The cryptocurrency landscape is vast and dynamic, with new currencies and technologies emerging every day. However, Ethereum, one of the most established cryptocurrencies on the market, appears to be strengthening even further, leaving its competitors in a delicate position.
Jamie Coutts, renowned cryptocurrency analyst at Bloomberg, recently shared his view on the current outlook for Ethereum relative to its rivals. According to him, the rise of Ethereum’s 2 layers (known as L2s) has been a crucial factor in strengthening the currency. These layers are helping Ethereum regain market share that had been lost to other alternative cryptocurrencies, known as Alt-L1s.
Data shows that over the last year, L2 active address growth has outpaced Alt-L1s by two times. This, even considering that the L2s started from a smaller base. This significant growth suggests that Ethereum is regaining ground and may be positioning itself for even greater market dominance.
📊 According to data from @DefiLlamathere are roughly 200 smart contract/PoS #blockchains. Astonishingly, 88% of all transaction fees over the past year came from just 2 chains. This leaves the remainder to compete for a mere 12% with $ETH L2s increasing their share at a rapid… pic.twitter.com/UhdEAoISKB
— Jamie Coutts CMT (@Jamie1Coutts) October 7, 2023
However, it’s not just L2 layers that are driving Ethereum forward. Coutts highlights that many of the alternative smart contract platforms are facing significant challenges. Issues like inflationary tokenomics, excessive block space, and the growing popularity of Ethereum are making it difficult for these coins to compete.
The analyst also noted that although the total value of fees generated by these alternative blockchains is increasing, many of them could disappear in the coming years. The reason? Many of these alternative networks, due to low activity, are not generating sufficient revenue to ensure their long-term security and sustainability.
Coutts concludes his analysis with a bullish outlook for Ethereum, but maintains a cautious outlook for many of the Alt-L1s. He believes that due to insufficient demand and a subpar economy, many of them may not have a bright future ahead of them.
The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing or trading cryptocurrencies carries a risk of financial loss.