Andreessen Horowitz (a16z), a big crypto investment fund, has released a detailed report to evaluate the potential of cryptos, specifically focusing on Ethereum (ETH), Web3 development, crypto adoption, DeFi, and stablecoins.
According to a16z, Ethereum has many traits that outperform its competitors in terms of developer interest. Currently, the network has about 4,000 monthly active developers. The 2nd place is Solona (1,000), Bitcoin (500) and Cardano (400) are respectively in 3rd and 4th place.
Demand for Ethereum can also be demonstrated through the estimated transaction fees paid on the blockchain for the seven days cycle, as of May 12. The data shows that Ethereum accounted for $15.24 million in fees, quite a big gap compared to the $2.5 million in fees combined of BNB Chain, Avalanche, Fantom, Polygon, and Solana.
However, the popularity of Ethereum is a double-edged sword. Because its network has always been known for decentralization rather than scale. As a result, other blockchains can utilize this weakness by attracting users with promises of good performance and lower fees.
Therefore, layer 2 rollups solutions were born with amazing development to reduce fees for Ethereum as well as increase transaction speed while waiting for the Proof-of-Stake upgrade.
The expansion will be a big turning point for the long-term development of Ethereum, especially when previous scaling solutions have reduced about 1.5% of frees made on ETH.
However, the consolidation is unlikely to happen soon, at least until the Q3 of this year. This will be an opportunity for competing blockchains like Solana, BNB Chain, and Polygon to surpass Ether in terms of addresses and daily transactions.
The data shows that Ethereum has 5.5 million active addresses accounting for 1.1 million daily transactions, while Solana has 15.4 million active addresses and 15.3 million transactions. BNB Chain comes at 3rd place with 9.4 million and 5 million, while Polygon has a total of around 2.6 million and 3.4 million.
Despite facing many challenges, Ethereum is still receiving great support, not only from crypto investors but also from various traditional institutions.
At the time of this writing, more than 10% of the total circulating supply of ETH is locked in the Ethereum 2.0 contract, with the largest percentage (above 30%) of ETH locking coming from the Lido Finance staking platform. With this advantage, Lido has now surpassed Curve, becoming the largest TVL (total value locked) DeFi protocol.
In addition, a16z estimates that there are currently 7 million – 50 million active Ethereum users, based on various on-chain metrics, which is considered similar to the evolution of the Internet. In specific, the Internet reached 1 billion users in 2005, this is incidentally also when Web2 boomed. DeFi’s TVL has skyrocketed to $113 in just 2 years, combine with NFT generating $3.9 billion in revenue, the prospect of Web3 hitting 1 billion users like the Internet in the next 10 years is possible. And certainly, to maintain its “dominant” position in both DeFi and NFT, Ethereum will have to upgrade a lot on the upcoming journey.
Disclaimer: This article is for reference purposes only, not investment advice. Investors should have deep research before making a decision. We are not responsible for your investment decisions.
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