Since its creation in 2013, Ether has gradually become the most ecologically prosperous blockchain: the
As of May 18, 2021, the market capitalization of Ether exceeds USD 390 billion, ranking 18th in the world, second only to Walmart.
Over 80% of the current TOP 300 blockchain ICO projects in terms of market capitalization are built on Ether.
The top TVL for DeFi within Ether, which reached $45 billion in Q1 2021.
Ether has the largest number of core protocol developers in the entire blockchain ecosystem, in addition to 240 active developers in January 2021, with a total code count exceeding Bitcoin by 8 times, thus showing the activity of the Ether ecosystem. (Developer report published by Electric Capital, a crypto asset management company)
In addition, the number of daily tweets and the number of active addresses of Ether is among the top parameters of all ecological chains, which is enough to see the status of Ether as the king of public chains in the industry.
Last year, Ether saw the rise of the DeFi project: in 2020 alone, the total locked positions on Ether increased 29 times and the market value of stable coins nearly quintupled. the explosion of DeFi made more people pay attention to cryptocurrencies and at the same time, it also led to a huge increase in demand for the use of each chain network. Firstly, the demand for transactions rose dramatically, and secondly, due to the high level of computational complexity, smart contract transactions were very consuming of block processing power, resulting in a decrease in the number of transactions that could be processed per block, while the speed of block out was almost constant across chains, so the processing of transactions on the chain became slower. A simple speed equation is: Waiting time = Number of pending confirmations in front of the queue / Processing speed The congestion of the network is reflected in the longer “queue” of pending transactions (numerator increases) and slower transaction processing (denominator decreases), and the combined effect of these two factors is that users wait for their turn in line The combination of these two factors will result in users waiting for their turn in line (without “jumping the queue”).
Ether’s space usage side by side confirms this. As the most important blockchain in the DeFi ecosystem, the space utilization rate of Ether has been stable at over 95% since the outbreak of DeFi in 2020, and currently even reaches 99%, which is a near-saturation state.
How does blockage manifest itself in the user experience?
This is determined by the miner mechanism. In ethereum, every transaction needs to be confirmed and packaged by miners; and miners get revenue from the fee (gas fee) paid by users (which is the source of miners’ motivation). In order to get more revenue, miners will prefer to prioritize the transactions in the block with higher fee settings. However, each block has a limited capacity, and when the number of transactions to be confirmed is too high, the unqueued transactions are stored in the miner’s memory pool; if the fee for that transaction is still lower than the bids for other transactions in the next block, then the confirmation of the transaction will have to be delayed. This is called “transaction queuing”. Currently, there is a huge backlog of orders in the miner’s memory pool, and if the user sets a lower fee, the transaction may be confirmed for more than a few hours, or even never get queued.
As the chart shows, the number of orders to be confirmed on Ether has been stable at around 160,000, and even over 18w at the peak.
This results in users having to raise their costs: fees or waiting time
Ethernet congestion forces users to choose between time and money, at the expense of one. For end users, if they don’t want to pay high fees, they have to wait and find a time when transactions are less busy to enter; and to avoid the long and torturous waiting period, there is only one solution: increase fees. The chart below shows the fluctuation of the average fee since the birth of Ether to the present.
Since 17 years when Ether started to have applications one after another until 20 years ago, although there were fluctuations, it almost remained below $1. The high point appeared in June 18, with a peak of $5.58; in the second half of 20 years, as DeFi applications gradually increased and a large number of transactions poured in, the fees started to rise and had huge fluctuations; since this year, the fees have entered the white heat of soaring, and the average fee even reached $68.74 on May 21 14 even reached $68.74, which means that the average transaction on Ether on that day cost an additional $68.74 in fees. This overwhelms a large number of long-tail users and raises the threshold for new players to enter the market, creating a serious obstacle to the long-term development of the entire ecology. In real time, a large number of Dapps (including some head dapps) have started to flow from Ether to other blockchains, which is a wake-up call for everyone.
