VanECK, a prominent global fund manager, expresses optimism regarding the potential of Ethereum Layer 2 (L2) networks, projecting a valuation surpassing $1 trillion by 2030.
Despite maintaining ambitious expectations for L2s, VanECK remains cautious about the long-term outlook for some of these networks. Their analysis evaluates 46 L2 networks across various parameters, anticipating the emergence of “thousands” more networks in the near future.
At the core of Ethereum’s challenges lies its limited capacity to handle data processing and transaction throughput efficiently. VanECK highlights the necessity of offloading data processing to Layer-2 blockchains to alleviate this bottleneck.
VanECK’s analysts envision Ethereum capturing a significant portion, approximately 60%, of the market share among public blockchains. With this projection, they anticipate L2 networks alone reaching a market capitalization of $1 trillion.
Acknowledging Ethereum’s dominance in smart contracts, the analysts emphasize scalability as a critical hurdle. While Ethereum offers robust security and decentralization, transaction fees and processing times escalate during periods of heightened usage.
Recent developments on Ethereum, such as the Dencun upgrade, focus on enhancing the network’s capability to process L2 transaction data efficiently. The integration of features like “Blobs” aims to reduce L2 transaction fees.
VanECK suggests that L2 networks are poised to generate significantly more revenue than the mainnet, citing superior transaction efficiency and user experience. However, they maintain a bearish outlook on the long-term value prospects of most L2 tokens due to intense competition.
Despite this, the top seven L2 networks already account for substantial total value locked, a metric expected to surge further with the launch of notable projects in the coming months.
VanECK anticipates a future where thousands of use-case-specific L2 solutions coexist alongside a few major players in the broader market. They also highlight the growing importance of zero-knowledge frameworks (ZKU) in L2 evolution.
This prediction from VanECK coincides with their anticipation of a decision from the SEC regarding their Ethereum ETF filing.
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