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VanEck Predicts Ethereum Layer-2s To Hit $1T Market Cap By 2030

VanEck Predicts Ethereum Layer-2s To Hit $1T Market Cap By 2030

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Analysts from investment manager VanEck have predicted that Ethereum’s Layer-2 scaling networks will hit a market capitalization of $1 trillion by 2030. 

VanEck’s prediction is based on the significant growth and impact of Layer-2 technologies on Ethereum’s scalability and efficiency. 

Ethereum Layer-2s To Hit $1 Trillion Market Cap 

The prediction by VanEck was made in a detailed analysis led by its senior investment analyst, Patrick Bush, and the head of digital research, Matthew Sigel. VanEck’s prediction regarding Ethereum Layer-2s hitting a $1 trillion market cap indicates a strong belief in the technology’s potential to help enhance Ethereum’s scalability and efficiency. It marks a significant shift in the digital asset landscape and the underlying technologies powering them. According to the report, Layer-2 blockchains are set to capitalize on Ethereum’s limited processing capacity and its ability to store and compute data. 

“Layer-2 blockchains are set to capitalize on Ethereum’s “primary challenge” — its “limited capacity to process, store, and compute data.”

The prediction was made by estimating that Ethereum would take up around 60% of the market share across public blockchains and then estimating the volume of assets within the Ethereum ecosystem. 

“Ethereum’s dominance in smart contracts faces a critical hurdle: scalability. While the network offers unparalleled security and decentralization, transaction fees and processing times soar when usage intensifies.”

There are 46 Layer-2 networks with $39 billion in total value locked (TVL). The largest Layer-2 network is Arbitrum, with a TVL of $18 billion. 

Addressing Scalability Issues 

The report states that Layer-2 technologies, like Optimistic Roll-ups and Zero-Knowledge Roll-ups, are helping address Ethereum’s scalability issues. Optimistic Roll-ups and Zero-Knowledge roll-ups are expanding Ethereum’s capacity to process transactions without compromising on its core attributes of decentralization and security. The report cites the example of EIP-4844, which saw the introduction of “Blob Space,” which helped to reduce data posting costs, benefiting Layer-2 operations. 

The report pointed out that the introduction of features such as Blob Spaces indicates that Ethereum’s development is focused on improving its ability to process transaction data from Layer-2 networks. The analysts also noted the significant potential for substantially more revenues to be generated on Layer-2 networks rather than the primary Ethereum network. 

“We expect L2 revenues to exceed Ethereum’s because Ethereum cannot match the transaction throughput or user experience of L2s.”

Growing Number Of Layer-2s 

The report noted that Ethereum Layer-2 tokens have a $40 billion fully diluted valuation, and introducing more projects over the next 18 months could increase the number to $100 billion. 

“It seems a bridge too far for the crypto market to absorb even limited amounts of that supply without massive discounts.”

They also predicted thousands of use case-specific L2s, with only a few major players in the general-purpose Layer-2 market. The use case-specific networks would be segmented by sectors, applications, or functions and built for specific functions. 

“It is also clear that most roll-ups will eventually move towards the zero-knowledge framework (ZKU) due to its many advantages.”

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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