Expansion is urgent
In order to solve this problem, retain users (retaining users also retains project owners) and make the whole ecology keep moving up, this congestion problem must be solved – the core is to improve the overall TPS (Transactions Per Second, throughput). In this regard, Ethernet has also been in the process of 2.0 upgrade, although the process is very long.
Compared with 1.0, the upgrade of 2.0 is mainly in two aspects: the change of consensus mechanism (from POW proof of work to POS proof of equity), and the use of a fractional chain. Under the POW mechanism, all nodes can only do one thing at the same time, and the amount of tasks that the whole network can handle is severely limited by the upper limit of tasks that a single node in the network can handle, resulting in a very limited processing capacity. The introduction of POS+Slicing technology enables Ether 2.0 to realize synchronous operation of multiple chains. Ethernet 2.0 will have 64 slices, which means it can handle 64 times the current transaction volume at the same time, like expanding a one-lane road into a 64-lane highway, and the TPS can be raised from the current 15 to thousands or even more.
Surely, the future ETH 2.0 can greatly improve the base throughput, but for one thing, if we only focus on Layer1 expansion in the future, it will reduce the decentralized character of the main chain, because to increase the throughput of the main chain, stronger and more professional nodes are needed; in addition, the transformation of 2.0 is a slow process in stages, and the full online may not be until a few years later, which is the long-term ethereum development direction rather than an immediate remedy.
If we need to alleviate congestion and high gas fee in the shortest time, while maintaining a high degree of decentralization, without relying on the deployment of slices, we can only find another way. Since the main chain can not go, we will find a way to make articles under the chain. Thus, the concept of Layer2 is born, which transfers the transaction calculation process on the main chain to the lower chain (i.e. Layer2) and returns the result to Layer1, and the chain only does notarization and information storage, which reduces the burden of Layer1 and greatly improves the efficiency of the main chain.
In fact, the concept of Layer2 was born as early as Bitcoin’s time: Bitcoin’s Lightning Network used a payment channel to allow a series of transactions between two points to take place under the chain and only return the final account results to the main chain. in August 2017, Joseph Poon, the author of the Lightning Network white paper, and Vitalik, the founder of Ether, jointly proposed the Plasma expansion plan In 2018, the Rollup concept was born, proposing to highly compress the transaction information under the chain and package it on the chain together with the transaction results, improving the security of the assets. It makes up for the shortcoming of data unavailability on the Plasma main chain (Plasma returns only results, no transaction information); Rollup is divided into ZK-Rollup and Optimistic Rollup, which use proof of validity (using zero-knowledge proof technology) and proof of fraud (same as Plasma) to ensure the validity of the data on the chain, respectively.
Thus, although the emergence of the Layer 2 concept predates Ether 2.0 (Vitalik only announced the Ether 2.0 roadmap in November 2017), the Layer 2 solution has been developing at a slow pace because the development of Ether has been in a calm stage until 2020; until last year, when DeFi exploded and the main chain congestion greatly affected the user experience, more It was not until last year when DeFi broke out and the main chain congestion greatly affected the user experience that more attention was focused on Layer2 expansion, and the latter’s development speed has increased exponentially. At present, a large number of teams are choosing different Layer2 tracks to sprint respectively, and are competing in both development speed and project quality: there are trade-offs and differences between different implementation paths in terms of security, decentralization degree, user experience, scalability, etc., which will also affect the application scenarios of future projects. However, it is certain that a large number of Layer2-based applications will appear in the public eye in the near future.
In the long run, Ether2.0 can provide a wider track for the ecology, while Layer2 technology will provide higher processing efficiency and richer application imagination based on the main ecology of Ether2.0; the two will complement each other to create a golden era of Ether2 in the future.
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Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/the-current-state-of-ethernet-congestion-the-problem-cant-be-solved-without-delay/
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