In comments likely to resonate with crypto fans, Hayden Adams, the founder of Uniswap, a leading decentralized exchange (DEX), predicts that network fees will eventually become a background expense for users, much like server fees are today for top centralized applications running on Amazon Web Service and other platforms.
Gas rates are a major pain point, mass migration to Solana, Layer-2 platforms
On our way to X, Adams for eyes a future where decentralized applications (dapps) seamlessly cover network costs on behalf of users. This approach, the inventor adds, is similar to how server costs are currently handled in the current setup, especially among operators of commonly used applications such as X or Facebook.
Server costs are often considered hidden costs in the overall business model. However, this can cost millions of dollars every month depending on the popularity of the app.
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Currently, the dream of low-fee transactions remains out of reach for some blockchains, especially Ethereum, the dominant smart contract platform. Ethereum is an old blockchain that has recently shifted from a proof-of-work to proof-of-stake consensus.
While this was a major shift, the network still faces challenges of scale. Optimally, Ethereum can only process 15 transactions per second. Comparing this to current demand, it just means that the ‘gas cost’ needs to be high to incentivize the validator to include transactions in the next block.
This high “gas fee” remains a major pain point, causing some projects to migrate to alternative networks with higher transaction speeds and lower costs. Solana, a high-throughput blockchain, and layer 2 scaling solutions such as Arbitrum have emerged as popular destinations for these migration projects. This trend is especially evident with the recent wave of meme coins like BONK and WIF, which have seen significant growth on Solana.
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Unlike Ethereum, Solana and layer 2 platforms that rely on Ethereum for security have higher throughput and negligible gas costs. Accordingly, more meme coin projects are being launched on these networks. Here users can make transactions without considering the consequences of gas costs. In recent weeks, the best meme coins have been launched on Solana in addition to PepeCoin (PEPE) or Dogecoin (DOGE).
Ethereum is working on scaling
Ethereum will implement the Dencun Upgrade in mid-March to combat the scaling issues. The update aims to significantly reduce costs for users interacting with layer 2 solutions. However, this upgrade is just one of many Ethereum developers plan to implement over time.
Ultimately, the proof-of-stake network aims to scale processing speed, allowing it to execute millions of transactions every second through innovations like Sharding.
Uniswap continues to lead in popularity in terms of assets under management. So far, Uniswap developers have deployed their solution on other blockchains and layer 2 options, including Arbitrum and the BNB Chain.
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