2024: A Game-Changing Year for Ethereum and L2 Blockchains
2024 is poised to be a monumental year for the Ethereum blockchain. Not only is the approval of an Ether (ETH) spot exchange-traded fund (ETF) in the United States on the horizon, but it will also witness the network’s first bull cycle since the Merge in 2022.
The Merge update has made ETH deflationary during periods of high network usage. To date, 0.2% of the Ether supply has been burned, and this number is expected to rise as network usage increases in the coming months.
Moreover, Ethereum Improvement Proposal 4844, the next network update, is scheduled for this year. Its goal is to make the entire ecosystem of layer-2 (L2) blockchains built around Ethereum up to 10 times more cost-effective.
This update will be a pivotal turning point in the cycle, propelling Ethereum and L2s to their most significant year in history. The concept is simple: Ethereum’s scalability relies on L2s, and L2s require subchains and specialized business developer teams to grow at the necessary pace.
But what exactly is Ethereum? Unlike Bitcoin (BTC), Ether is not merely an asset linked to blockchain functionality. Ethereum is more akin to a shared and programmable database or a decentralized application (DApp) development platform. Its value is derived from the existence of valuable applications built on it.
While some native Web3 applications already exist, the majority will come from traditional companies adapting their systems and integrating with the blockchain. However, this has not been achieved on a significant scale yet. Few individuals possess the ability to think in blockchain terms, envision problems, and consider blockchain as a solution or understand tokens well enough to explore associated business opportunities.
In previous cycles, consistent guidance was lacking, and projects struggled to compete with meme coins and the nonfungible token (NFT) craze for block space. Companies were eager to experiment but lacked the knowledge and guidance from business development teams, resulting in failed projects.
However, in 2024, this dynamic will change. With more leadership positions at large companies and a more mature approach to building on-chain, the blockchain ecosystem is experiencing specialization. L2 blockchains are segmenting into subchains with specialized teams and structures for specific niches.
For example, Polygon, as a leading L2 blockchain, is diversifying into several subchains dedicated to specific use cases. By providing a Chain Development Kit (CDK) on which subchains are built, Polygon is facilitating this diversification. All liquidity is connected through an aggregation layer.
Other major L2 blockchains are following suit. Optimism, for instance, refers to its CDK as “Op-Stack.” This paradigm shift sets the stage for a fierce battle in 2024, with specialized subchains and business development teams from each major L2 blockchain vying for dominance in the same segments.
Consequently, 2024 has the potential to witness the emergence of Web2 killer apps in Web3. It will mark the beginning of the retention cycle, where companies and users integrate blockchain into their daily lives. This will undoubtedly be the year of L2 blockchains and, consequently, the most significant year for the Ethereum network.
Lugui Tillier, the chief commercial officer of Lumx, a Web3 studio in Rio de Janeiro, believes that 2024 will be a game-changing year for Ethereum and L2 blockchains. Lumx boasts BTG Pactual Bank, Latin America’s largest investment bank, among its investors.
Disclaimer: This article is for general information purposes only and should not be construed as legal or investment advice. The views and opinions expressed are solely those of the author and do not necessarily reflect the views of Cointelegraph.