Macro economist and technology investor Tascha predicts that the market share of Ethereum (ETH) will “continue to decline” in 2022 as emerging competitors continue to put pressure on a blockchain that has not yet been found.
ETH’s dominance in relation to TVL has fallen 37% to $ 158 billion this year, according to DefiLlama.
Although Ethereum has nearly 100% market share with TVL in early 2021, the network has lost much of that dominance to emerging competitors.
LUNA currently accounts for the second largest number of assets under management in the DeFi sector at $ 18.31 billion in TVL, followed by Binance Smart Chain at $ 16.97 billion.
Solana and Avalanche lag behind with combined valuations of $ 11.95 billion and $ 11.94 billion, respectively.
The tech investor said Cosmos, Near, Polygon, and several other blockchains are likely to take Ethereum’s market share as they continue to grow through 2023.
Chaos in Ethereum
Tascha had previously pointed out the chaos in Ethereum in a Twitter thread. In it, she suggested some of the changes the Ethereum community should make and how they should move from one value proposition to the next.
The focus goes “from sharding and solving scaling problems to a settlement layer with Layer 2 above to compete with Bitcoin (BTC)”.
“All of these are signs that Ethereum is still finding a focus in the value proposition.”
“The truth is that in the future, Ethereum wants to be everything – sharding, layer 2 security, etc. – newer chains have similar distributions in more meaningful ways, e.g. B. Subnets. ) by Avalanche, Appchain of Near, Zone of Cosmos “.
Sharding is a technique used by blockchain networks or companies to process more transactions per second, while blockchain layer 1 is a series of solutions that are built on top of existing protocols like Ethereum or Bitcoin and are scalable.
Layer 2 solutions connect to an underlying Layer 1 blockchain to improve efficiency and are often owned by third parties.
In order for blockchain networks to evolve into viable alternative payment systems, they must be able to process a large amount of transactions, data, and users – what is commonly referred to as scalability.
“The world won’t wait for Ethereum to classify itself”
Tascha noted that the Layer 2 rollout has stalled for the time being and the expectations of unpublished zero knowledge roll-up Layer 2 solutions are “so high that they can hardly be fulfilled”.
“The world never stands still and waits for Ethereum to take care of itself. Ethereum will hardly grow faster than other competing solutions. ”
Although Ethereum is chaotic, there is a correspondence between its three Layer 1 competitors Solana (SOL), Terra (LUNA) and Avalanche (AVAX) – now established status SoLunAvax memes.
All three were widespread in 2021, which is reflected in the price hike and TVL. In her Twitter post, Tascha discussed how SoLunAvax will be prepared for the “best risk / return” in the next two years.
The biggest advantage for Solana is its monolithic structure. While SOL is structurally the “Single Foundation Token”, with no “uncertainty about where the values are accumulated”. This, along with the lack of “very successful apps”, can also lead to ruin.
“The monolithic construction is less flexible and prevents Solana from competing for potentially promising use cases. Modular networks have a much greater capacity for collective thinking, “which means that more people are working on these blockchains, learning from one another and improving faster.
Avalanche promises solid growth
What is called “Solana’s curse is a blessing for Avalanche”, explained Tascha and emphasized the subnet structure, which in her opinion is “more flexible, versatile and scalable”.
Compared to Solana and Luna, Tascha feels more secure at Avalanche, although she sees “new signs of healthy ecosystem growth and diverse innovations” despite the late start of the Altcoin.
If Avalanche and Solana have a lot in common, then LUNA is “different”. According to Tascha, Terra is “not an ecosystem, but a range of products” powered by two projects, namely Anchor and Lido.
“Anchor alone accounts for more than 40% of the total TVL. If you remove Lido, a project that is simply LUNA’s stakeout service, Anchor’s market share will increase by more than 60%. ”
“It’s worth noting that the growth of the UST stablecoin and a number of groundbreaking projects have put Terra in the top 10 by market cap, suggesting the power to build products for the masses rather than targeting a small number of groups in space. “.
If one compares Terra with the South Korean economy, “where the four largest” projects “- Samsung, Hyundai, SK and LG – account for almost half of GDP,” warns the macroeconomist of “all in” LUNA because of the risk of concentration.
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