Ethereum Faces 'Intense' Competition From Other Networks: JPMorgan

1 month ago

Ether (ETH) has underperformed different cryptocurrencies successful caller months arsenic the Ethereum blockchain has faced "intense" contention from different networks, Wall Street slope JPMorgan (JPM) said successful a probe study connected Wednesday.

The token lacks a compelling communicative similar that of its larger adjacent bitcoin (BTC, the slope said, adding that bitcoin benefits from its cognition arsenic a store of worth and arsenic integer gold.

Despite upgrades, specified arsenic Dencun, enactment has shifted from the main Ethereum web to its furniture 2's, which is detrimental to the blockchain's growth, the study said. The network's latest upgrade, Pectra, is apt to hap successful aboriginal April.

"Competitive pressures person led immoderate decentralized applications (dapps) to migrate from Ethereum to different application-specific chains for amended performance," analysts led by Nikolaos Panigirtzoglou wrote.

Examples see decentralized exchanges (DEXs) specified arsenic Uniswap, dYdX and Hyperliquid, the slope said.

Uniswap's upcoming move to Unichain is important due to the fact that it is 1 of Ethereum's "largest state consuming protocols," and its migration could effect successful a important nonaccomplishment to the network's interest pool, the slope noted.

JPMorgan said this inclination of dapps moving to different furniture 2s oregon alternate furniture 1s could negatively interaction Ethereum by lessening enactment connected the main network, which could effect successful little transaction fees and validator revenue.

Layers 2s are abstracted blockchains built connected apical of layer 1s, oregon the basal layer, that trim bottlenecks with scaling and data. In presumption of supply, this could marque ether inflationary arsenic "fewer transactions connote reduced token burning," the authors wrote.

The slope noted that Ethereum's maturation is down that of competitors specified arsenic Solana, which saw a surge successful enactment linked to memecoins.

The Ethereum ecosystem inactive dominates the stablecoin, decentralized finance (DeFi) and tokenization spaces successful spite of these challenges, the slope said.

The web could spot accrued organization request from tokenization enterprises but "competition from different networks is apt to stay aggravated successful the foreseeable future," the study added.

View source