In his recent research note, Bank of America analyst Alkesh Shah predicted that Ethereum will continue to lose market share to rival Solana.
Although 2021 has been a banner year for Ethereum, its performance has been eclipsed by Solana.
SOL has surged more than 2,200% against ETH last year, with its native blockchain emerging as one of the top contenders for the smart contract crown. With that said, the SOL/ETH pair is down 8% this year, with the entire market suffering a significant correction.
Shah believes Solana can turn into a behemoth like Visa, becoming the payment protocol in the crypto industry.
Although Ethereum is more decentralized, Shah claims that it is not scalable enough, which increases transaction costs. Therefore, the analyst believes that scalability is a reasonable trade-off:
Solana prioritizes scalability, but a relatively less decentralized and more secure blockchain has trade-offs, exemplified by a number of network performance issues since its inception.
Solana, however, has her own share of performance issues. The network crashed on September 14 due to a bug, showing the fragility of the “Ethereum killer.” This isn’t a one-time event: Solana also stopped on December 4 for five hours. Earlier this month, the network started experiencing throughput issues.
JPMorgan is on the same page
As reported by U.Today, JPMorgan Chase analyst Nikolaos Panigirtzoglou also forecasts that Ethereum is at risk of being disrupted by the likes of Solana, Binance Smart Chain, and Avalanche.
Panigirtzoglou argues that it will be too late for Ethereum to scale as the shard chain phase will begin only next year.
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