In light of concerns regarding network congestion and high gas fees, one partner at Rollbit, borovik.eth, expressed an optimistic outlook for Ethereum’s long-term prospects. According to borovik.eth, Ethereum’s developer ecosystem, its role in the broader blockchain ecosystem, and the launch of numerous Layer-2 solutions (L2s) are the key factors driving this positive sentiment. This stands true even as other layer-1 coins like Solana and Cardano have experienced significant gains in 2023.
While Ethereum’s scaling challenges may be cause for worry, borovik.eth believes that developers will find innovative ways to address these concerns over time. This long-term resolution of scaling issues is seen as a catalyst for Ethereum’s strong recovery in the near future. The development of layer-2 off-chain options, supported by major companies such as Coinbase and venture capitalists, further strengthens Ethereum’s position for a potential bull run.
As of December 26, Ethereum is on an upward trajectory, although it has cooled off after experiencing solid gains in the fourth quarter of 2023. However, Ethereum’s spot rates currently underperform compared to most layer-1 platforms like Injective Protocol and Solana, both of which have reached new highs in price. ETH is still struggling to break through the critical resistance level of $2,400. Should bulls overcome this obstacle, Ethereum may soar towards $3,500 or higher in the coming months.
Solana’s soaring valuation, particularly in the latter half of 2023, has prompted some to draw a comparison between ETH and SOL. Arthur Hayes, a notable figure in the crypto industry, even recommended rotating funds from SOL to ETH, showing his support for Ethereum. Despite Ethereum’s challenges in on-chain scaling, developers have been actively working to find solutions. The introduction of layer-2 off-chain options using rollups has played a significant role in alleviating pressure from the mainnet and reducing gas fees.
According to L2Beat, layer-2 protocols now manage over $18 billion in total value locked (TVL), with 34 active projects and 23 more in development. Companies such as Coinbase have embraced layer-2 solutions, utilizing the Ethereum mainnet for security while allowing users to transact at lower costs through their Base platform. In fact, over 60% of Base’s revenue comes from rollup fees, highlighting the importance of these scaling solutions and reinforcing Ethereum’s role in the ecosystem.
The upcoming Dencun Upgrade, scheduled for integration in the next year, is expected to further reduce layer-2 fees. Developers plan to release this update on the Goerli test network as early as mid-January 2024. By continuously improving and refining layer-2 solutions, Ethereum aims to create a sustainable and scalable platform for decentralized applications (dApps) and smart contracts.
Despite the challenges it faces, Ethereum’s positive long-term outlook remains intact. Its strong developer ecosystem, pivotal role in the blockchain industry, and the continuous development of layer-2 scaling options position Ethereum favorably for future growth. With ongoing advancements and upgrades, Ethereum is poised for a resilient and prosperous future.