Ethereum may be Losing Ground to ETH-Killers like Solana

Ethereum, the top altcoin has maintained its monopoly in the cryptocurrency space both in terms of market cap and increased adoption.

However, the mushrooming of Ethereum killers over the last few years has raised skepticism around Ethereum’s dominance.

In fact, JPMorgan analysts are of the opinion that Ethereum could be losing ground to rivals in the NFT market, which could give a boost to the likes of Solana in the near future. 

Here are the Roadblocks

With a market cap of over $364 billion, Ethereum takes the second spot by market cap next only to the king crypto Bitcoin. In the DeFi space too, Ethereum has dominated in terms of Total Value Locked (TVL) and covers over 60% of the market (by TVL) with $137.98 billion as TVL in the chain at press time. 

Despite Ethereum’s success in the DeFi space and the NFT sector competing cryptocurrencies or ‘Ethereum-killers’ are trying to improve on its biggest flaws.

As the Ethereum network continues to suffer from a spike in transaction fees, high gas fees, and network congestion, the pertaining issues seemed to have pushed NFT apps away from the Ethereum network, as per JPMorgan analysts.

The bank’s analysts have found that Ethereum’s NFT volume share fell from 95% at the start of 2021 to around 80%. A reverse migration of NFT apps from Ethereum could further affect ETH prices and demand structure in the future if not dealt with. 

Analyst Nikolaos Panigirtzoglou further said:

“It looks like, similar to DeFi apps, congestion and high gas fees has been inducing NFT applications to use other blockchains.” 

The analysis further presented that the Solana network in particular had been seizing market share from Ethereum in recent weeks. Notably, the rise in the market cap of Layer-1 protocols in the last year has further led to skepticism around ETH’s trajectory. 

What’s the Way Forward?

Ethereum founder Vitalik Buterin a couple of weeks back proposed multidimensional pricing of a transaction to tackle high gas fees for the network aiming to optimize gas cost through multidimensional EIP-1559. 

Over 1.5 million ETH tokens have been burned to date and removed from circulation since the London Hardfork, driving a shortage in Ethereum supply. The same has fueled a long-term bullish narrative for Ethereum price. 

However, at the time of writing, much like the larger market ETH too seemed to be losing ground price-wise as it traded at $3,057.80 noting a 3.33% daily fall in price.