a big deal and an incredible cost savings of many magnitude.”
Davis is looking for more applications to implement scaling solutions, particularly the leading decentralized exchange Uniswap, which is the leading user of gas on Ethereum. He notes that Uniswap’s upcoming upgrade will likely implement Layer 2 scaling solutions.
He also notes solutions like Chainlink’s (LINK) Off-Chain Reporting upgrade are poised to bring fees to a tenth of oracle services costs and reduce the overall burden on the network.
Davis is also bullish on the Layer 2 scaling solution Optimism.
“These measures, they’re going to help massively, but the really big one that is getting a lot of people excited, that could be pretty game-changing for the Ethereum ecosystem is called Optimism. This is new Ethereum technology shipping to Ethereum’s mainnet in March…
It’s going to allow projects to easily implement Layer 2 scaling solutions directly into the application… It will be the greatest upgrade in Layer 2 scaling technology for Ethereum and it’s going to work directly with applications that are existing to help them bring down fees.”
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