Ethereum 2.0: DeFi project changes


The end of 2020 is big for the crypto community. Not only did digital property prices rise dramatically, but it also marked the beginning of another bull market Launched the Ethereum 2.0 Beacon chainHas been in development for some time.

The long-awaited upgrade to the Ethereum blockchain transforms network authentication into stock proofing. Speed Security; It aims to address payment issues and address issues that Ethereum can handle. Back 2020.

Ethereum 2.0 is still in the early stages of development In step 0, There is still a long way to go until the transition from the old chain to the new one is complete. Despite these conditions, rapid growth has had an impact on the market. Dr Octavius, co-founder of the OctoFi DeFi protocol, told Cointelegraph that this is true in DeFi space.

“Most people misunderstand the meaning of Eth2 and the industry as a whole, especially DeFi,” he said. Other Bondings As the competition competes to address compression issues with Ethereum, the network impact is deep and Ethereum leaps far beyond others. Whatever. Launch 2.0 makes people believe in the enduring power of Ethereum.

Improved DeFi

The launch of Ethereum 2.0 caused price volatility. Starting December 1, the price was around $ 670, and in the following days it was slightly similar to the rest of the mountains. ETH 2.0 has been a major driver of total lock value growth in projects, and Phoebe has benefited the most from DeFi, and according to Octavius, the trend is likely to continue: ”

TVL was under $ 10 billion in early November and is now under $ 14.1 billion, slightly adjusted to $ 13.4 billion. According to Data from DeFiPulse Therefore, a few days before the start of the Beacon chain, After November 27, there was a significant improvement. New confidence in the development efforts of Ethereum and DeFi for longevity has increased.

Of course, this significant growth, along with other factors, including the bull that currently runs in crypto, was donated. Integration of Yearn.Finance with Decentralized Exchange SushiSwap, Yearn.Finance is the latest in the list of secure partners. In addition, the demolition of Uniswap’s breeding business led to the emergence of other protocols such as SushiSwap and Bancor on TVL. Ilya Abugov, a consultant at DappRadar, DeApp’s statistical data collection consultant, told Cointelegraph that Eth2 is critical to removing rival blockchains in DeFi space.

This can be important when competing blockchains actually start operating. As Polkadot and NEAR become more active, the good news about Ethereum 2.0 will help keep projects connected to the Ethereum ecosystem. ”

Despite significant growth in TVL, total payouts have declined. In November, sales exceeded $ 41 billion, down 12% from the previous month. Consumers can explain their decision to transfer funds and share shares on Eth2.

This is one of the steps required to get started with ETH 2.0. 16,384 confirmants need 32 ETH shares each to signal the start of a new chain. The 524,288 ETHs on the deposit agreement could easily explain the decline in November trading volume.

In addition to the billions on TVL, another factor that shows DeFi’s dominance is that 99% of Ethereum remittances are related to DeFi protocols. This means that users can still enjoy DeFi’s high productivity ETH 2.0 bets are unlikely to be beaten: Users will remain in Ethereum throughout this transition as long as the potential projects on the blockchain continue to perform well. In addition, There may also be improvements created by the update Attracts a more cautious organizational audience:

Weaknesses of ETH 2.0 in DeFi

Once Ethereum 2.0 is fully operational, the DeFi market will be faster. Expandable network will benefit. However, stakeholders in some industries argue that there may be some weaknesses.

Migrating to a PoS agreement affects the DeFi ecosystem. People who carry ETH in their wallets will be interested in their problems. Basically, betting compensation can compete with the benefits of yield farms and other DeFi products by sharing very similar rewards systems. It will take time to implement, but the high benefits of Eth2 can lead to conflict and reduce the use of DeFi. However, innovative solutions have been identified for this conflict.

Validators can raise funds in an unlocked original ether by transferring a token created by a fully secured contract to a creditor. Conversely, when the two blockchain companies do not merge and the lock ends, the creditor promises that the original 32 ETH aggregate bet will be automatically awarded. Dr. Octavius ​​is optimistic about such developments:

“This concept is interesting not only for future markets but also for predictive markets, and how they can be used to improve project governance. […] But I’m also very interested in how something like EIP 1559 could influence S2F to influence E2 into a better ETH flow than Bitcoin. I think there will be a whole change in the way we evaluate investments, especially as DAOs and DeFi projects continue to generate attractive revenue.

Another big risk is that both the old and new Ethereum blockchains are currently running simultaneously. With a successful development milestone, a full transition to the new chain is planned for 2022, but without significant risks. DeFi protocols can undergo a smooth transition. However, minor cuts may occur Even huge losses can be devastating: Dr. Octavius ​​told the Cointelegraph: “We can see unexpected mistakes; Or the results of Eth2 still dominate. But it’s really important if developers choose to continue building Ethereum. ”

What does the future hold for Ethereum?

There seems to be a consensus on the positive impact of Ethereum 2.0. But as mentioned earlier, there are some drawbacks. Switching from technical risks to a change in DeFi and liquidity environment. According to Abugov, it will not be felt in the last days:

“Ethereum 2.0 is not expected to have a significant impact on liquidity in the next 9-12 months,” he said. It will eliminate some of the ETH, but it is doubtful that it will be enough to transform the current Ethereum 1.X economy.

With the transition to Ethereum 2.0 posing a potential risk for Dehere’s development, some are anticipating a very bright future. The NFT market is growing significantly throughout 2020 And is not a direct competitor to the betting model behind Eth2.

Whatever the Ethereum 2.0 development, 2021 is likely to bring DeFi is screened for the next level of funding: “Consumers will suddenly find that they can access new savings bank accounts with 2% interest per annum derived from their DeFi,” said Dr Octavius.

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