VanEck expects the value of the ETH L2 network to reach $1 trillion by 2030.
Key Takeaways
- VanEck predicts that the Ethereum Layer 2 network will be worth $1 trillion by 2030.
- The company highlights transaction pricing, developer experience, user experience, trust assumptions, and ecosystem scale as important factors for L2 growth.
- Despite the potential challenges posed by market competition and the introduction of new tokens, the L2 Network is expected to play an important role in the future of the blockchain ecosystem.
Patrick Bush and Matthew Sigel of investment management firm VanEck predict: The Ethereum Layer-2 (L2) network could reach a valuation exceeding $1 trillion by the end of this decade.
Despite the optimistic outlook, analysts A prudent stance on long-term success Many of these networks predict intense competition between networks.
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The L2 network operates on top of major blockchains such as Ethereum by processing transactions separately and then reintegrating them. Increase transaction speed without sacrificing security or decentralization.
VanEck’s analysis is based on: Survey of 46 L2 networks across 5 key areas: Transaction pricing, developer and user experience, trust assumptions, and ecosystem size.
The company predicts this: Ethereum is expected to dominate 60% of the public blockchain market. Rollups by use case will increase.
But Bush and Sigel expressed concern about the problems such a network could face.
We see fierce competition between L2s, with network effects being the only moat. As a result, we are generally bearish on the long-term value prospects for most L2 tokens.
According to analysts, The market is becoming increasingly competitive, The total diluted valuation (FDV) for the top seven L2 tokens is $40 billion. they predict Entering a new project, Potentially adding another $100 billion to FDV; This leads to a saturated market that may not be sustainable without significant price adjustments.
Despite these obstacles, the growth and development of L2 networks remains an area of interest for investors and developers in the blockchain and cryptocurrency space.
In other news related to the ETH L2 network, Starknet recently announced plans to introduce a “parallelization” feature to increase transaction speed and efficiency.
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