A leading global investment firm, VanEck, predicts Ethereum’s Layer 2 scaling networks will achieve a $1 trillion market cap in six years.Â
These networks, designed for specific use cases, aim to overcome Ethereum’s limitations in processing and storing data. Currently, there are 46 Ethereum layer 2 networks with a total value locked of $38.97 billion, with Arbitrum being the largest at $18 billion.
Despite Ethereum’s dominance in smart contracts, scalability remains a hurdle, leading to high fees during peak usage. Ethereum’s recent Dencun update aims to reduce layer 2 transaction fees with features like “Blobs.”
Analysts foresee higher revenues on layer 2 networks than on Ethereum’s base network due to better transaction throughput and user experience. However, they express caution about the long-term value of most layer 2 tokens due to intense competition.
Van Eck predicts a future with thousands of specialized layer 2 networks alongside a few major general-purpose chains, driven by the network effect. Many roll-ups are expected to adopt the zero-knowledge framework for its advantages.
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