Conformable statements to Vitalik Buterin, the Istanbul upgrade increases the number of transactions in the Ethereum network to 3000 per second. Although it is a clear improvement for one of the most active blockchain networks, it will not bring about essential changes in the ecosystem.
Specifically, the network will become faster and some improvements will be implemented, but Ethereum will not become “a worldwide computer”.
Obtaining consensus through mathematical calculations is very expensive – and therefore very slow. The Istanbul upgrade will make Ethereum network consensus faster, but the term “world computer” seems hyperbolic. The current situation makes the blockchain more like a “trusted machine” than a “world computer”.
Blockchain for DeFi applications
The cost of consensus is the reason why decentralization applications are more similar to what Nick Szabo calls “Distribution Machines”. If a line of code does not manage value, it is more efficient to run in a faster, cheaper and more centralized environment.
This means that decentralized applications are those using smart financial contracts. Such as decentralized exchanges, swaps, non-fungible token sales and financial credit and arbitrage (DeFi) products.
Ethereum is currently the most widely used blockchain for DeFi applications because it has a relatively high liquidity background and a very high degree of programmability. In particular, lending seems attractive, as current DeFi protocols produce interest rates of up to 10%.
Currently, nearly $ 700 million in value is locked into DeFi contracts. It remains to be seen whether such high rates will keep rising, as more and more money floods the market, in search of high returns.
Therefore, increasing Ethereum performance through the Istanbul upgrade streamlines current activity, but seems unlikely to produce new types of applications.
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