The DeFi sector has been growing rapidly over the years; however, if decentralized finance projects wish to stay relevant, certain adaptation measures regarding the multichain future will have to be taken. With this in mind, Ethereum (ETH) has firmly established itself as the 2nd biggest cryptocurrency by market cap, right behind Bitcoin (BTC). Ethereum has plenty of dApps whose activity had greatly increased during last year. Additionally, trends involving yield farming (liquidity mining) had also experienced an upward movement, which had allowed holders to be able to earn rewards using cryptocurrency capital.
Despite all of that, however, the main issue for Ethereum has been the high transaction fees, and although the London hard fork is expected to fix this glaring issue, we cannot avoid the fact that such astronomical fees have rendered Ethereum effectively unusable for many investors.
Alternatives to Ethereum
It goes without saying that Ethereum is still the most populated as well as active blockchain at the moment. However, it will need to change things if it wants to maintain its dominance as other cryptocurrencies are emerging, which can threaten its position. These include layer-1 protocols like Solana (SOL) and BSC (Binance Smart Chain) and also layer-2 solutions like Polygon (MATIC).
Nevertheless, investors have recently come to realize that rather than pick and choose which cryptocurrencies to support and invest in, it might be more beneficial for everyone to adopt a ‘multichain’ mindset through which all chains might function interchangeably in order to enhance the overall industry. This kind of approach comes with several advantages, such as lower fees and greater transaction speeds, as well as creating strong user bases, new vibrant communities, and unique identities and different cultures.
However, there are also certain drawbacks. A considerable disadvantage has to do with the fact that a few blockchains may need specific programming languages like Simplicity, Solidity, Rust, Rholang, or JavaScript in order to work correctly. This could result in a barrier being created for some developers. Secondly, different blockchains will end up generating innovation silos, which will create problems regarding overall adoption and continued progress.
A multichain approach will add more value
Although unexpected problems may arise, adopting a multichain approach will nevertheless add more value by linking multiple blockchains. This will make the process of transferring information from a particular chain to another both accessible and seamless, in addition to improving scalability, usability, and functionality for new users.
Of course, there is still a long way to go before we can reach this goal. Still, by achieving such interoperability, the cryptocurrency industry may end up becoming unstoppable.
