Summary:
- Ethereum gas fees are at all time highs due to high network demand.
- Small transactions and investments in ERC-20 tokens like Uniswap and FARM are unaffordable.
- While we wait for Etherum 2.0, Celo has gone ahead with its own proof of stake protocol enabling low transaction fees.
- Celo additionally has a high quality UX (via Valora) for payments making it much more usable than most DeFi platforms.
Background:
Gas fees on Ethereum are at an all time high, above 200 gwei at the time of writing. For a transaction requiring 100,000 gwei, and an Ether price of $1,500 , that puts the transaction cost at $30. Many transactions require more gas, taking costs above $100 for transactions in certain cases.
This means that only transactions in the thousands of USD are viable on payment and investment platforms.
Only perhaps for yield farming platforms like harvest.finance that allow investments to be pooled in smart contracts to save on gas, can it be said this this is a good thing. Even still, the bar for investing and transaction is very high.
Proof of Stake as a Solution:
We know that Ethereum 2.0 is coming and should allow for lower transaction fees on a proof of stake platform. In the meantime, Celo.org has gone ahead and developed its own proof of stake platform* with lower fees (albeit lower transaction volumes at present than happening on Ethereum). Celo is worth reading into for at least three reasons:
1. An early proof of stake model.
2. Good UX - unlike many Defi platforms. Check out ValoraApp.com .
3. Mobile friendly. Can be run on very basic mobile phones using remote nodes to do the computing.
It is early days for Celo and a long way to catch up on Ethereum, but I think it is well worth exploring. Those interested can follow a mini-course I put together providing an DIY-learning approach to the platform.
*which originated as a hard fork of a Go implementation of the Ethereum platform
Disclosure: I am long CELO, FARM, UNI, AAVE, CRV and BTC.
