Ethereum’s Layer 2 Networks Projected to Reach $1T Market Cap by 2030: VanEck Analysts

According to VanEck, Ethereum’s L2 solutions could outperform the main blockchain within six years, putting the platform’s market cap at $1 trillion.

In a paper released earlier this week, VanEck analysts predicted that Ethereum’s Layer 2 scaling networks would have a market valuation of $1 trillion by 2030. The $1 trillion estimate was made by projecting that Ethereum would have 60% of the market share across all public blockchains and calculating the volume of assets in its ecosystem.

Ethereum’s $1T Potential Through Layer 2 Innovations

Patrick Bush, VanEck’s senior digital assets investment analyst, and Matthew Sigel, digital assets research head, discussed the transformative potential of Layer 2 blockchains in improving Ethereum’s scalability and performance.

Ethereum’s dominance in smart contracts raises scalability concerns as transaction costs and processing times rise during peak usage. According to the experts, Layer 2 networks will capitalize on Ethereum’s restricted capacity to process, store, and compute data, opening up new avenues for innovation and growth within the blockchain ecosystem.

The research also emphasizes the role of Layer 2 solutions, specifically Optimistic Roll-Ups and Zero-Knowledge Roll-Ups, in improving Ethereum’s transaction processing capabilities while maintaining its essential principles of security and decentralization. One notable advancement is Ethereum’s new Dencun upgrade, which includes the novel “Blob” feature that reduces data posting costs, hence enhancing Layer 2 operations financially.

Layer 2 Networks Could Dominate Ethereum

According to VanEck’s analysis, Layer 2 networks will account for a considerable share of transaction value and Total Value Locked (TVL) in the Ethereum ecosystem. This expansion is projected to be fueled in part by the potential for Maximal Extractable Value (MEV) to boost Layer 2 revenues. They also envision a future in which Layer-2 platforms could provide substantial competitive advantages over Ethereum in certain industry segments. Despite their bullish perspective, the experts are concerned about the long-term worth of most layer 2-related tokens due to “cutthroat competition,” which could affect the long-term value of many projects. They highlight that the top seven Ethereum layer 2 tokens already have a fully diluted valuation of $40 billion, with more projects set to emerge in the coming months.

The paper envisions a future world populated by thousands of use-case-specific Layer 2 networks serving a variety of industries, including gaming, social media, and infrastructure. These specialized chains are planned to supplement Ethereum’s general-purpose chains, with a small number emerging as key players as a result of network effects and widespread acceptance.

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