Speaking to “several high-profile decentralized finance [DeFi] projects” regarding the future of this area, provider of crypto market data CryptoCompare discovered that most said “Ethereum (ETH) won’t be replaced as the go-to blockchain network for DeFi” in the following three years.
CryptoCompare collected answers and data via a survey, from a few DeFi protocols, including Augur (REP), Argent, DDEX, Balancer (BAL), Nexus Mutual, Kyber Network (KNC), Loopring (LRC), and Staked, the firm said in a blog post.
On an inquiry whether Ethereum will be succeeded as the top DeFi network in the next three years, 62.5% of respondents completely disagreed.
Inquired about “shortcomings of the Ethereum network in its current state,” the respondents said that the primary interests regarding the DeFi space’s future are safety, user expertise, marketing, and a lack of foundation for truly decentralized products.
50% of respondents chose 10/10 when ranking “how big of a concern security” is in DeFi, and no one went below 8.
37% chose ten repeatedly when ranking how critical it is for DeFi platforms to add insurance against loss of funds. In distinction, others chose 3, “suggesting a clear divide in opinion on this issue,” said CryptoCompare.
Notwithstanding the transaction throughput limit witnessing a fee rise over 3,500% this year, many respondents didn’t see the high fee among the most critical issues. A few respondents “pointed towards layer-two scaling solutions” as higher transaction fees will “create more urgency on solutions.” Others said that high fees are a burden to some users, not an issue for others, such as monthly active users “who deposit for months.”
Shane Hong, Marketing Manager at on-chain liquidity protocol Kyber Network, was quoted as saying that:
“In my opinion, it is indeed hard for mass selection to be accomplished given the current state of transaction fees. But there will always be a group of users looking for profit-making opportunities even with the high fees.”
In the meantime, crypto wallet Argent said that there’s still a need to “build use cases that solve significant pain points for a mainstream audience.“
A few folks in the Cryptoverse see the DeFi growth as evidence of the space being a speculative bubble, particularly given that unaudited projects could attract hundreds of millions of dollars in a matter of hours the YAM case. On the opposite side, said the post, stand those who find the growth natural and not comparable to the 2017 initial coin offering (ICO) bubble.
It’s its use cases that urged the 2020 DeFi explosion, CryptoCompare argued, and these include: seeking out a crypto-backed loan; saving and earning interest on one’s holdings which can be tied to the value of the USD thanks to stablecoins; trading on decentralized platforms; joining leveraged positions; tokenizing real-world assets, etc.
Furthermore, the user base appears to be small, while the survey respondents assumed that “valuation is forward-looking, and that new products are going to bring in new users.” As for the current users, most responses go in approval of possible use cases.