Vitalik Buterin proposes low transaction fees on layer-2, fuels Ethereum price uptrend
- Ethereum developers consider adding blob-carrying transactions to boost the scalability of rollups.
- Proposed updates could lower transaction fees, provide immediate relief before sharding is complete.
- Investor sentiment on Ethereum improved as the altcoin received larger allocation, based on a CoinShares survey.
- Analysts believe that Ethereum price is at the make or break point as it hits $3,000 while maintaining a bullish structure.
Ethereum co-founder Vitalik Buterin has proposed a solution to provide temporary relief to scalability issues and transaction fees on layer-2, ahead of sharding. New updates could be bundled and added to the Shanghai hard fork.
Investor outlook on Ethereum turns bullish ahead of new updates
Ethereum’s development roadmap is ever-evolving. Vitalik Buterin, the co-founder of the Ethereum network, proposed a new update to provide immediate relief to layer-2 scaling solutions without sharding.
Rollups, or layer-2 chains, inherit the Ethereum network’s security, decentralization and liquidity. Early-stage rollups like Optimism, Arbitrum and StarkNet are awaiting further optimization in 2022. Buterin has suggested “blob-carrying transactions” that drop transaction fees by five times or more by the end of 2022.
Ethereum layer-1 may continue to remain expensive; however, higher scalability and zero-knowledge(zk) rollups can offer the cheapest fees to users. Eventually, users would use zk rollups exclusively rather than interacting directly with the Ethereum network.
Some proposals to add "blob-carrying transactions" in a near-future hard fork, bringing higher scalability to rollups before full sharding is complete. https://t.co/oRTSwAC1oD
— vitalik.eth (@VitalikButerin) February 5, 2022
Lower transaction costs and higher scalability are expected to boost investor outlook on Ethereum. CoinShares, a capital markets firm, recently conducted a digital asset bi-monthly fund manager survey. The survey results reveal investor sentiment has improved for Bitcoin and Ethereum.
The report reveals the underlying correlation between investor sentiment and allocation to digital assets. Compared to altcoins Polkadot, Cardano and Solana, relatively larger allocations accompany an improved outlook on Ethereum.
The report reads:
Allocations to digital assets mirrored the growth outlook for digital assets, where allocations were minimally increased for the larger coins [Bitcoin, Ethereum] at the expense of altcoins.
Analysts have evaluated the Ethereum price trend and noted that the altcoin is at a make or break point.
@AltcoinSherpa believes that a return to lows is likely in Ethereum; however, the price has maintained a bullish market structure on the 4-hour weekly chart, $3,000 is the make or break point.
$ETH: This isn't generally how bottoms are formed; I think a return to the lows is likely (eventually). With that said, price has still maintained a bullish market structure on the 4h w. HHs/HLs. Approaching a scary area in the 3000s, be careful. #Ethereum $ETHUSD pic.twitter.com/9KoAwUnsM2
— Altcoin Sherpa (@AltcoinSherpa) February 4, 2022
FXStreet analysts believe that Ethereum bears are in despair as the altcoin approaches $3,500.
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
