Ethereum Is Manhattan and Everyone Is Moving to the Suburbs

The network congestion on Ethereum inspired the Aragon community and Balancer Labs to devise a solution that offers off-chain voting with on-chain execution via the Snapshot DAO governance tool.

Before a scalable version of Ethereum arrives in Ethereum 2.0, it's likely many social innovators, DAOs and DeFi protocols will look to off-chain systems to meet their needs.

Running a smart contract on Ethereum is like renting an apartment in Manhattan - you are hyper-connected to "a cultural center and the world of finance" but you pay a lot for a 500-square-foot studio.

Similar to Manhattan, Ethereum could be considered a hive of decentralized activity; congested, but an important economic "'pull factor"' for the many different DeFi protocols.

The advancement of off-chain and layer 2 technologies - and eventually Ethereum 2.0 - comes at an important time for these social DAOs looking to scale.

DeFi protocols, predictions markets and decentralized exchanges are among the most prominent users on Ethereum today.

In essence, hyperconnectivity on Ethereum allows a protocol to open a vault on Maker, get dai, lend that dai on Aave, and then offer yield to their users, just one of the many examples of the "Money legos" that open up with hyperconnectivity on Ethereum.

Many of the bigger DeFi protocols running on Ethereum today will continue to operate just fine without needing an added functional layer to scale.

Just as the suburbs of New York City expanded and evolved over time too, will the rollout of Ethereum 2.0 take time.

Off-chain solutions, like Snapshot, or layer 2 virtual machines, will go a long way to meeting the requirements of DeFi and social DAOs.These will be available to us in the very near future as we wait for Ethereum 2.0 to offer decentralized communities the essential infrastructure necessary to escape the congestion.