Pain Point, Ethereum Network, Limits of Ethereum

Slowdown in the Ethereum Network

Although most stablecoins use ERC-20 standard tokens on the Ethereum network, the network has not yet ready to be used for daily payments due to relatively low speed in processing transactions. In addion, the rise of gas price when transaction traffic is jammed up presents another issue. In response to those problems, many public blockchains are making greater efforts to provide a blockchain solution that allows maximum transaction processing by specifying an optimum point between decentralization and security.

Limits of Ethereum-dependent Collateral Loan Market

Ethereum is primarily used for DeFi among other cryptocurrencies. Its market capitalization stands at about $25 billion as of 28th June 2020 according to data from coinmarketcap.com. This means that the total supply of the DeFi market reaches just about KW30 trillion, though the entire Ethereum would be locked up as collateral. That is relatively small portion held in the global financial market. To overcome the challenge, leaving a smart contract application technology aside, a technology that allows to collateralize various blockchain-based digital assets need to be deveoped. In addition, steps should be taken to expand to other asset classes such as stocks or gold to tokenize them for being used as collateral.

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