As an analyst with over two decades of experience in the tech and finance industries, I’ve seen my fair share of market shifts and adaptations. The latest report from VanEck suggesting Ethereum’s decline is a trend that, while concerning, doesn’t surprise me.
New reports from VanEck show that Ethereum is losing ground in the world of digital currencies.
As per the “August 2024 Crypto Monthly Review”, Ethereum’s proportion of trading activity on decentralized platforms has decreased from approximately 42% in the previous year (2022) to around 29% in the current year.
According to VanEck, the decline can be attributed to multiple reasons. One significant factor is a drop in Ethereum’s network earnings. This decrease is partially due to the rise in popularity of newer, quicker blockchains such as Solana, Sui, and Aptos.
These blockchains are capable of handling multiple transactions simultaneously at speeds reaching thousands per second, thereby drawing interest not only from end-users but also developers who might otherwise focus on Ethereum.
2ndly, a growing number of developers prefer constructing fresh tokens on quicker blockchain systems rather than Ethereum, as the Ethereum network has experienced significant congestion and increased costs for usage.
For example, the Dencun update implemented in March 2024 was designed to decrease transaction costs for Ethereum’s layer-2 applications; however, this change may have caused an excessive growth in their usage, potentially exceeding what is currently necessary.
As a diligent analyst, I’ve come across the insightful perspective shared by Adrian Brink, co-founder of Anoma. It seems that we currently have an oversupply of Ethereum scaling solutions, given the volume of traffic they are designed to manage.
Since the Dencun update, Ethereum’s transaction costs have plummeted by an astounding 99%. However, this cost reduction has come at a price, as the network now grapples with challenges posed by emerging rivals and internal complications.
Yet, the way Ethereum tackles these hurdles significantly impacts its continued dominance within the digital marketplace.
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2024-09-06 03:48