Dapps (Decentralized applications) built on Ethereum have seen tremendous growth over the last 3 years. According to stateofthedapps.com there are currently more than 3000 dApps with 106k DAUs doing a massive 222k transactions every 24 hours on Ethereum mainnet. As mainstream adoption increases, this number is only bound to go up.
The highly open source & decentralized nature of Ethereum allows developers to deploy dapps from anywhere in the world without censorship. As the dapps increased multifold, so did the users. This led to an unwanted aftereffect- increased gas fees.
As blockchains are decentralized in nature, the transactions are added and validated in the network blockchain by anonymous miners or validators. All transactions cannot be validated simultaneously, as the energy cost for miners would be exceedingly high. All the unprocessed transactions enter the mempool where miners decide which transaction to validate. In the Ethereum mempool, arbitrage bots monitor pending transactions and attempt to exploit profitable opportunities. The bots try to outbid each other only to escalate the gas fees which leads to failed transactions. These failed transactions add no value but clog up the Ethereum network, reduce the blockspace for users, and increase the gas costs for them.
This has created an opportunity for alt-Layer 1 platforms to advertise themselves as “Eth-killers” by providing low gas fees. These chains have much lower fees as they have very few validator nodes. But this didn’t stop users from moving to other chains.
According to DefiLLama, ETH had a massive 97% share of TVL compared to other chains in Jan 2021. 1 year later, although still dominant the share has dropped to 55%. The significant drop can be attributed to multiple factors like LP mining rewards, cheap gas fees, and migration of dApps to other chains to retain users allowing them to pay lower gas fees.
So what’s next for Ethereum?
There has been an influx of roll-ups, STARK-based L2s along with sidechains. As these products are still in the early stages they suffer from centralization, down-time, insecure bridges, and low security.
Vitalik Buterin in 2018 tweeted that “Most dapps have lots of room to gas-optimize, and even if you don’t your dapp running raises gas fees and pressures *others* to gas-optimize. There’s plenty of low-value spam on chain” there’s still a lot that can be achieved by optimizing the dApps”.
The volume is growing on Uniswap and other exchanges but the growth of the new user base is pretty much flat. So just the transaction size has gone up making this accessible to whales only and normal users are getting priced out of trading on Ethereum.
Instead of deploying forks of dApps on permissioned centralized solutions, it’s time to come up with gas-efficient solutions. There is plenty of innovation happening in DeFi & DEXs but very little to no research on prioritizing & providing a low gas environment for end-users. This is very important to onboard new users as they cannot afford high gas fees and imagine having to pay for a failed transaction.
WhatSwap is an on-chain decentralized trading protocol using an automated liquidity pool based on a “constant product formula.” Every WhatSwap trading pair stores a reserve of the dual asset pools, which provides liquidity for the assets in the pool.
WhatSwap incorporates all essential trading features in the protocol smart contracts while achieving the low gas fees trades for the user.
Key features of WhatSwap:
- Highly gas efficient
- Permissionless Listing
- Familiar & Easy to use — UI & UX
- ETH/ERC20 and ERC20/ERC20 (in V2) token pairs.
WhatSwap saves ~60% gas fees for a swap and ~90% gas fees for pool creation compared to existing decentralized trading protocols.
Such highly efficient DEX not only saves a lot of gas for users but also provides more blockspace for other transactions to be validated in the block. Thereby increasing the efficiency of Ethereum to provide a robust user experience for end-users.