In a recent interview, the co-founder of Ethereum said that a new simple approach would be implemented to tackle the Ethereum traffic bottleneck. The rollup would aggregate transactions currently not present on Ethereum to be moved in the Ethereum smart contract, which would help reduce price and amount of traffic by incrementing the rate of data transferred of blockchain ranging from 15 to 1000 (transaction per second).
The L2 solution
The new rollup is called the L2 solution, which is made by Optimism; the solution currently is in the testing phase but would likely be given a green signal as soon as beta testing is finished. Vitalik Buterin also asserted that Ethereum would need an increase in capacity.
A new update at block 1224000 is also imminent, with reports suggesting the rollout with the name “Berlin” would be made available on the 14th of April 2021. There is also another update coming this summer; however, Buterin failed to mention if the L2 solution would be implemented or not.
Why the update is so important for Ethereum
A few years back, amid the Crypto-Kitties NFT craze, Ethereum traffic congestion caused a huge choke which was an embarrassment not just for Ethereum’s entourage but for the whole community, further adding to the injury, the one solution opted to get rid of all Ethereum’s network congestion problem.
As the popularity of DeFi (Decentralized Finance) skyrocketed in 2020, the resources required to maintain the system, such as the price of transaction and computation time, skyrocketed as-well, increasing the burden.
Where Ethereum stand in valuation today
In 2021 the value of oil has dropped around 70%, whereas the price of Ethereum is in a spiral of increasing 11.5% daily. The price of Ethereum is related to the price of a transaction on the web.
There is huge competition in the Defi market, wherever the smart-contract is being used. Because of this network congestion of Ethereum, the only beneficiary is its substitutes.
Relocation to those platforms does often happen. Ripple, one of the competitors, has a few problems up its sleeves related to the selling of unregistered securities, causing a legal battle with the Exchange commission of the USA and getting two of their CEOs sued.
Another one of the key competitors of Ethereum, Binance Smart Chain, has also made headlines since its chairman tweeted about in 2020, the leading cryptocurrency exchange’s Smart Chain has been more economical compare to Ethereum.