Crypto News

VanEck predicts that the collective market cap of Ethereum Layer-2 will reach $1 trillion by 2030


VanEck estimates that Ethereum’s Layer 2 protocols will reach a collective market cap of $1 trillion by 2030, according to a new research report released April 3.

The prediction was revealed in a detailed analysis conducted by Patrick Bush, senior investment analyst at VanEck, and Matthew Sigel, head of digital research.

VanEck’s forecast of a $1 trillion market cap for Ethereum Layer-2 by 2030 reflects a belief in the technology’s potential to significantly improve the scalability and efficiency of blockchain, marking a notable change in the landscape of digital assets and their underlying technologies.

Solve Scalability

The investment firm’s analysis assessed the burgeoning Layer 2 ecosystem along several critical dimensions: transaction prices, developer experience, user experience, trust assumptions, and ecosystem size.

According to the report, Layer 2 technologies, particularly optimistic roll-ups and zero-knowledge roll-ups, solve Ethereum’s biggest challenge: scalability.

These solutions aim to expand Ethereum’s transaction processing capacity without compromising its core security and decentralization attributes. The analysis sees the EIP-4844 upgrade as a key development, introducing “Blob Space” to significantly reduce data publishing costs, thereby financially benefiting Layer 2 operations.

According to the report, the cost reductions enabled by EIP-4844 are key to improving Layer 2 profit margins.

The report also explored the revenue models of Layer 2 solutions, with a focus on transaction sequencing as the primary revenue source. He examined on-chain and off-chain cost structures, particularly noting the expensive proof mechanisms used by Zero-Knowledge Roll-Ups.

TVL

By assessing the competitive landscape, the study predicts that by 2030, Layer 2s will capture a significant portion of transaction value and total value locked (TVL) within the Ethereum ecosystem.

This growth is partly attributed to the potential of Maximum Extractable Value (MEV) to increase Layer 2 revenue. VanEck’s analysis suggests a future in which Layer 2 platforms could provide competitive advantages over Ethereum in specific market segments.

However, the report maintains a neutral tone regarding the speculative nature of the crypto market and the uncertain future of Layer 2 token valuations. It anticipates the emergence of many use case-specific Layer 2 rollups, indicating broader application of blockchain technology beyond finance to sectors such as gaming, social media and infrastructure.

VanEck’s analysis presents a compelling vision of the future, in which Ethereum’s Layer 2s evolve from nascent technologies to the central cogs of the global blockchain ecosystem.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button