If you have been in dabbling in any Defi projects on ethereum, I'm sure you've noticed the incapacitating pain of ETH gas fees.
Now, heads up, I'm going to FUD. Major. Then we'll have the soft landing about one of the other blockchains which can be "the next eth."
As of this writing, ETH gas fees are down from an all time high of over 969gwei to 111 gwei. I'll write a tutorial about the nuances and mechanics of ethereum network's structure and fees for newbies later on. But right now, I'm writing for anyone who has the bare basics of interacting with contracts in eth. That is insane. ETH miners are artificially jacking up eth gwei prices by front running user TX's (transactions). Have you ever noticed gwei fees will be X amount, and the instant you push the confirm button on a TX it suddenly goes over by just a few gwei? Suddenly your, OVER PRICED, Tx which was supposed to take "8-13 mins" is "2 hours+"
This is unacceptable. After using ETH for roughly 3 years now, I can say with a clear conscience, I detest almost everything about the network. From the "degen apes" (as they call themselves), to the cultist "bro" mentality that is present on nearly all DeFi projects. If you so much as even whisper a valid question about the project's potential trajectory, you are razed to the ground with incoming messages about your "fud-ing" or being a "non-believer" of the project. On a side note, I guess I missed the memo where belief is supposed to drive value. Forget fundamentals.... silly me.
Lastly, I'd like to point out one other major flaw with nearly all major DeFi projects. Whales. yes, leave it to a financial instrument to make one the most begin mammals on the planet a thing to be hated. Most ETH DeFi projects are structured in a way that rewards those who stake MOST into the platform wit the greatest chunk of the rewards. So, if John Smith has 1 eth and adds liquidity to a pool, then stakes the liquidity pool token into project one, he will be paying #1- the swap fee (another point which I hate about Uniswap, 1inch or any other eth based DEX [DeCentralized Exchange]). #2 - the ETH network fee (which is just downright insane to me). and he'll get about .01% of the pool (assuming the project has any real value). Whale Smith, will deposit 10000-100000 ETH into the same project, but whale smith will also get 10-15% of the pool rewards. Let's say the rewards for DeFi protocol 1 is DeFi Token X worth 10 USDT. John Smith will get about 1-10 cents of that 10 USDT paid out by the pool. Mr. Whale? $1-$1.5 it varies. But you catch my drift.
so what really blows? (pun intended)
Here's where the trick really happens. Mr. Whale gets a large chunk of token X from the overall pool rewards, he is simply there to farm. He doesn't care about the project, he is a "non-believer." So he sells token X in DeFi exchanges and guess what happens? Poor Mr. John's .1X token's value plummets. Not only that, but his initial investment into the staking pool, also plummets (they refer to these are impermanent losses, I'll address those in my DeFi 101 guide as well). Mind you, the TX ETH network fees for both Mr. Whale and Mr. Smith are the same! Except Mr. Whale has made upwards of a few thousand to hundred thousand, so an $200 fee is no big deal for him. But for Mr. John? It could be, depending how much he staked, more than the value of his staked amount! Whales are literally SUCKING your equity, out of a project, and injecting it into ETH. That's the scam folks! I'd bet my bottom dollar any VC's funding these projects are vested heavily in ETH directly. They too, get a large chunk of the DeFi project tokens (called emissions) and dump them for ETH. Think of it as an investment bank or an angel investor having stock options to sell at a certain time. What happens when they can? stock usually sinks right? No different in DeFi.
But this suction of equity out of a project serves a second nefarious purpose. When Mr. Smith is stuck in a pool, because he doesn't want to lose on his initial investment, that money is locked. Whether or purpose, or as a result of impermanent losses and high TX fees, it is locked into the project. This only helps the project attract other suckers who see total value locked into the contract as some form of validation. This in turn triggers another wave of people who see the value of the token low, as a buying opportunity, jump into some dischord or telegram channel, and see all the bagholders who're stuck from the last wave, saying "buy the dip" or "loading more shares." I swear, it is amazing to watch this play out. It's like seeing a fly stuck in a spider web say "oh look, this hammock is awesome!" I once saw some poor sap buy a DeFi coin at $500 during the first wave, it fell to less than $100 in the first week whales were able to harvest their tokens. He kept posting on the dischord chat about how it will come back up one day. It's been 28 weeks since the post, and the token is hovering in the upper 60's, up from lower 20's...
Before you roast me about the merits of immutability and so forth, I do believe SOME projects on ETH are legitimate. But because of the network fees being so crazy, and so many whales basically reducing any yields down to nothing almost (if not negative), I'm moving on to greener pastures.
Which brings me to Tron. Oh sweet Tron. A lot of people are giving it such a bad rap. Bad rap from rug pulls (which btw also happened on Ethereum in its infancy) or Justin Sun. Drama set aside, let me illustrate some differences. Tron network fees are AT most 2-3 TRX. That 6-21 cents TOPS.
Tron transactions are nearly instant. Forget paying $28 (and that's when gas is "cheap") for a TX that'll take minutes to hours if there is a sudden spike in gas prices.
I found a lot of great staking projects in Tron that have WAY better returns, and also a lot less whales in the ecosystem. A $500 investment on some staking platforms give stakers 1-5% of the total pool. You'll never find that on ETH. For smaller players who want to enjoy DeFi returns, and have the luxury of entering and exiting a position without getting stiffed from TX fees, Tron is a contender.
Not to mention you can earn yields from Trx in 3 ways. Staking, vote delegation, freezing Trx to sell Energy, or just plain old staking in a liquidity pool on JustSwap or SunSwap, or something else I have yet to discover. I'm still new in the Tron space, but the telegram channels, and individuals I've spoken to about projects have been far more helpful than any degen farmers on eth. I'm seeing a more sharper and advanced group of traders who've also been burned in ETH projects, or are also fed up with ETH fees. They're actively monitoring projects for problems. Addressing new opportunities, with a healthy dose of skepticism. And believe me, once I get my bearings in this new ecosystem, I'll give everyone a full rundown of what's happening and where to find the best potential yields.
But just to give you an idea of the difference between Tron and Ether in a real world application. Consider this, transferring USDT from any exchange to another exchange, or your wallet. Transferring over ERC-20 network (Ethereum) is whatever ETH gas fees are the moment. So $5+if you're lucky. How much does it cost to send the same USDT over TRC-20 network? 1USDT flat. And again, that's on the pricier end. So given the choice to send USDT over ethereum or Tron, which would you pick? And that's only the start...
If Tron can find a way to shake off its bad reputation from past rug pulls and / or its contentious founder, I think it can give the smaller players in DeFi a place to get some yields without having to auction off a kidney to pay for transactions.
I hope you enjoyed the article, if you don't agree with some, or this article, please keep your responses civil. Don't berate me, don't call me names. You are entitled to your opinion, as much as I am mine. And if you strongly disagree, write a response. But keep it civil. We are the most advanced species on the planet, let's act that way.
Cheers
OGF
P.S. - NONE OF THIS IS INVESTING ADVICE.
It is just a reflection of the experiences I've had in the the crypto-sphere. Please due your own due diligence and research before investing anything into a potential project or investment platform. And apologies for typos or bad grammar. I wrote this in a rush.
