ETH 2.0 Won’t Fix Ethereum’s Scalability Problems, Analyst Argues

The average transaction fee on Ethereum costs $7.5, three times that of Bitcoin. Setting up a wallet on MakerDAO costs over $40, while the fees to lend on Compound amount to $10. These ludicrous fees are not sustainable.

With new yield farming incentives on DeFi platforms being launched every other day, the space continues to expand despite alarming signals around network congestion and high fees. 

DeFi users are eagerly awaiting the eventual launch of ETH 2.0, which promises to scale the blockchain, but that too might not be enough to support the existing number of crypto users.

The number of unique DeFi addresses is rising quickly with the addition of 350,000 addresses since the beginning of the year . While DeFi platforms like Uniswap surpassed Coinbase in terms of trading volume, its user base is still tiny compared to Coinbase’s 32 million customers.

Assuming network gas fees have peaked, it is a good time to realistically assess how much of a difference Ethereum 2.0 will make on fees.

It starts with 64 shards at first so it should be able to handle at least 64x more usage (potentially even more if we get some L2 adoption as well).

— David Iach | davidiach.eth