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Bloomberg crypto market analyst Jamie Coutts says that alternative Layer-1 protocols that are trying to dethrone Ethereum (ETH) are continuing their efforts at full speed. A striking comment from the senior analyst!
Work on Layer 2 Projects!
Crypto analyst Jamie Coutts claims that the rise of Ethereum Layer-2 protocols on social media platform X helps generate revenue from its competitors. The analyst stated the following in his comments:
The increase in L2s means that the Ethereum network is starting to regain market share from its Alt-L1 (alternative Layer-1) counterparts. Last year, the active address L2 growth outpaced Alt-L1s by 2 times, even if it is from a lower base.
Jamie Coutts also argued that alternative smart contract platforms face a series of headwinds threatening their survival, including inflationary tokenomics, excessive block space, and the rapidly growing network effects of Ethereum.
Critical Comment from the Analyst!
Although the total fee amount generated by such blockchains is in a long-term upward trend, the analyst pointed out that most chains could easily be dragged into uncertainty in the next few years. The senior analyst said the following in his comments:
Despite the current bear market, Blockspace Demand is in a long-term structural uptrend. However, the crypto industry is struggling with serious problems of its own making. It is possible that only a small subset will be valid in a few years.
Jamie Coutts also suggested that many alternative layers are likely not generating enough fees to secure the future of their networks due to lack of activity. The analyst said the following in his comments:
Although a cratered treasury market invalidates our thesis that capitulation in 2022 was a low cycle for ETH since 22Q, our outlook for the token remains positive. However, due to insufficient demand and below-average tokenomics, we continue to have a negative outlook for many Alt-L1s (not all).
