What are the prospects for Ethereum in 2021?
What a year 2020 for Ethereum! Phase 0 of Ethereum 2.0, DeFi and democratisation, Ethereum could hardly have dreamt of anything better. Now that we have just entered the new year, we are able to look a little more closely at what we expect for 2021, and how the year of Ethereum could go.
DeFi continues on its way
Haaaa the DeFi, how to miss this ecosystem after its performance in 2020! In view of the constant evolution of the DeFi in 2020, there is a good chance that the ecosystem will continue to be the talk of the town in 2021.
Obviously, the year 2021 could turn the current ranking Bitcoin News Trader of DeFi projects upside down, with the arrival of new projects, or the evolution of others.
Unfortunately, the craze for DeFi in 2020 has also led to a very large number of hacks and attacks of all kinds. Among these attacks, the reentrancy attack was one of the most common.
Thus, for the year 2021, we can hope that smart contract developers and investors will learn from the mistakes of the past and that better practices will be put in place. For example, the systematic auditing of smart contracts, the regular absence of which has unfortunately been the cause of too many hacks in 2020.
This maturation will be necessary for Ethereum. If the community as a whole does not better apply best practices, the DeFi on Ethereum could well see its reputation tarnished once again.
Phase 1 of Ethereum 2.0
It is impossible to talk about Ethereum without talking about Ethereum 2.0. Indeed, Phase 0 of Ethereum 2.0 was rolled out on 1 December last year.
This phase is the first of a series of three phases spread over several years.
Thus, after phase 0, which aimed to set up the beacon chain, the backbone of Ethereum 2.0. Phase 1 will introduce the shard chains.
These shard chains, or simply shards, have the particularity of dividing the network into a multitude of sub-networks, responsible for independently processing their data. As such, they are an integral part of Ethereum’s scaling strategy.
According to the announcements of the Ethereum Foundation, phase 1 could be launched in 2021. However, Ethereum 2.0 subscribes to delays and it is not excluded that these delays will not be met.
Democratisation of second layer solutions
Although an excellent year for Ethereum, the year 2020 has nevertheless seen its failures. For example, the network became congested too many times, leading to significant increases in transaction costs.
These periods of paralysis for the network have had many negative effects and, in addition to annoying users, have resulted in the loss of several million dollars.
Thus, we can hope that 2021 will be the year of the democratization of second layer solutions. Indeed, although Ethereum 2.0 is supposed to solve Ethereum’s scalability and performance problems, this upgrade will not be fully deployed until 2022, or even 2023. Therefore, it is essential to put in place solutions while waiting for its deployment.