In the last few weeks, many Crypto News from the DeFi area have made headlines. Massive Kurgewinne how the Compound helped with that. Since most of these distributed financial applications on the Ethereum Blockchain, you can say that, as a result, the Adoption of the ETH, is on the rise. The Figures of the transaction activity that is on the new heights show last. We do not explain to you in this article, why the increasing Adoption by DeFi is only positive for Ethereum.
Ethereum: increased activity by DeFi
Transactions on the Ethereum network are currently on a High, which was last observed towards the end of the ICO hype at the beginning of 2018. Much of the activity can be attributed to the increase of DeFi -, and Layer-2 applications.
As the below Chart shows, has exceeded the transaction activity in the previous year’s figure of 1 Million per day – in January of 2018, there were 1.3 million per day. The current transaction activity is between 1.1 and 1.2 million/day:
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ETH transaction prices are rising massively
As mentioned above, is a part of this increased transaction activity in the Defined area and thereby increasing Adoption of ETH.
Unfortunately, this influx of users does not come without a cost: According to the data of Glassnode the average daily Gas price of an Ethereum transaction was above 50 Gwei. The are five times the cost of a higher transaction than in April and the highest since almost two years.
#Ethereum gas prices continue to rise.
The daily median gas price has increased by more than 5x since April, surpassing 50 Gwei yesterday for the first time in almost 2 years.
Live chart: https://t.co/jAzTVXZoVy pic.twitter.com/nN2ToIOuZE
— glassnode (@glassnode) July 17, 2020
Some of ETH Fans like well argue that the increasing Adoption with the inevitably increasing transaction costs bullish on Ethereum are. But is that really so?
The disadvantages of Adoption
The issue of scalability is one of the weak points in the case of Ethereum. Not without reason the development of ETH 2.0 is so important for ETH Zurich. So positive is the increased transaction activity and the increasing Adoption by DeFi is so greatly increased by the transaction, the weaknesses of the network costs shown.
So Qiao Wang, the former Head of product of Messari and a well-known Crypto Analyst writes:
As long as ETH 2.0 is rolled out completely, there is the obvious Chance that a highly scalable Blockchain Ethereum dethroned. To pay a 10 Dollar transaction fee, and to wait 15 seconds on the payroll, is just bad UX.
I’ve changed my mind after using a dozen of Defi platforms. So long as ETH 2.0 is not fully rolled out, there’s an obvious opportunity for a highly scalable blockchain to dethrone Ethereum. Paying $10 transaction fee and waiting 15 seconds for settlement is just bad UX. https://t.co/vXAAFET3YK
— Qiao Wang (@QWQiao) June 28, 2020
Nevertheless, it could be the other way around, a lack of Adoption, poor to the Ethereum network. Crucial for the future success of the crypto currency, the development of ETH 2.0 remains as before, what the Blockchain scalable is.
(Image Source: Shutterstock)
The comments in this article do not represent any trading recommendations or investment advice.