- Ethereum’s attempt to resolve the blockchain network’s scalability problem could kill layer-1 scaling solutions.
- Though layer-1 solutions may not become irrelevant immediately after the launch of ETH2.0, these projects may lose their utility.
- Analysts have predicted that the growth of layer-2 scaling solutions combined with upgrades could limit layer-1 projects.
On-chain activity and the utility of Ethereum layer-1 scaling solutions may be negatively impacted by the launch of ETH2.0. The implementation of sharding and proof-of-stake consensus mechanism could make layer-1 scaling solutions irrelevant.
ETH2.0 may be the real killer for layer-1 scaling solutions
Based on Coinbase’s recent institutional market intelligence report, layer-1 scaling solutions could lose their relevance and utility with the launch of ETH2.0.
Though there is a spike in the popularity of layer-1 scaling solutions due to high gas fees on the Ethereum network, there could be a drop in the utility of the projects. The altcoin network is attempting to resolve the scalability problem of Ethereum through sharding and proof-of-stake.
Layer-1 scaling solutions could become irrelevant. Proponents believe that ETH2.0 could scale over time, and until then, Ethereum killers could witness a spike in adoption.
A majority of the layer-1 project development is happening on the Ethereum blockchain. The report reveals a total of 214 projects, with over $156 billion in total value locked. Ethereum layer-1 alternatives offer users a faster and cheaper option in the absence of ETH2.0.
@venturefounder, a crypto analyst and trader, believes that after staying close to 100% supply in profit for months, the correction brought the profitable supply down to 75%. The price is close to the September 2021 correction, $3,000; Ethereum could capitalize further in the ongoing blood bath.
#ETH: After staying close to 100% supply in profit for months, the correct correction finally brought % supply in profit to July 2021 levels (75% supply in profit).
— venturefoundΞr (@venturefounder) January 12, 2022
Even though price is close to Sept 2021 correction (~$3k), $ETH capitulated much harder this time. pic.twitter.com/eylc9pRiwm
FXStreet analysts expect Ethereum price to bounce back to $4,000.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Crypto today: Bitcoin, Ethereum, XRP tests key support, TRON network non-stablecoin activity hits new highs
Bitcoin, Ethereum, and XRP hover around key support levels after registering a steep correction earlier this week. TRON network’s stablecoin activity hit new highs following the release of SunPump. TRON trades at around $0.1500, almost flat on the day.
Bitcoin Weekly Forecast: $50,000 on the horizon if it breaks below key support level
Bitcoin price tests the key support level at $56,000 on Friday, consolidating over a 1% decline this week. If it drops below this support, a continued downtrend is likely for BTC, as suggested by substantial outflows from US spot Bitcoin ETFs, rising institutional selling, and bearish on-chain indicators.
Vitalik Buterin says all Layer-2 token holdings will be donated to charity, won’t sell for profit
Vitalik Buterin, Ethereum co-founder, has not sold Ether since the altcoin’s ICO in 2018. On-chain transfers by Buterin make headlines as ETH holders keep eyes peeled for selling pressure on the altcoin.
WazirX, PenPie and Bo Shen hackers launder $42.7 million in stolen funds through Tornado Cash
Three different hackers responsible for the exploit of crypto assets worth millions of dollars from crypto exchange WazirX, DeFi protocol Penpie, and Founder of Fenbushi Capital Bo Shen are using Tornado Cash to move part of the stolen funds.
Bitcoin: $50,000 on the horizon if it breaks below key support level
Bitcoin (BTC) price tests the key support level at $56,000 on Friday, consolidating over a 1% decline this week. If it drops below this support, a continued downtrend is likely for BTC, as suggested by substantial outflows from US spot Bitcoin ETFs, rising institutional selling, and bearish on-chain indicators.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.