At peak load last week, the average gas price for a fast transaction on the Ethereum network (i.e. guaranteed next block confirmation) reached over 1,000 gwei, sending transaction fees soaring.
As a result, if you tried to trade on Uniswap or another Ethereum-based decentralized exchange in the last week or so, then you may have been greeted with quite frankly astronomical gas fees, at times exceeding $400 a pop.
But times are changing. Thanks to the advent of a range of layer 2 protocols, Ethereum users are able to cut their fees down to a bare minimum and make the most of their capital in what many consider to be one of the biggest bull runs in recent history.
Second Layer Solutions
Layer 2 solutions have long been considered to be the holy grail for Ethereum scaling since they allow users to continue to benefit from Ethereum’s impressive security and functionality, while tacking on a better user experience and improved efficiency.
However, it wasn’t until relatively recently that we began to see the emergence of truly viable, easy-to-use solutions that actually have demonstrable utility.
One of the most prominent of these layer 2 solutions is Metis, a platform that allows firms to launch their own decentralized company (DAC) and build highly efficient Ethereum DApps that run at a fraction of the usual cost.
The way it works is simple. It uses a technology known as Metis Rollups to collect a batch of transactions on layer 2 before finalizing these on the Ethereum mainchain in a single transaction.
This produces a final, public record of the transaction, and ensures users continue to benefit from Ethereum’s robust Proof-of-Work (PoW) network after transacting on Metis.
Last month, Metis launched the alpha version of its testnet, bringing an optimized version of optimistic rollups to the Ethereum blockchain. A fully formed version of the testnet is scheduled to go live on June 15, allowing developers to get to grips with its full capabilities.
From DACs to Trust Verification we’re patent-pending on a wave of revolutionary L2 tech. Explore all the ways Metis can help your business thrive. pic.twitter.com/gHAaA8Ra7c
— Metis (@MetisDAO) May 14, 2021
Celer proposed a similar solution with its Layer2.finance platform, which is designed to make interacting with DeFi on Ethereum a far cheaper and more efficient task by providing a “DeFi Public Transportation System” of sorts.
The platform uses a layer-2 rollup solution to allow users to easily split the cost of interacting with various DeFi DApps in a completely trustless, non-custodial manner. Right now, the protocol supports Curve, Compound and DAI, allowing users to save up to 99% on their transaction fees by safely batching their DeFi transactions with other users of the protocol.
This! And “nobody” should not be pushed to the sidelines when crypto matures. “nobody” should NOT pay $200 to access DeFi that weren’t possible without them. @layer2finance is here to keep “nobody” happy. https://t.co/kMAcIEfsBz
— CelerNetwork (@CelerNetwork) May 14, 2021
Currently, Metis and Layer2.finance count among the few usable platforms that can be reliably used to scale Ethereum. It remains to be seen which of the numerous others also in development will also succeed in their goal.
What About Scalable Alternate Blockchains?
Over the last few years, you have likely heard about the launch of more than a few so-called “Ethereum killers” — i.e. blockchains capable of dramatically exceeding the 7-14 transactions per second (tps) Ethereum currently supports.
However, while dozens of platforms have promised to support well in excess of 100 transactions per second, many have yet to experience the kind of network load that Ethereum witnesses during peak times.
As it turns out, many of those that have, also end up buckling under the load — despite their reported scalability or efficiency.
Binance Smart Chain (BSC) is a poignant example. Due to the rapid growth of DeFi on BSC in addition to dramatically increasing trading volumes on BSC-based decentralized exchanges like PancakeSwap, BSC has recently been put under greater load than ever before. At times, this congestion has rendered the blockchain essentially unusable, leaving transactions stuck for hours while crippling the BSC DApp ecosystem.
NOTICE #BinanceSmartChain Network is currently congested
All BSC activities, including BSC balance display, BSC transfers and DeFi harvests/claims, are impacted due to the BSC network congestion
— SafePal Wallet (@iSafePal) May 10, 2021
Terra, another high-throughput blockchain, faced a similar challenge, despite claiming to offer an order of magnitude higher tps than Ethereum. As a result of last week’s mass LUNA liquidations due in large part to the functioning of the Anchor Protocol, Terra too found itself suffering from congestion, leading to stuck transactions and overall headache for users.
As a result, while high-throughput layer 1 blockchains may pose a potential alternative solution to Ethereum’s congestion woes, most remain a work in progress.