According to a report by JPMorgan, Ethereum could be at risk of losing its dominance due to the inability to produce efficient scaling solutions quickly. The note, written by the firm’s managing director of global market strategy Nikolaos Panigirtzoglou, further states that other new smart contract-enabled blockchains are taking this market share, rather than ethereum sidechains or other ethereum-based solutions. .

Ethereum’s dominance is at stake, according to JPMorgan

A note from JPMorgan state Ethereum may continue to lose its dominance in the decentralized finance space in the coming year. The report, written by Nikolaos Panigirtzoglou, managing director of global market strategy at JPMorgan, noted that this dominance is in jeopardy due to Ethereum’s problems scaling its network.

In response, the note states that scaling:

Necessary for the Ethereum network to maintain its dominance, it may be too late.

Ethereum is centered on an L2 (Layer 2) centric roadmap that supports the rise of rollups and sidechains in an attempt to find alternatives to the intensive activity and high fees that occur on its Layer 1 blockchain . Even with this strategy, the percentage of Defi dominance estimated at nearly 100% early last year has now fallen to 70% of the estimated market.

The rise of new challengers

More problematic, Panigirtzoglou further explained, is that Ethereum has lost some of its influence in the defi space to other chains rather than its own L2 scaling solution. Solana, avalanche, BSC and the earth, a group of cryptocurrencies and networks that support smart contracts known as the “Ethereum Killer” has been gaining market share and creating a community behind it.

This has also led to an increase in the price of their respective native tokens. While Ethereum has also managed to increase the price of its network assets, ether (Ethereum), each of the above tokens exceeds Ethereumperformance last year. Sharding, the strategy Ethereum will use to scale its L1 blockchain, will not appear until next year after the merger, which will change the proof-of-work (PoW) consensus to a more energy-efficient proof-of-work. Stake (PoS) consensus.

The note concludes:

In other words, in our opinion, Ethereum is currently in a fierce race to maintain its dominance in the application space, and the outcome of this race is far from certain.

What do you think of JPMorgan’s view on Ethereum and its possible future in Defi? Let us know in the comments section below.

Sergio Goshenko

Sergio is a cryptocurrency journalist in Venezuela. He describes himself as late to the game, entering the crypto space when prices rose in December 2017. With a background in computer engineering, living in Venezuela, and being affected by the cryptocurrency craze on a social level, he offers a different perspective on the success of cryptocurrencies and how it can help the unbanked and underserved.

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