According to The Block, financial giant JPMorgan recently issued a report stating that the performance of Ethereum’s network activities has failed to meet market expectations since its Shanghai upgrade in April this year. Despite significant reductions in energy consumption and increases in staking, network activity has grown relatively slowly.

(Anniversary of the Ethereum merger | Energy consumption plummeted by 90%, deflation was achieved, and the surge in pledgers became a hidden concern)

JP Morgan: Ethereum activity performance “disappointing”

JPMorgan noted that Ethereum’s network activity has been “disappointing” since the implementation of the Shanghai upgrade in April. An analysis team led by analyst Nikolaos Panigirtzoglou elaborated on this view in a report on Thursday, noting that although Ethereum network energy consumption has shifted from proof-of-work due to the Merge upgrade, It fell by more than 99% for proof-of-stake, and the amount of pledged increased sharply, but the increase in network activity was not as expected.

Bearish factors lead to declines in multiple Ethereum indices

In the report, analysts further pointed out that Ethereum’s daily transaction volume, daily active addresses and the total value locked (TVL) of decentralized finance (DeFi) protocols are all showing a downward trend. They believe this may be due to factors such as market turmoil in FTX and Terra, regulatory uncertainty in the United States, and reduced venture capital funding. These "bearish factors" may have offset the positive impact of the Shanghai upgrade on Ethereum network activity. effect.

(ETH fell below 1.6K! PoS must be deflationary? ETH has been showing inflation for seven days)

Overly optimistic about Shanghai’s upgrade

Additionally, Ethereum’s second-layer network performance has been mixed, with Optimism seeing an increase in activity and Arbitrum experiencing a decline. Analysts pointed out that this indicates that market expectations before Shanghai's upgrade may be too optimistic.

In terms of centralization issues, analysts have focused on liquidity staking protocols like Lido, which have maintained dominance in the market, raising concerns about Ethereum’s centralization.

EIP-4844 may not be effective in saving

Looking ahead, the cryptocurrency industry has high hopes for Ethereum's EIP-4844 upgrade, known as "protodanksharding," hoping to further boost activity on the network. However, analysts at JPMorgan said that “persistent bearish crypto forces remain a headwind.”

It is worth noting that protodanksharding is an innovative solution different from traditional sharding technology. It will introduce temporary packets, which is expected to increase the throughput of the Ethereum network and reduce transaction fees. The upgrade was originally scheduled for the fourth quarter of this year, but may be postponed to early next year.

JPMorgan takes a conservative view of the benefits of upgrades

JPMorgan’s report reveals the challenges Ethereum has faced in terms of network activity since the Shanghai upgrade. Despite a series of technical upgrades and market changes, Ethereum’s performance still failed to meet the expectations of some market participants. In the future, all parties will continue to pay attention to the development of Ethereum and its upcoming technical upgrades, hoping to see its performance in the market improve.

This article JPMorgan Chase: After Ethereum Shanghai upgrade, online activity performance is disappointing appeared first on Chain News ABMedia.