In the ongoing bearish market sentiment, where overall cryptocurrencies, including Bitcoin, Ethereum, Ripple, and others, continue to experience downside momentum, an asset management firm has made a big prediction regarding the Layer 2 (L2) network. According to VanEck, the future of the Ethereum L2 network has the potential to reach a massive valuation of over $1 trillion by 2030.
VanEck Ethereum’s Layer 2 prediction
However, Layer 2 networks are essential secondary systems built on top of the Ethereum blockchain to enhance scalability and speed. In this prediction, VanEck’s analysts, Patrick Bush, and Matthew Sigel, have analyzed 46 L2 networks across various criteria and expect an increase in “rollups,” which are a type of scaling system.
While analyzing the L2 network, it is observed that Arbitrum has led the group with over $18 billion in locked tokens, out of a total of $36 billion across all networks. Meanwhile, the firm believes that Ethereum will continue to dominate the overall crypto market by capturing an estimated 60% of the share across public blockchains. They attribute this projection to the volume of assets within the Ethereum ecosystem.
However, VanEck remains cautious about the long-term prospects of many L2 networks due to their continuous evolution and development. Additionally, they also highlight the importance of factors such as transaction pricing, developer expertise, user experience, as well as ecosystem size for the sustained growth of the L2 network.
Despite the optimistic outlook, analysts Patrick Bush and Matthew Sigel express concerns about cut-throat competition among L2 networks and the potential oversupply of L2 tokens in the market. They caution that the crypto market may struggle to absorb the influx of new tokens without significant discounts.
Ethereum price performance
Besides VanEck’s prediction over Ethereum’s Layer 2, if we look at the current Total Value Locked (TVL) on Ethereum, it is astounding. The current TVL of the Ethereum network is somewhere over $50 billion, and 1,030 protocols are currently based on Ethereum.
Despite this massive Ethereum TVL, currently, Ethereum is trading near $3,350, and in the last 24 hours, it experienced a decent 1.1% upside momentum. If we look at Ethereum’s ETH performance over a longer period, in the last 7 days, Ethereum’s price experienced a downside momentum of nearly 6%. Whereas, in the last 30 days, its price experienced a downside momentum of over 4%.
