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Crypto is expecting a significant bull run, with the total crypto market cap at over $2.5 trillion as of April 4, 2024. Bitcoin has a big share here, at about $1.302 trillion, breaking into the top 10 assets in the world by market capitalisation and taking the ninth spot.
Experts have been issuing optimistic forecasts in the long term across all sectors of the crypto economy, including a recent prediction from Van Eck analysts: they expect Ethereum layer 2 tokens to hit $1 trillion in market capitalisation by 2030.
To elaborate on this: said Van Eck analysts were bearish on these L2 tokens owing to tight competition, but they do see Ethereum layer 2 scaling networks reaching $1 trillion in market cap and being made up of many use case-specific chains by 2030.
As Van Eck’s Patrick Bush- senior digital assets investment analyst, and Matthew Sigel- digital assets research head, stated, these layer 2 blockchains are all about solving for the primary challenge Ethereum faces, which is “limited capacity to process, store, and compute data.” They expect Ethereum to expand to about 60 percent of the market share throughout all public blockchains, and the estimation of the volume of assets harboured on Ethereum based on this prediction amounts to the $1 trillion amount they have mentioned.
Notably, Ethereum’s scalability challenges have long been highlighted by the crypto community, especially as Ethereum situated itself at the heart of DeFi with its smart contract functionality. As the aforementioned Van Eck analysts stated, “Ethereum’s dominance in smart contracts faces a critical hurdle: scalability…. While the network offers unparalleled security and decentralisation, transaction fees and processing times soar when usage intensifies.”
The proof of stake transition is expected to take care of a part of these challenges in the coming years, but layer 2 protocols to share the burden are expected to remain as relevant as ever.
The recent Dencun upgrade for Ethereum in March brought down layer 2 transaction fees through data-saving features called ‘Blobs’, which shows the network is putting thought into making layer 2 data processing more efficient. As institutional interest grows in Ethereum, the blockchain seemingly has an upward trajectory ahead.
Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist.
Twitter: @bhardwajshash