The clamor warning about the decline of the Ethereum Blockchain network has been increasing in recent months. Important analysts in the crypto sector assure that the rise of scalability solutions and the push of competitors like Solana are the main threats.
In the first case, the lead developer of the Blockchair project, Nikita Zhavoronkov, states that the largest multipurpose network “is dying.” In that sense, it stands out that the blockchain practically shot itself in the foot with second layer (L2) solutions. In his opinion, these solutions are keeping the commissions of the first layer network to a minimum.
In a post on X, the expert claims that all the important projects that made Ethereum great are leaving. Among them, the defection from Ethereum of Uniswap, Polymarket and now ENS stands out. Although he concedes that these projects are still working under the EVM, that is not Ethereum itself. “Ethereum no longer represents a necessity at all,” says Zhavoronkov in an X publication.
Since last March, transactions in second layers such as Optimism and Arbitrum grew by 430%. At the same time, fees collected by Ethereum’s L1 blockchain fell by more than 87% in the same period, according to Bloomberg.
Ethereum is dying. All the major projects are moving to their own blockchains. Uniswap, Polymarket, and now ENS — they all use the EVM technology, but not Ethereum itself. There’s no need for Ethereum anymore. Not scaling L1 was a fatal mistake. https://t.co/I2NxfqcUi1
— Nikita Zhavoronkov (@nikzh) November 11, 2024
Will Solana Blockchain Deal the Killing Blow to Ethereum?
According to some experts consulted by Bloomberg, the advance of L2 was carried out without sufficient observation of the consequences. The low scalability of that network caused high commissions during peak periods of activity. The pace of growth in the adoption of cryptocurrencies would eventually make Ethereum a completely collapsed network.
The response of Vitalik Buterin and company was to launch second layer solutions. The side effect is that users and developers opt for the cheapest solution. This leaves the tap open for Ethereum to bleed in the future.
The coup de grace of this situation, which Consensys itself describes as critical, is the advance of the competitors. For example, the most powerful and capable networks in their L1 experience a large flow of investment capital. Although the Ethereum blockchain remains the queen of the DeFi sector, some consider that it is a matter of time before it loses the throne.
For the first time in its history, the Ethereum network is in a danger zone, says Max Resnick of the Special Mechanisms Group (owned by Consensys). Although the network’s total value locked (TVL) exceeds $70 billion, Solana’s rises sharply. From $560 million in November 2023, Solana now has a TVL of almost $10 billion.
This is also reflected in the native tokens of these networks. While ETH rises 78% year-on-year, SOL reaches a dizzying 309%.
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