Crypto analyst Ignas says Ethereum (ETH) is losing its competitiveness against other layer-one networks. In an X post, the analyst stated that Ethereum’s underperformance compared to other networks was the key reason behind ETH’s price struggles.
Per the post, Ethereum’s dominance in the layer-one industry quickly grew after introducing layer twos such as Arbitrum and Optimism. However, as other layer-one networks improved their speed, costs, and scalability, Ethereum eventually lagged.
Solana Has Outperformed Ethereum
Solana (SOL) is one of the networks that has proven a formidable rival to Ethereum. According to the analyst, SOL was “the biggest slap in the face to ETH maxis.” Solana has outperformed Ethereum in the last two years despite the bearish sentiment caused by the FTX collapse.
“SOL got hit extra hard due to FTX collapse but not only recovered but shattered the illusion that the Ethereum roll-up approach is the only viable scaling solution,” the analyst stated.
The X post further noted that while the initial launch of layer two networks was good for Ethereum, an influx of these rollups created liquidity and fragmentation issues, which caused a shift towards Solana and other layer one networks.
“Ethereum isn’t the winner of the L1 wars. The value accrual from all L2s is not yet clear as well. And that’s a good thing for the sake of all industries. Even if Ethereum fails, alternative L1s are building their future,” Ignus added.
This debate comes amid concerns that layer twos have been shifting activity and revenues from Ethereum. TokenTerminal data shows that Ethereum’s monthly active addresses have plummeted to the lowest level this year.
Buterin Proposes Improvements on Ethereum
Ethereum co-founder Vitalik Buterin has shared his vision for the Ethereum blockchain as part of the next step in the network’s roadmap. In a blog post, Buterin outlined plans for the network to surpass 100,000 transactions per second (TPS) on the Ethereum main net and layer two blockchains.
According to Buterin, this upgrade will ensure that all the ecosystems within Ethereum work in harmony and address fragmentation.
Buterin further stated that the main Ethereum network needed to be scaled to meet demand and address potential security issues.
“If L2s become very scalable and successful but L1 remains capable of processing only a very low volume of transactions, there are many risks to Ethereum that might arise,” Buterin stated.
Ethereum traded at $2,598 after a 0.8% drop in 24 hours. In the last 30 days, ETH has gained by 12%.