Ethereum is currently the blockchain leader in the decentralized finance (DeFi) sector. According to DeFi Llama, the total value locked on the Ethereum network sits at around $170.78 billion, significantly higher than the other networks.
However, experts have stated that ETH might soon lose its top position because of the network’s problems. These issues include high gas fees, long confirmation times and slow updates.
Ethereum losing its competitive edge
Ethereum faces much competition from other blockchains in the market, including Binance Smart Chain, Solana, Avalanche, and Fantom. Developers are running towards these networks because they offer solutions to most of the ETH network’s problems.
The ETH network has been making updates to enable it to transition to a proof-of-stake framework. Experts have now stated that with the slow update to make this happen, ETH will lose its position as the blockchain network used by all developers.
According to Nicholas Merten, a YouTuber behind the DataDash channel, several reasons will inhibit the adoption of Ethereum over time. Merten believes that eventually, layer two solutions built on EETH might fail to gain adoption.
In a Twitter thread, Merten stated that “L1 should be much cheaper. The cost reduction potential of roll-ups (L2) can’t be fully realized until more users move from L1 to l2. We need major players in the space to sponsor the cost of bridging for existing users and reward programs for LPs who move to L2, etc.”
Solana & Avalanche as Ethereum’s greatest competitors
The growth of Solana and Avalanche is one of the greatest threats to the leadership position of the Ethereum blockchain. The two networks offer significantly lower fees. Solana’s gas fees are at a low of $0.01, while Avalanche’s come in at $0.89.
Moreover, various DeFi projects have migrated from ETH to these two scalable networks. Earlier this year, Power Ledger announced its migration from Ethereum to the Solana network.
Following Merten’s tweet, the CEO of Three Arrows Capital, Zhu Su, announced that he was moving his investments from ETH to Avalanche. In a Twitter post, Zhu Su stated that “Yes I have abandoned Ethereum despite supporting it in the past. Yes ETH has abandoned its users despite supporting them in the past.”
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