The pro-crypto Wall Street giant, JPMorgan took a rather surprising stance against the dominating blockchain, Ethereum and its coin, Ether ($ETH). JPMorgan highlighted that Ethereum is already losing its rank in the Defi sphere to the up and coming competitors, and may lose further if it does not escalate the time taken for scalability upgrades.
According to Bloomberg, JPMorgan noted that due to the late launch of the Sharding feature, which is “most critical” development for scaling the Ethereum network, it is possible that by the time Ethereum catches up to speed it would have already lost its dominance.
“In other words, Ethereum is currently in an intense race to maintain its dominance in the application space with the outcome of that race far from given, in our opinion”
Bi-fold reason to Ethereum losing Defi dominance
It is evident that there are two main reasons because of which Ethereum could potentially lose its dominance in the Defi sphere. First – the scalability issue and second would be an increased number of competitors with independent blockchains.
As of now, blockchains process transactions one after the other. However, with Ethereum’s Sharding feature – a scalability functionality in ETH 2.0, parallel processing will become possible, maintaining Ethereum’s superiority. But, this upgrade is far from implementation, expected to arrive in 2023 although, Ethereum has already fell from its 100 percent market share in Defi, to a mere 70 percent, and is predicted to fall further if it does not prepone the Sharding feature implementation.
Bloomberg quoted the note from analysts led by Nikolaos Panigirtzoglou that mentioned “optimistic view about Ethereum’s dominance is at risk”…Scaling, “which is necessary for the Ethereum network to maintain its dominance, might arrive too late.”
Panigirtzoglou added that another “rather problematic” threat to Ethereum are market competitors with independent blockchains. These competitors are coming up with more accessible and cheaper innovations on their separate blockchains, instead of relying on Ethereum’s Layer 1 network for their security. In lieu of these concerns, Ethereum should ideally push forward its ETH 2.0 launch to reclaim its throne.
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The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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