A note from JPMorgan states that Ethereum may be at risk of losing its dominance due to its inability to quickly produce effective scaling solutions. A note written by Nikolaos Panigirtzoglou, the company’s chief global strategy director, further states that other smart-backed blockchains, instead of Ethereum side chains or other Ethereum-based solutions, have this market share. Etherea’s dominance at stake According to JPMorgan

A report from JPMorgan states that Ethereum may continue to lose dominance in decentralized finance in the coming year. A note written by Nikolaos Panigirtzoglou, Executive Director of Global Markets Strategy at JPMorgan, states that this dominance is threatened by Ethereum’s difficulties in expanding its network.

The note stated that scaling:

What is necessary for Ethereum to maintain its dominance may come too late.

Ethereum has focused on a L2 (Layer 2) plan that supports the rise of rollups and side chains in order to try to find alternatives to the intense activity and high fees that occur on its Layer 1 blockchain. which was estimated at almost 100% at the beginning of last year, has now fallen to an estimated 70% of the market.

Rise of new challengers

Panigirtzoglou further explains that more problematic is the fact that Ethereum has lost some of its influence in the defi arena in favor of other chains, instead of its own L2 scaling solutions. Solana, Avalanche, BSC and Terra, a group of cryptocurrencies and networks with the support of clever contracts, known as “ethereum killers”, gain market share and create a community behind them.

This has also led to an increase in the price of their respective native tokens. While Ethereum was also able to increase the price of its network asset, ether (ETH), each of the above tokens surpassed last year’s ETH performance. Sharding, which is the strategy that Ethereum will use for scaling in its L1 blockchain, will not arrive until next year after the merger, which will change the proof-of-work (PoW) consensus to a more energy-efficient proof-of-stake (PoS) consensus.

Concluding remarks:

In other words, Ethereum is currently racing intensively to maintain its dominance in the application space, and in our opinion the result of this race is far from a given.

What do you think about JPMorgan’s opinion on Ethereum and its possible future in defi? Tell us in the comments section below.

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