VanEck believes Ethereum’s layer 2 protocols will reach a combined market capitalization of $1 trillion by 2030, according to a new research report published on April 3.
This prediction was revealed in a detailed analysis led by VanEck’s senior investment analyst Patrick Bush and head of digital research Matthew Sigel.
VanEck’s prediction that the market capitalization of Ethereum Layer-2 will reach $1 trillion by 2030 reflects his belief in the technology’s potential to significantly improve blockchain scalability and efficiency, marking a noteworthy addition to the landscape of digital assets and their underlying technologies. It represents change.
Scalability solution
The investment firm’s analysis evaluated the fast-growing Layer-2 ecosystem across several important aspects, including transaction pricing, developer experience, user experience, trust assumptions, and ecosystem size.
According to the report, Layer 2 technologies, especially optimistic rollup and zero-knowledge rollup, are solving Ethereum’s biggest challenge: scalability.
These solutions aim to expand Ethereum’s transaction processing capacity without compromising its core properties of security and decentralization. The analysis points out that the EIP-4844 upgrade is a key development that introduces “Blob Space”, which significantly reduces data publishing costs, providing financial benefits to Layer 2 operations.
According to the report, cost savings implemented through EIP-4844 will play a pivotal role in improving Layer 2 profit margins.
The report also examined the revenue models of layer 2 solutions, highlighting transaction sequencing as a key revenue source. It examined both on-chain and off-chain cost structures, paying particular attention to the expensive proof mechanisms used by zero-knowledge rollups.
TVL
Assessing the competitive landscape, the study predicts that layer 2 will account for a significant portion of transaction value and total value locked (TVL) within the Ethereum ecosystem by 2030.
This growth is partly due to the potential of maximum extractable value (MEV) to boost layer 2 revenues. VanEck’s analysis points to a future where Layer-2 platforms could provide a competitive advantage over Ethereum in certain market segments.
However, the report maintains a neutral tone regarding the speculative nature of the cryptocurrency market and the uncertain future of layer 2 token valuations. This anticipates the emergence of layer 2 rollups for a variety of use cases, indicating broader application of blockchain technology beyond finance to areas such as gaming, social media, and infrastructure.
VanEck’s analysis presents a compelling vision for the future, with Ethereum Layer-2 evolving from a nascent technology to a key cog in the global blockchain ecosystem.