Flipside: Ether Layer 2 to Face Increasingly Competitive Landscape in 2024

A new report from the on-chain data platform points to a battle for lower fees, better user experience and user attention.

According to a Jan. 25 report from on-chain data platform Flipside, a battle could be waged over Ether’s Layer 2 blockchain (L2), one of which will offer the lowest-cost fees by 2024. This controversy could occur if the bull market begins in 2024, raising transaction costs for Ether and forcing users to look for alternatives.

Additionally, a more competitive environment in L2 could lead to less profitable projects, a better user experience, and renewed interest in the governance tokens of these chains (e.g., OP, ARB, and POL). Ultimately, Flipside analysts believe the battle will accelerate the adoption of EVM-compatible blockchains.Bitcoin Miner

EVM stands for ethereum virtual machine, which can be simply understood as software that translates and executes smart contract commands. As such, the existence of decentralized applications like Uniswap or Aave requires EVMs to process information sent from smart contracts.

Another catalyst for wider adoption of Ether L2 is the Dencun upgrade, due in the first semester of 2024, which will introduce “blobs”, which are transactions capable of handling large amounts of data that can be attached to an Ether block. As a result, L2 will be able to use these blobs to store transactional data, freeing up more space in the Ethernet block and increasing L2’s throughput.

New Market Players

Flipside’s report also mentions that more blockchains are expected to be launched in 2024 than in the previous year. This could mean more blockchains with specific use cases that will take advantage of each network.

According to Flipside, these new blockchains will emerge to meet new and existing needs, and Ether L2 may have to fight for user interest as people are still interested in new blockchains.ETChash Miner

In addition, the report emphasizes that new blockchains will remain relatively new during the bull market between 2020 and 2021. However, these chains have made significant developments in cross-chain interactions and transmission over the past two years, making it easier for Web3 users to interact with multiple chains.

The report notes that while the majority of crypto users will continue to use a single chain, “the crypto community as a whole will become more mobile, flexible, and willing to move across different chains to take advantage of opportunities.” Thus, in addition to the war on the ethereum ecosystem, L2 may face more external competition this year.