Ethereum has the highest level of market cap after Bitcoin for a long period of time but many developers are currently fleeing to the other mediums. The reason why it has been resisting all the newly introduced cryptocurrencies for years and years is that it offers exceptional features for smart contract processes and decentralized applications. However, the picture has been reversed and Ethereum is partially losing its power because of the absence of what has made it the star of the market, the developer community. There are lots of factors leading to this fall but three of them are more significant than the others.
- Limited Interoperability With Other Tools
Interoperability becomes one of the most required features of the crypto world for developers. What developers have realized was the power of cross-chain technology, which seeks to allow transmission of value and information between different blockchain networks. The inability of different blockchains to communicate with one another has made it impossible for people to enjoy the full benefits of blockchain technology. Thus, developers changed their preferences in the way that they can utilize the interoperability of a platform.
Although Ethereum has taken some steps such as better token wrapping protocols and layer 2 swapping platforms, they have fallen far behind in the market in terms of interoperability. For example, a new blockchain called Polkadot came into our world and it offers sophisticated bridge technology without imposing uniformity across blockchains. Other platforms also present more integrated and interoperable applications, which makes developers transit from Ethereum to them.
- Harmful Effects On Environment
In the early days, many people could not realize how the mining process can be devastating for the environment, but now it becomes a major concern with expanding mining network. The proof-of-work protocol requires a gigantic amount of energy, which is currently used by Ethereum. What Ethereum tries to do in order to alleviate the unwanted side of this method is to mix it with the proof-of-stake consensus that guarantees a similar level of security with less energy consumption. However, the update is still not ready, and developers are already looking for other options instead of waiting.
- High Transaction Fees
Can you guess the average Ethereum transaction fee? It is probably higher than you think — $25. A smart contract process is even more expensive, usually seven times higher than the level we have stated before. This high number is represented as a gas fee and it makes really hard for Ethereum to attract new developers into the system. As a result, the developers work on other ways of overcoming the fee barrier and migrate to more improved platforms with lower fees.