According to analysts, Ethereum is facing a major war

The Ethereum (ETH) ecosystem has several layer-2 solutions to increase network scalability. During busy times, Ethereum's blockchain can be quite unattractive for users, mainly due to sky-high fees. Because of this, users are fleeing to Layer 2, and according to blockchain analytics firm Flipside, this will only increase in the coming year.

BlackRock's Ethereum ETF postponed, decision expected in spring

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Battle between Ethereum Layer 2 networks

Flipside has shared expectations that a real “war” awaits Ethereum in a new report.

A new bull market would boost activity on Ethereum, which would logically lead to higher transaction fees. This gives more crypto users reason to use a scaling network. These scaling networks must compete to attract the most users.

The report states:

“The continued demand for low-cost alternatives to Ethereum, as well as the growing number of L2s compatible with the Ethereum Virtual Machine (EVM), will put pressure on more L2 projects to focus on reducing costs for end users.”

Flipside sees the competition between the various Layer 2s such as Polygon (MATIC), Arbitrum (ARB) and Optimism (OP) as positive.

According to the company, the race for cheaper alternatives will ultimately lower barriers to access and use of Ethereum Virtual Machine (EVM) blockchains and “accelerate user growth.”

Ethereum ETFs

This year will also be about the possible arrival of ridicule Exchange-traded funds (ETFs) for Ethereum.

Last summer, major asset managers, including BlackRock, filed such applications in the United States Securities and Exchange Commission (SEK).

This week the financial regulator said it needed more time for BlackRock's application.

The first definitive deadlines for applications from ARK Invest and VanEck will be the end of May. It is far from certain that the SEC will give the green light. In any case, it will be an important point of discussion in the coming months.


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