Flipside predicts that layer-2 solutions will bolster and expedite s’s domination.
The dominance of Ethereum in the deployment of smart contracts is waning, according to a recent research report by Flipside. The study reveals that there has been a surge in competition among layer-2 networks (l2), resulting in a decline in smart contract deployments on Ethereum. Data from Flipside shows that since January 2022, nearly 640 million smart contracts have been deployed, with Polygon and BNB Chain (formerly known as Binance Smart Chain) leading the pack in terms of contract deployments.
One notable layer-2 solution, Optimism, has been responsible for two-thirds of all EVM smart contract deployments in 2024 so far. This highlights the growing popularity and adoption of layer-2 solutions that operate on top of Ethereum’s architecture.
In addition, Flipside notes that there has been a significant increase in the number of contract deployers across various chains. These deployers now make up 34.7% of all categorizable deployers, a significant jump from 11.2% in 2022 and 2023. However, Flipside clarifies that it is not just developers who can deploy contracts, as smart contracts can also deploy contracts themselves.
Interestingly, the research report also highlights a decline in deployers related to non-fungible tokens (NFTs). Their presence has decreased from 18.6% to 8.2% over the same period. This suggests that the next bull run in the cryptocurrency market may prioritize decentralized finance over NFTs, which dominated the previous cycle.
Looking ahead, Galaxy Digital, the crypto bank led by Michael Novogratz, predicts that 2024 will be a crucial year for Ethereum. The rise of other layer-1 blockchains like Solana is expected to intensify competition in the smart contract space. Galaxy Digital analysts point out that Ethereum’s modular architecture, particularly its various rollup types, will introduce new challenges and technological risks due to their early stage of development. They identify Solana as the most prominent general-purpose blockchain and the primary competitor to Ethereum.
Despite the increasing competition, Ethereum remains a bullish investment option. The postponement of ETH ETFs by the SEC and the recent $1 billion liquidations have not dampened market sentiment towards Ethereum. Analysts believe that Ethereum’s spot ETF narrative will come into play and outperform Bitcoin in the near future.
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