Will the wave of competition from the new generation of blockchains be strong enough to “topple” Ethereum?

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2022-05-21 08:38:36

With the advent of a series of new blockchains that are innovative in all aspects, Ethereum is facing many great challenges to maintain its position in the market.

Will the wave of competition from the new generation of blockchains be strong enough to “topple” Ethereum?

Specifically, crypto investment fund giant Andreessen Horowitz (a16z) has just released a detailed report to evaluate the current potential of cryptocurrencies in general, specifically focusing on Ethereum (ETH). . Additionally, a16z focuses on topics such as Web3 development, crypto adoption, DeFi, and stablecoins.

According to a16z, Ethereum is clearly outperforming the competition in terms of engineer interest, as the network is running around 4,000 monthly active developers compared to Solana who ranks second at 1,000. Bitcoin and Cardano are in the next positions at 500 and 400 respectively.

Demand for Ethereum can also be demonstrated through the estimated transaction fees paid on the blockchain over the seven-day average, as of May 12. The data shows that Ethereum accounted for $15.24 million generating a surge in demand. quite a contrast to BNB Chain, Avalanche, Fantom, Polygon and Solana with about $2.5 million in fees combined.

The popularity of Ethereum is also a double-edged sword. Because Ethereum has historically been prized for decentralization over scaling. As a result, other blockchains have been able to “attack” this weakness of Ether and attract users with promises of good performance and lower costs.

Therefore, layer 2 scaling solutions were born with amazing development aimed at reducing fees for Ethereum and increasing transaction speed while waiting for the upgrade to go to Proof. The long-awaited -of-Stake is coming to the platform to make the network more efficient.

See more: Kyros Kompass #3: Overview of the Layer 2 Painting

The support coming from Layer 2 is quite substantial considering that across adoption so far, scaling solutions have contributed to around 1.5% of the fee savings realized on ETH.

However, consolidation is unlikely to happen anytime soon, at least until the third quarter of this year. This will create an opportunity for competing blockchains including Solana, BNB Chain, and Polygon to continue to closely trail Ether in terms of addresses and daily transactions.

The data shows that Ethereum has 5.5 million active addresses accounting for 1.1 million daily transactions, while Solana has a whopping 15.4 million active addresses and 15.3 million transactions. BNB Chain comes in at third place with 9.4 million and 5 million, while Polygon has a total of around 2.6 million and 3.4 million respectively.

However, despite facing certain challenges as mentioned above, it is undeniable that Ethereum is still receiving strong confidence in the future of PoS from users, not only investors. single cryptocurrency but also in terms of reception from a variety of traditional institutions.

To better understand the overall picture of the penetration of large traditional companies into Ethereum and how they “bet” on the future of ETH, please read through the article below:

– Detail: Ethereum (ETH) – The position of “blockchain hegemony” is reflected in the level of reception from large companies

At the time of writing, more than 10% of the total circulating supply of ETH is locked in the Ethereum 2.0 contract, with the largest percentage of ETH locking coming from the Lido Finance staking platform with more than 30%. Because of this advantage, Lido has now surpassed Curve, becoming the DeFi protocol with the largest TVL.

In addition, a16z estimates that there are between 7 million and 50 million active Ethereum users today, based on various on-chain metrics, the context is similar to the evolution of the Internet around AD. 1995. For comparison, the Internet reached 1 billion users in 2005. Incidentally, this is also when Web2 began to form its prosperity cycle.

Combined with important factors from other areas including DeFi’s total value locked (TVL) has grown to 113 USD in just 2 years or NFT has generated 3.9 billion USD in revenue. So far, it is possible that Web3 can reach the same threshold of 1 billion users as the Internet within the next 10 years. And certainly, to maintain the “unique” market share in these two areas, Ethereum will have a lot of work to do on the upcoming journey.

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