As the demand for cost-effective alternatives to Ethereum intensifies, 2024 is poised to witness increased competition in the blockchain space, with emerging layer-2 projects prioritizing the reduction of end-user costs, according to a research report from Flipside, a blockchain data platform.
Ethereum faces growing competition as users actively explore alternatives that offer lower fees and faster transactions. The historical trend of surging transaction costs during bull runs on Ethereum-based protocols has contributed to the ongoing shift.
The proliferation of Ethereum Virtual Machine (EVM)-compatible layer-2 networks is a key driver of this competition, with a substantial portion of EVM users exploring alternative options to Ethereum. Analysts predict that layer-2 projects will increasingly focus on cost reduction for end users to remain competitive in this evolving landscape.
Governance tokens of EVM-compatible layer-2 networks, including Optimism (OP), Arbitrum (ARB), and Polygon (POL), are gaining prominence, playing a central role in each network’s competitive advantage.
The upcoming Ethereum Dencun upgrade, featuring the introduction of “blobs” allowing large data storage on Ethereum blocks through EIP-4844, is expected to add to the competitive dynamics. Blobs will enhance block space on the mainnet and increase throughput for layer-2 networks, posing a challenge to Ethereum’s dominant position.
Galaxy Digital, another key player in the crypto space, also anticipates a pivotal year for Ethereum in 2024, emphasizing the challenges posed by other layer-1 blockchains. Galaxy Digital points out potential challenges and technological risks associated with Ethereum’s modular architecture, especially diverse rollup types. Solana, with its monolithic architecture, is positioned as a primary competitor against Ethereum.
The competitive landscape in 2024 signals a transformative year for Ethereum as it contends with emerging alternatives and strives to maintain its leadership position in the blockchain industry.
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