- 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.
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