Ethereum’s scaling is causing a ruckus in the cryptoverse, as layer-2 solutions emerge. These L2s – like Optimism, Arbitrum, and even Unichain – now handle more and more transaction load, reducing action on the Ethereum mainnet. Some investors fear that these L2s are gnawing away at Ethereum’s revenue, but Katalin Tischhauser, head of research at Sygnum Bank, suggests it’s too early for that verdict. Tischhauser says Ethereum’s layer-2s might be the booster, not the leech, in the Ethereum ecosystem.
“It is much too early to tell whether Ethereum’s strategy of scaling through layer 2s is cannibalistic or will lead to net growth,” Tischhauser told Cointelegraph. She refers to L2s as a potential “catalyst” rather than a cannibal.
Can L2s Drive Revenue – Not Rob It?
As more action shifts to L2s, Ethereum’s daily fees have dropped, staying between $1 million and $5 million. That’s a stark contrast to the $30 million days Ethereum saw in 2021 and 2022. This revenue shift rattled some investors, especially after Uniswap, Ethereum’s powerhouse decentralized exchange, announced its pivot to layer-2 chain Unichain. Ethereum validators could lose between $400 million and $500 million in annual revenue if Unichain gains traction.
Yet Tischhauser remains optimistic, noting that L2s may actually expand Ethereum’s reach. “The long-term view is that the net effect will be growth for the Ethereum L1 because the cheap L2s can catalyze new types of transactions previously not possible,” Tischhauser noted. If L2s scale enough, they still settle final states on the mainnet, ultimately pumping life into Ethereum’s base layer.
Analysts Split Over Ether’s Future
Still, Matthew Sigel, VanEck’s head of digital assets, has flagged concerns. After discovering that L2 transactions make up 90% of recent Ethereum network volume, he adjusted his Ether price forecast. Initially predicting Ether could hit $22,200 by 2030, Sigel lowered his estimate to $7,300 if the 10:90 ratio continues.
Ethereum’s scaling is far from over, and fierce competition looms, especially with faster and cheaper L1s gaining traction. Henrik Andersson from Apollo Capital argues Ethereum’s L2 expansions are its survival tool, and without them, Ethereum might have lost ground to rivals. He believes Ethereum’s L2 innovation could keep it dominant, securing its position as the go-to layer-1.
As of now, Ethereum is priced at $2,520 – down 48% from its peak – and the battle to remain dominant in the blockchain space continues.
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