Key Points
- VanEck analysts predict that Ethereum Layer 2 networks will reach a $1 trillion market cap by 2030.
- Layer 2 networks are expected to generate more revenue than the base Ethereum network.
VanEck Analysts’ Forecast on Ethereum Layer 2 Networks
Investment management firm VanEck recently published a report on the future growth of Ethereum Layer 2 (L2) networks.
The report, authored by Patrick Bush, senior digital assets investment analyst, and Matthew Sigel, head of digital assets research, predicts that Ethereum L2s will reach a market capitalization of $1 trillion by 2030.
Bush and Sigel base their prediction on the potential of layer-2 blockchains to address Ethereum’s primary challenge – its limitations in processing, storage, and data computing.
Despite Ethereum’s dominance in smart contracts due to its unparalleled security and decentralization, scalability remains a persistent issue.
As Ethereum’s usage intensifies, transaction fees and processing times rise, hindering the network’s ability to meet the demands of a rapidly expanding ecosystem.
However, Ethereum is actively working to enhance its layer-2 transaction processing capabilities.
Ethereum Layer 2 Networks and Future Revenue
The VanEck analysts also suggest that L2 networks could generate more revenue than the base Ethereum network. They anticipate a future with thousands of use case-specific layer 2 networks, each poised to reshape industries and unlock new possibilities.
A select few general-purpose layer 2 chains are expected to emerge, benefiting from network effects and becoming cornerstones of the ecosystem.
Cautionary Note on L2 Tokens
Despite the optimism around layer 2 networks, Bush and Sigel warn against overly enthusiastic valuations for L2-related tokens due to ‘cutthroat competition’.
The top seven Ethereum layer 2 tokens already have a fully diluted valuation of $40 billion, indicating potential market saturation and the need for caution when assessing future growth prospects.
Ethereum’s layer 2 networks continue to evolve in ways that impact the entire industry. With scalability overcoming previous limitations, the journey towards a trillion-dollar market cap by 2030 could be underway.
