Analysts from VanEck, an investment manager, predict that Ethereum’s layer 2 scaling networks will reach a market capitalization of $1 trillion in six years. These networks will consist of numerous chains that are tailored to different use cases. The main advantage of layer-2 blockchains is their ability to address Ethereum’s limited capacity to process, store, and compute data. Currently, there are 46 Ethereum layer 2s with a total value locked of $39 billion, with Arbirtum being the largest at $18 billion. Ethereum’s dominance in smart contracts is hindered by scalability issues, as transaction fees and processing times increase with higher usage. To tackle this challenge, Ethereum’s development is focused on improving the processing of layer-2 transaction data, as seen in the recent Dencun update, which introduced the “Blobs” feature to reduce L2 transaction fees. The analysts believe that there is significant revenue potential in layer 2s compared to the base Ethereum network. However, they express bearishness towards the majority of L2-related tokens due to intense competition and potential oversupply. The top seven Ethereum L2 tokens already have a fully diluted valuation of $40 billion, and this is expected to increase to $100 billion with the launch of new projects in the next 18 months. Looking ahead, the analysts foresee a future with thousands of use-case-specific layer 2s, with only a few major players dominating the general-purpose L2 market. These use-specific networks will be segmented by sector, application, or function, and some may be built for specific purposes, such as decentralized social media. The analysts also predict that most roll-ups will eventually adopt the zero-knowledge framework (ZKU) due to its advantages.
VanEck predicts Ethereum layer 2s will achieve a market capitalization of $1 trillion by 2030.