Alternative layer-1s attempting to dethrone Ethereum (ETH) might be running on borrowed time, according to Bloomberg crypto market analyst Jamie Coutts.
Coutts says on the social media platform X that the rise of Ethereum layer-2s (L2s) is helping to take revenue away from ETH competitors.
“The rise in L2s has meant that the Ethereum network has started to regain market share from the Alt-L1 (alternative layer-1) peers. In the past year, active address L2 growth outpaced Alt-L1s by 2x (albeit from a lower base)”
Coutts says that alternative smart contract platforms are facing a number of headwinds that threaten their survival, including inflationary tokenomics, excessive block space and Ethereum’s rapidly growing network effects.
Even though the total amount of fees generated by such blockchains is on a long-term uptrend, the analyst says that most of the chains could easily fade into obscurity over the next several years.
“Despite the current bear market, Blockspace Demand is in a long-term structural uptrend. However, the crypto industry is plagued with serious issues that are entirely of its own making. It is possible that only a tiny subset will be relevant in a few years.”
Coutts also says that many alternative layer-ones, due to a lack of activity, are most likely not generating enough fees to ensure the future security of their networks.
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