Ethereum

2024

Solana

Impact

<p style="text-align: justify">You can also read this news on COINTURK NEWS: <a href="https://en.coin-turk.com/vaneck-analyzes-factors-affecting-ethereums-recent-price-performance/" data-wpel-link="internal" rel="noopener noreferrer nofollow">VanEck Analyzes Factors Affecting Ethereum’s Recent Price Performance</a><br></p>
<p style="text-align: justify">Asset manager VanEck evaluated various factors contributing to Ethereum’s (ETH) recent poor <a href="https://finance.coin-turk.com/" data-wpel-link="exclude" rel="noopener noreferrer nofollow">price</a> performance. According to VanEck’s August 2024 Crypto Monthly Report, Ethereum’s share of <a href="https://en.coin-turk.com/sec-proposes-registration-requirement-for-large-dex-liquidity-positions/" data-wpel-link="internal" rel="noopener noreferrer nofollow">decentralized exchange</a> trading volume fell from 42% in 2022 to 29% in 2024. The three main reasons for this decline are the overall decrease in network revenues, “conscious policy choices,” and the value loss caused by layer-2 solutions.</p>
<h2 id="decrease-in-network-revenues">Decrease in Network Revenues</h2>
<p style="text-align: justify">According to VanEck’s analysis, consumers’ shift to layer-1 blockchains with higher transaction volumes like Solana negatively impacted Ethereum’s revenues. Ethereum had become one of the leading platforms for decentralized finance as the first mover in the smart contract <a href="https://newslinker.co/category/science/space/" target="_blank" rel="noopener noreferrer nofollow" data-wpel-link="exclude">space</a>. However, blockchains like Solana, MATIC, Sui, and Aptos, with their high transaction capacities, are reducing Ethereum’s competitive advantage.</p>
<h2 id="internal-and-external-pressures">Internal and External Pressures</h2>
<p style="text-align: justify">Ethereum is under revenue pressure due to the impact of layer-2 solutions within its ecosystem and external competition. Ethereum’s layer-2 networks reduced network fees by 99% with the Dencun upgrade in March 2024, causing these networks to proliferate rapidly. According to Anoma’s co-founder Adrian Brink, there are currently too many layer-2 solutions on Ethereum.</p>
<h2 id="impact-of-competition">Impact of Competition</h2>
<p style="text-align: justify">VanEck’s report notes that new tokens are now being launched on networks offering higher transaction capacities to improve user experience. This shift is causing users to move to more efficient networks due to Ethereum’s transaction speed limitations. Networks like Solana can process thousands of transactions per second, reducing the demand on Ethereum.</p>
<p style="text-align: justify">While Ethereum strives to maintain its leadership in the decentralized finance world, increasing competition and internal pressures are negatively impacting the network’s revenues and price. The rapid proliferation of layer-2 solutions and the reduction in transaction fees are expanding Ethereum’s ecosystem but creating a revenue contraction. For Ethereum to overcome these challenges in the future, it will need to solve scalability issues and develop more innovative policies.</p>
<p>The post <a href="https://en.coin-turk.com/vaneck-analyzes-factors-affecting-ethereums-recent-price-performance/" data-wpel-link="internal" rel="noopener noreferrer nofollow">VanEck Analyzes Factors Affecting Ethereum’s Recent Price Performance</a> appeared first on <a href="https://en.coin-turk.com" data-wpel-link="internal" rel="noopener noreferrer nofollow">COINTURK NEWS</a>.</p>

VanEck Analyzes Factors Affecting Ethereum’s Recent Price Performance

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