Will Ethereum’s Usage Decline ?

According to a report by Bank of America, Ethereum is currently the leading operating system for decentralized finance (DeFi) due to the lack of alternatives available. However, the bank warns that Ethereum’s dominance may be threatened if the platform does not improve its “throughput,” the number of transactions it can complete per second. This article discusses Bank of America’s report on the future of Ethereum and its potential implications for app developers and users.

Ethereum’s Current Dominance in DeFi

Bank of America’s report states that Ethereum’s smart contract-enabled platform has provided it with a first-mover advantage in the DeFi space. As a result, app developers have flocked to the platform, leading to network effects as the number of decentralized apps (dapps) and users grew.

Threats to Ethereum’s Long-Term Viability

The bank’s report warns that Ethereum’s usage may decline if its blockchain fails to increase its speed and capacity. This could lead to app developers choosing other networks to build on, ultimately threatening Ethereum’s long-term viability.

Importance of Ethereum’s Roadmap

Bank of America believes that Ethereum’s ability to expand its throughput capacity significantly is critical to its long-term success. This includes the implementation of sharding architecture, as outlined in Ethereum’s roadmap.

Network Congestion and Transaction Fees

The success of Ethereum’s early adoption has resulted in network congestion and surging transaction fees, which the report describes as a “double-edged sword.”

Future of DeFi

As with prior tech cycles, the report suggests that new projects are likely to emerge in the DeFi space, and poorly positioned projects will exit.

In conclusion, Bank of America’s report highlights the importance of Ethereum’s ability to improve its speed and capacity to ensure its long-term success. While Ethereum remains the dominant operating system for DeFi, the emergence of alternatives and the threat of declining usage means that it must continue to innovate to stay ahead.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.

ZebPay Weekly

Subscribe for latest crypto news & stay updated!

    Start Trading Now