Analysts at JPMorgan Chase & Co. (NYSE:JPM) believe the overall optimistic view about the dominance of Ethereum (CRYPTO: ETH) is at risk.
What Happened: In a research note seen by Bloomberg on Wednesday, JPMorgan analyst Nikolaos Panigirtzoglou said unless the final, and “most critical” phase of Ethereum’s efforts to scale is completed in 2023, the network’s 70% of DeFi market share could drop further.
“The optimistic view about Ethereum’s dominance is at risk. Scaling, which is necessary for the Ethereum network to maintain its dominance, might arrive too late,” opined Panigirtzoglou.
The analyst went on to note that Ethereum is losing market share to other independent Layer 1 blockchain networks such as Terra (CRYPTO: LUNA), Binance Smart Chain, Avalanche (CRYPTO: AVAX) and Solana (CRYPTO: SOL).
Given the rate at which these other Layer 1 ecosystems are growing, Panigirtzoglou thinks a bulk of activity may never return to Ethereum when it does finally manage to fully implement its scaling solutions.
“In other words, Ethereum is currently in an intense race to maintain its dominance in the application space with the outcome of that race far from given, in our opinion,” he wrote.
The congestion on the Ethereum network, which has largely led to its infamous record-high gas fees, has rendered it “unusable” by many market participants, particularly those that engage in smaller transactions.
“It has to be cheap by the standards of people who are coming into the system today and who are going to be putting $20 or $40 into crypto if they put in anything at all,” said Etherum co-founder Vitalik Buterin in a recent interview with Bankless.
According to him, Ethereum is currently over 50% of the way to ETH 2.0, which refers to the merged network, fully decentralized and scalable.
ETH Price Action: As of Thursday morning at publication, Ethereum was trading at $3,376.70, down 11.44% in the last 24 hours.
Photo by Shubham Dhage on Unsplash
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