JPMorgan has issued a note stating that Ethereum could lose its defi dominance due to the inability of producing effective scaling solutions quickly. Nikolaos Pantigirtzoglou is the managing director for global markets strategy of JPMorgan. The note also stated that Ethereum sidechains and other Ethereum-based solutions are losing market share.
JPMorgan: Ethereum dominance is at stake
JPMorgan notes that Ethereum could lose its dominance in decentralized finance over the next year. Nikolaos Pantigirtzoglou is JPMorgan’s managing director for global markets strategy. The note states that Ethereum may lose its dominance in the field of decentralized finance due to scaling problems.
This note said that scaling was:
This is crucial for Ethereum to continue its dominance. But it might not be enough.
Ethereum’s L2 (Layer 2)-centric roadmap has been a focus. This supports rollups, sidechains, and other alternatives to Layer 1’s intensive activity and high fees. Even with this strategy the defi dominance percentage, originally estimated at nearly 100% at the beginning last year has dropped to 70% right now.
New Challengers are Emerging
Panigirtzoglou further explains that what’s more problematic is the fact that Ethereum has lost part of its influence in the defi arena to other chains, instead of to its own L2 scaling solutions. Solana, Avalanche, BSC, and Terra, a group of smart contracts-enabled cryptocurrencies and networks known as “ethereum killers,” have been gaining market share and creating a community behind them.
The price of native tokens has also increased as a result. While Ethereum managed to also increase the price of its network asset, ether (ETH), each one of the aforementioned tokens surpassed ETH’s performance last year. Sharding, which is the strategy Ethereum will use to scale in its L1 blockchain, won’t arrive until next year after the merge, which will change the proof-of-work (PoW) consensus to a more energy-friendly proof-of-stake (PoS) consensus.
In other words, Ethereum currently faces a tough race to keep its position in the app space. However, we believe that the end result of this race is far from guaranteed.
What do you think about JPMorgan’s opinion on Ethereum and its possible future in defi? Leave your comments below.
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