So far 2020, the decentralized finance (DeFi) sector has unveiled an exponential. DeFi protocols named after foods have extended notably fast. Yield farming and reward incentives play a significant role in the growing trend of the sector. As per Defi pulse data, the total value locked in the defi hit almost $11 billion thresholds on September 23.
Several DeFi protocols have appeared out of nowhere in recent weeks, offering meaningful lending and borrowing solutions. However, the growing trend of defi space slows down the Ethereum Network. Miners on the Ethereum blockchain have achieved a new milestone by earning $500,000 in transaction fees, in less than two hours.
DeFi Protocols Rush to Adopt Layer 2 Scaling Solution
As Ethereum gas fees skyrocket, Defi protocols are pushing to adopt a layer 2 scaling solution to avoid network congestion. According to the market inside the report, layer 2 scaling solutions are getting close to being adopted by leading DeFi protocols, including Aave, Synthetix, and Uniswap.
Uniswap, the giant decentralized exchange, is going to adopt a principal upgrade with Uniswap V3. Uniswap founder Hayden Adams said that V3 would ‘fix everything’ implying that L2 may be a big part of the upgrade.
Synthetix, an on-chain synthetic assets project, is also working on L2 scaling. Founder Kain Warwick mentioned in a blog post, the Fomalhaut, the first phase of the L2 solution, will be Optimistic Ethereum. It’s a boosted testnet pointed toward mitigating gas costs for little SNX stakers who have confronted expenses in the many dollars to gather weekly incentives.
A subsequent update called ‘Deneb’ is expected on September 29 which likewise incorporates measures to diminish gas charges. Warwick added said:
“Both of these releases are direct responses to increased gas costs due to Ethereum congestion. Some of the changes are stop-gaps while we transition to Optimistic Ethereum but included in these two releases is the first step towards L2 Synthetix.”
Earlier co-founder of Ethereum Vitalik Buterin has also suggested that network users should be utilizing a layer-2 scaling solution to remove the burden of high gas fees.
“To those replying with “gas fees are too high”, my answer to that is “well then more people should be accepting payments directly through zksync/loopring/OMG”. Seriously, scaling to 2500+ TPS for simple-payments applications is here, we just need to… use it,” Vitalik said.