Analysts at investment firm VanEck have projected that by 2030, Ethereum’s Layer 2 scaling solutions could surpass the primary blockchain in performance, achieving a market capitalization of $1 trillion.
A recent report from VanEck predicts that the market cap of Ethereum’s Layer 2 networks could hit the $1 trillion mark in the next six years, attributing this growth to Ethereum’s anticipated 60% share of the total market across all public blockchains and the valuation of assets within its ecosystem.
The Potential of Ethereum’s Layer 2 for $1 Trillion Valuation
VanEck analysts, including senior digital assets investment analyst Patrick Bush and head of digital assets research Matthew Sigel, have emphasized the crucial role of Layer 2 solutions in addressing Ethereum’s scalability challenges, which currently limit its performance due to high fees and slow transaction times during peak demand.
Layer 2 networks are expected to alleviate these constraints, fostering innovation and growth by enhancing Ethereum’s ability to process, store, and manage data.
The report highlights Optimistic Roll-Ups and Zero-Knowledge Roll-Ups as pivotal Layer 2 technologies that improve Ethereum’s transaction throughput while maintaining its security and decentralization.
Furthermore, the report discusses the significance of Ethereum’s recent Dencun upgrade and its “Blob” feature, which is designed to lower the costs associated with data posting, thus benefiting Layer 2 networks economically.
The Ascendance of Layer 2 Networks Within Ethereum’s Ecosystem
According to VanEck’s analysis, Layer 2 networks are poised to capture a considerable share of the transaction volume and Total Value Locked (TVL) in the Ethereum ecosystem, bolstered by the potential for Maximal Extractable Value (MEV) to boost Layer 2 revenues. The analysts also anticipate that Layer 2 solutions could surpass Ethereum in niche markets, offering unique competitive edges.
However, the report also expresses caution concerning the long-term value of layer 2-related tokens, pointing to intense competition that might affect the value of numerous projects. It mentions that the leading seven Layer 2 tokens for Ethereum already have a combined fully diluted valuation of around $40 billion, with expectations of more entrants in the near future.
VanEck envisions a diverse ecosystem of thousands of Layer 2 networks, each tailored to specific use cases like gaming, social media, and infrastructure, operating alongside Ethereum’s main chains. A handful of these specialized networks are likely to dominate due to network effects and broad adoption, becoming key components of the broader Ethereum landscape.