Polygon will ignite DeFi Summer II on Ethereum

Aave and Curve are the catalysts for the next Cambrian explosion, arms race, liquidity black hole on Ethereum

After a week of using Polygon network, an Ethereum Layer 2 network, I have come to a lot of conclusions and had an epiphany:

  • The Polygon experience is exquisite - fees are $0.0006 USD and transactions are about 3 seconds. This is a gigantic relief after experiencing Ethereum fees that often exceed $100 per transaction over the last 8 months.

  • I am fully convinced blockchain scaling is possible

  • Ethereum will be the dominant Layer 1 blockchain because of its decentralization, security, network effects, vibrant DApp ecosystem, the emergence of DeFi, and the high yield ETH staking opportunity

  • Polygon has a HUGE first mover advantage over Optimism, which is not expected until June/July, 2021. Synthetix and Uniswap both bet on Optimism, while Aave and Curve have proceeded to build on Polygon

  • Aave and Curve will be rewarded for listening to their customers and implementing Layer 2 solutions first

  • Zero knowledge proof/rollup scaling solutions are supposed to be the holy grail of transaction scaling, and have been implemented by dydx and Loopring, but neither are cornerstone DeFi money legos like Aave and Curve

  • Polygon’s MATIC token will be the best performing of the Layer 2’s in 2021 (not financial advice)

I sent a tweet about a new algorithmic stablecoin that looks very interesting, Elena Protocol. I passed on setting up a yield farm and participating in the early liquidity mining because of the high gas fees required on Ethereum Layer 1:

My estimate for fees on this very cool, new algorithmic stablecoin setup would be:

  1. $100

  2. $15

  3. $35

  4. $65

  5. $15

  6. $15

  7. $85

  8. $15

  9. $50

Total = $395, and this doesn’t include the cost to withdraw and swap earned ELENA tokens to try and recover some of your ETH gas.

Here’s a well known mobile wallet, lowering the barrier to entry for new DeFi users. Argent is dropping hints, look out Dharma!

There is now a DeFi DApp race to implement layer 2 scaling solutions and win market share in the form of liquidity (total value locked), and to win small investors back from the Binance Smart Chain. It will be very hard to go back to Layer 1 after my experience on Layer 2, and I’m very excited to watch the Layer 2 DApp migrations, integrations, and launches begin!