High transaction fees have been a problem for investors and blockchain projects since 2014 when Vitalik Buterin admitted on Bitcoin that the “Internet of Money” would not cost $ 0.05 per transaction. It’s absurd. “
Fast forward to November 2021 and the easy approval of a token so it can be traded on Uniswap can cost up to $ 50 in Ether, depending on the time of day.
Ethereum average gas fees | Source: Etherscan
Layer 2 solutions, which are supposed to help solve the charging problem, cannot escape the curse of the high charges in overloaded networks when new users enter the crypto ecosystem.
https://twitter.com/satsdart/status/1455646425333780498?ref_src=twsrc%5Etfw” target=”_blank” rel=”nofollow noopener“Isn’t arbitrum inexpensive? Just kidding.”
Because of the persistently high Ethereum fees, more and more users are connecting assets to lower-cost Ethereum Virtual Machine (EVM) -compatible networks. Data from Dune Analytics shows that Total Value Locked (TVL) over the bridge protocols has been on an upward trend since early October.
TVL on Ethereum Bridge protocols | Source: Dune Analytics
As shown in the graphic above, the Ronin Bridge has become one of the most popular protocols over the past month, largely thanks to the migration of assets from Axie Infinity users to a platform with lower fees.
The popularity of Axie Infinity is shown in the following table from Token Terminal, which shows the log revenue.
Top projects by log turnover accumulated in the last 7 days | Source: Token Terminal
The third-ranking protocol by revenue is PancakeSwap (CAKE), a high TVL DeFi protocol on Binance Smart Chain (BSC) that offers significantly lower transaction fees than those on Ethereum.
Most of last week’s TVL top winners are also protocols found on Ethereum rivals or offering multi-chain functionality in a side-chain environment.
Top projects according to TVL in the last 7 days | Source: Token Terminal
Avalanche, Abracadabra.money, Yield Yak, Benqi, SpookySwap and Loopring are also Ethereum side-chain or multi-chain compatible networks that have seen a significant increase in TVL in the past 7 days.
Unless something can be done about the high transaction costs in the Ethereum network in the short term, the trend towards shifting liquidity to other blockchains is likely to continue.
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