A note from JPMorgan states that Ethereum may be at risk of losing control of the challenge due to its inability to quickly produce effective expansion solutions. The memo, written by Nikolaos Panigirzoglu, managing director of global markets strategy at the company, said that other new blockchains that enable smart contracts are those that are taking this market share, rather than Ethereum sidechains or other Ethereum-based solutions.
Ethereum dominates the stake according to JPMorgan
A note from JPMorgan states that Ethereum may continue to lose its dominance in the decentralized finance space in the coming year. The memo, written by Nikolaos Panegirzoglu, managing director of global markets strategy at JPMorgan, notes that this dominance is at risk due to the problems Ethereum has had in expanding its network.
In this regard, the note states that the analogy:
Which is essential for the Ethereum network to maintain its dominance, may arrive too late.
Ethereum has focused on its L2 (layer 2)-focused L2 (Layer 2) roadmap, which supports the emergence of backlogs and sidechains to try to find alternatives to the intense activity and high fees that are occurring on the Layer 1 blockchain. Even with this strategy, the percentage of dominance, which was estimated at 100% at the beginning of last year, has fallen to an estimated 70% of the market today.
The emergence of new competitors
Panigirtzoglou further explains that what is more problematic is the fact that Ethereum has lost part of its challenger influence to other chains, rather than its own L2 scaling solutions. Solana, Avalanche, BSC, and Terra, a group of cryptocurrencies that enable smart contracts and networks known as the “Ethereum killer,” are gaining market share and creating a community that supports them.
This also increased the prices of their original tokens. While Ethereum has also managed to increase the price of its network asset, ether (ETH), each of the mentioned tokens has outperformed ETH last year. Sharding, the strategy that Ethereum will use to expand into the L1 blockchain, will not arrive until next year after the merger, which will change the Proof of Work (PoW) consensus into a more energy-friendly one. Share consensus (PoS).
The note concluded:
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 meaningless, in our opinion.
What do you think JPMorgan thinks of Ethereum and its potential future in the face of the challenge? Tell us in the comments section below.
photo credits: Shutterstock, Pixabay, Wikicommons
disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services or companies. Bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the Company nor the author shall be liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.