JPMorgan: Ethereum has ‘intense’ competition from other block chains

For many years, Ethereum (ETH) was the undisputed leader in smart contracts and decentralized finance (Defi), but that dominance is being challenged more and more. The crypto coin has recently performed strongly substandard compared to Bitcoin (BTC), and according to analysts from JPMorgan, this is partly due to the growing competition from faster and cheaper block chains, such as Solana (SOL).

Ethereum loses ground

According to a recent report from JPMorgan, the rise of competing networks led to a decrease in activity on the Ethereum head network and a disappointing course performance of ETH. While Bitcoin has more than surpassed his all-time High (ATH) from the previous Bullrun, Ethereum still remains 46% below its peak value.

Lack of a strong narrative

According to JPMorgane, Ethereum misses a clear and convincing narrative, as Bitcoin has. While BTC has positioned itself as digital gold and value storage, Ethereum has had different roles over the years:

• In the beginning, Ethereum was the place for Smart Contracts and Dapps.
• Later the focus shifted to Defi and Non-Fungible tokens (NFTs).
• The switch to proof-of-stake (POS) had to stimulate energy efficiency and strike, but did not yet lead to broad market adoption.
• Now Ethereum is positioned as a world computer and fundamental layer for tokenization and financial applications, but this vision lacks the simplicity and attraction of Bitcoin’s Store-of-Value narrative.

Due to the lack of unambiguous positioning, more and more activity is shifting to other block chains or to Ethereum’s Layer-2 (L2) solutions. Although L2 networks increase the scalability of Ethereum, this also has disadvantages. Fewer transactions on the main network lead to lower transaction costs, resulting in less income for validators. In the long term, this can put pressure on the growth and stability of the ecosystem.

Migration from dapps to competitive networks

Another worrying signal is that more and more large decentralized applications (DAPPS) such as Uniswap and Dydx move their infrastructure partly or completely to other networks. Alternative Layer-1 Blockchains attract developers with faster transactions and lower costs.

For example, the recent decision by Uniswap to launch Unichain, its own blockchain, can take a hefty bite from Ethereum’s income from gas fees. If this trend continues, Ethereum can lose even more market share to competitors.

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