All digital currency prices are in a downward spiral, but Ethereum has another major problem.
Ethereum is the other one big coin and is in position number two. Of course behind Bitcoin. Both coins have lost significant value in recent times. But that’s not the biggest problem with Ethereum right now. A note from US investment bank JPMorgan states that the currency is at risk of losing its decentralized finance dominance. This is due to the inability to quickly produce effective scaling solutions.
Ethereum has a problem
Nikolaos Panigirtzoglou, director of global market strategy at the bank, co-authored this note. He also stated that other new blockchains with smart contracts are taking this market share. Instead of Ethereum side chains or other Ethereum based solutions. This is a threat to the currency.
The bank expects that Ethereum may continue to lose its dominance in decentralized finance in the coming year. This is in jeopardy due to the issues Ethereum has had with scaling its network.
scale up
The bank’s analysts expect that what it takes for the Ethereum network to maintain its dominance may come too late. The digital currency has centered on an L2 (Layer 2)-focused roadmap, supporting the emergence of rollups and side chains. This is to try and find alternatives to the intensive activity and high costs that take place on the Layer 1 blockchain.
Even with this strategy, the percentage of defi-dominance, which was estimated at nearly 100% early last year, has fallen to a market estimate of 70% today. New challengers making it smarter are taking bites out of market dominance. So this can continue, which puts Ethereum in a difficult position.
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