Ethereum & DeFi Sector Receiving Tons Of Attention - EtherDesk Exclusive.
2021-02-07 | Mike Hallen
Since the year 2020, the DeFi [Decentralized Finance] sector has been received
tons of attention due to its cutting-edge innovation
and therefore the lucrative high yield opportunities offered to crypto holders.
Despite these features, this week’s record-high gas fees show that
the world remains to have growing pains
and therefore the absence of
an appropriate layer 2 solutions
might be pushing smaller investors
faraway from DeFi.
Investors attempting
to put a trade on Uniswap
or just approve
a new token on their favorite DeFi platform will have noticed the dent these actions have
placed on their ETH wallet.
According to the data revealed by Etherscan, the gas prices
haven't reached as high as they were earlier in 2020,
they're noticeably higher since December of last year. This rise in gas fees also coincides with the surge in Ethereum price.
Analysis
of various time zones reveals that
the value for transactions occurring during the Asian trading session is
like those during the United States trading session. This shows that the fees are
an element of network usage and highlights the 24-hour nature of the cryptocurrency market.
There is one group, however, that has benefited from the sudden hike in-network fees. fees brought on by
the increase of DeFi: Whale token holders.
A closer
look at the wallets that contain
a min. of 20
ETH throughout 2020 reveals a better number of Ethereum transactions than those coming from smaller wallets, which also correlated to
a rise in fees.
Since gas fees
aren't calculated
based on the dimensions of the transaction but rather
the value to interact with smart contracts, large wallet holders are more likely
to interact with the protocol during higher congestion times as
a bigger wallet balance
is less suffering from raising transaction costs.
Hypothetically, a $200 USD trade and a $20k trade on Uniswap could both cost roughly $50 USD in fees beneath present conditions, making it less likely that smaller wallets will engage as the cost of the trade is 25% of
the entire value traded versus 0.25%.
In order for DeFi to continue its explosive growth, the gas issues seen on the Ethereum network problem will be
got to be addressed before any level of mass adoption
is often achieved.
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