Sam Bankman-Fried believes even ETH 2 can't handle DeFi's potential growth

Published at: Nov. 11, 2020

FTX exchange co-founder and CEO Sam Bankman-Fried believes Ethereum is incapable of handling decentralized finance’s growth.

Talking to Camila Russo from the Defiant Podcast, Bankman-Fried said that the Ethereum blockchain is limiting DeFi’s development and the only way around it is to build on other networks.

“At some point, it’s just clear that we weren’t getting around that. Either we're going to build it on Ethereum or we are going to build something that we thought was going to be really exciting, but not both.”

He stated that anytime his team tried to build something new that they were excited about, they “immediately exceeded the throughput of Ethereum blockchain by orders of magnitude.”

Bankman-Fried claims to have tested more than 30 blockchains, including Ethereum, before deciding to build his DeFi project Serum on the Solana blockchain due to its speed and infrastructure.

Bankman-Fried believes that DeFi could one day be used by 1 billion people, which means that blockchains will need to dramatically expand their scaling capacities in order to support a 10-figure user base. Even scaling improvements in Ethereum 2.0 won't provide enough capacity for what Bankman-Fried has in mind:

“Not just 100 times faster than Ethereum, we need, like, a million times faster than Ethereum.”

During the DeFi boom of recent months, the increasing popularity of Ethereum-powered DeFi protocols heavily congested the Ethereum network — spiking fees to more than $15. When fully operational, Ethereum 2.0 could scale up by a factor of 100 to 1000.

Solana’s CEO and founder, Anatoly Yakovenko — who was also on the podcast — echoed Bankman-Fried’s thoughts, stating that the current version of Ethereum is so poorly designed that the hardware requirements for its 15-transactions-per-second network aren’t much below those needed by Solana, which is currently processing 500 to 600 TPS.

Not everyone is writing Ethereum off, however. DappRadar communications director Jon Jordan told Cointelegraph in June that he believes Ethereum 2.0 will benefit DeFi greatly. He believes the introduction of sharding chains and a proof-of-stake consensus model will solve some of the most fundamental issues of decentralized applications, considerably increasing transaction speed and throughput.

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Technology
Ethereum
Scalability
Defi
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