One of the most visible victims of the recent bloodbath is Ethereum’s native token. Ether has lost 17.3% of its valuation in the past week alone. Despite this, proponents of the organization have continued to put their faith in the blockchain network even as “ETH killers” threaten to dethrone it from the top spot.
The chief investment officer of crypto-focused hedge fund Pantera Capital, Joey Krug, is one such believer. He recently suggested that Ethereum could one day become a fundamental part of the global financial system. Speaking to Bloomberg, he said,
“If you turn the clock forward 10 to 20 years, a very large, maybe even north, 50% of the world’s financial transactions are in some way, shape or form. touch Ethereum.”
This will be despite the stiff competition it currently faces, which Krug believes will eventually move to Ethereum as a base layer to build on. Several smart contract platforms have emerged in the years since the birth of Ethereum. Thus, posing threats to its dominance with the rise of DeFi and NFT trading. These include Solana, Avalanche, and Polkadot, all of which claim to offer higher transaction speeds and lower costs amid Ethereum’s growing congestion problems.
Without pointing to any networks, the CIO highlighted concerns related to security threats and increased focus on ETH rival platforms, arguing that,
“There are so many trade-offs that other chains are keeping Ethereum from making on the decentralized side, which is quite important. I don’t know if they are best suited to be the new class of global financial payments. ”
One barrier to reaching this milestone is the network’s typical high transaction fees. Earlier this week, the total gas fees charged to execute transactions hit a one-month high of $1,882,360.
📈 # Ethereum $ ETH Total Fees Paid (7-day MA) just hit a 1-month high of $1,882,360.40
The previous 1-month high of $1,881,803.77 was observed on January 8, 2022
View index: https://t.co/ck7taVmbWM pic.twitter.com/BEEUbxYCOW
– glassnode warning (@glassnodealerts) January 9, 2022
As a result, the number of non-zero addresses hit an all-time high on Jan. 10. Thereby, indicating that users were unable to move their assets even during the fee-led market plunge. high network.
📈 # Ethereum $ ETH The number of non-zero addresses that just reached ATH is 72,411,467
View index: https://t.co/beS1MtIgAZ pic.twitter.com/7u64eBpayo
– glassnode warning (@glassnodealerts) January 9, 2022
Ethereum’s scalability issues have begun to hinder its adoption as an institutional settlement layer. Notably, Su Zhu, CEO of Singapore-based hedge fund Three Arrows Capital recently announced the ‘abandonment’ of the network due to excessive gas fees.
However, Krug predicts that these obstacles will be removed when Ethereum successfully transitions to ETH 2.0 and ushers in the Proof-of-Stake era, further propagating its use as a base layer. With the public testnet released, the consolidation into the POS is expected to happen in the first quarter of 2022.
Co-founder Vitalik Buterin recently noted that subsequent developments will focus on increasing the network’s scalability and throughput. He also proposed a multidimensional pricing model for its combustion mechanism.
However, analysts at global supremacy bank JP Morgan remain unconvinced, as they believe that significant developments may come too late for the network to continue to hold its dominant position. A recent research note highlighted that the delay in incorporating the final stage of sharding, which will have significant implications for network expansion, has pushed development forward at least in the past. next year. Thus, giving its competitors an opportunity to capture the majority of the DeFi market share.