Are Ethereum Fees Low Enough To Support DeFi Now?

DeFi has become all the rage but just like 2017 which stopped a lot of growth due to high fees and slow throughput on blockchains we again hit the same thing in the DeFi era. With NFT's in high demand and DeFi booming Ethereum prices saw all new highs but also all new highs in terms of fees getting all the way up to $70!

For the every day user this made it impossible to use Ethereum in terms of making any kind of money or transactions in DeFi. NFT's where ok but with the high fees it limited some lower end artwork etc which honestly is fine.

It begs the question now are Ethereum fees low enough now to start supporting DeFi again?

The short answer kinda/sorta

At the moment the full TVL in defi is about 59 billion dollars worth this sets up back to March of this year levels. Still far higher than we where a year ago when DeFi really didn't even exist it's market cap at the time was just 1 billion.

Even at $3 per transaction this still counts a lot of lower players out of the Ethereum DeFi space as most are a few transactions to take place. In order to stake and convert into a DeFi Ethereum project you're look at about 3-4 transactions in total or a total cost of $12- $20 might not seem like a lot but if someone wants to add in $100 they are now set back 20% if they add in $1,000 they are now set back about 2% doesn't seem that high but it actually is. It means if you want to still play in the defi space you should be adding in roughly $2,000+ on your transactions to make them break even as quickly as possible.

The sweet spot seems to be $1.50 or less in transaction fees with a decent turn around in terms of time. If this is achievable which is what we saw when many abounded Ethereum and instead went to Binance that sweet spot was under $1 which allowed almost everyone to take part.

Granted Ethereum is MUCH easier to access over Binance for the every day user.

What I fear is these lower fees are going to set the dev team back in their chairs again and not push as hard to figure out PoS and lowering fees on the Ethereum network. We saw this happen when we went into a bear market after the 2017 rally and 3 years later we fell into yet again the SAME issues. If they don't get it fixed this time around I'd honestly would have lost hope for Ethereum and instead moved on to another up and coming crypto which has already solved these issues.

Posted Using LeoFinance ^Beta