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Home » “Ethereum will establish itself as the dominant smart contract network”: Grayscale

“Ethereum will establish itself as the dominant smart contract network”: Grayscale

Important facts:
  • Ethereum’s second layers “generate value and attract users,” the company explains.

  • For Grayscale, “Coinbase’s move underscores its relevance.”

Ethereum’s future looks bright and “will establish itself as a dominant smart contract network,” supported by second-tier scalability developments, notes investment firm Grayscale.

“Ethereum’s network and liquidity effects have enabled it not only to weather the storm of adverse macroeconomic and market events, but also to attract developers working to address its scale challenges,” he explains in report.

It should be noted that Ethereum’s main network (Mainnet or L1) is characterized by limitations such as: B. the slowness of transactions and high fees or commissions that are generated. This opened the doors for layer two (L2) scalability solutions. who are responsible for solving these difficulties.

The L2 has potential Ethereum is more accessible and scalable for a wider range of applications.

This has given the network an edge that, according to Grayscale, “acts as a flywheel, helping to create value for Ether (ETH) and attract users and developers to decentralized applications.”

The growth of the second layers in Ethereum has been so great that projects like Arbitrum and Optimism outperform Layer 1 Total Value Lock (TVL), which competes with Ethereumlike Solana and Avalanche, as you can see below graphic by DeFiLlama.

Graph of total value locked across all networks. Source: DeFiLlama.

Coinbase paves the way for the launch of dApss

In its report, Grayscale also places particular emphasis on the second-layer network on Ethereum, called Base, as it believes it has the potential to serve as a “major new channel for onboarding mainstream users to cryptocurrencies.”

As CriptoNoticias reports, Base, created by the Coinbase exchange, was launched on August 9th. The goal is to make it easier for developers to create decentralized applicationsSo far, wallets, bridges between networks, security providers, oracles and analysis services have been created.

“Coinbase may be paving the way for widespread adoption of decentralized applications.” [dApps] based on Ethereum with Base”.

Grayscale report.

Base’s growth and adoption has been tremendous. Within a few weeks exceeded to its second-tier competitors and even to the Ethereum mainnet in daily transactions.

The report warns that consolidating Base as Ethereum’s main Layer 2 could become an attractive option if certain alternative Layer 1s “fail to gain traction and suffer due to low security budgets and lack of liquidity.”

Merges, ETFs and RWAs are attractive for investors

However, Grayscale’s vision is shared by Brazilian cryptocurrency investment company Hashdex focuses on other aspects that also raise positive expectations for Ethereum.

A recent one report of the company states that there have been “huge and exciting developments under the hood of Ethereum.” They add:

“We believe the case for investing in the world’s largest smart contract platform has never been stronger.”

Hashdex, Brazilian investment company

Hashdex highlights the network’s potential after switching from Proof-of-Work (PoW) mining to Proof-of-Stake (PoS), where transactions are validated through staking. This event is known as Merge and took place on September 15, 2022.

“This has helped make Ethereum more of a technology investment with measurable returns, making it more attractive and familiar to traditional investors,” says the Brazilian company.

All of this has sparked interest in Ethereum, according to Hashdex. There is evidence of this in the massive interest from institutional investors who have applied for approvals Launching an Ethereum exchange-traded fund (ETF) In the United States.

Another factor that sets Ethereum apart from other projects is its leadership in the tokenization of “real world” assets Real world assets, RWA, in English). This refers to the process of converting rights to a tangible or intangible asset into a digital token on a cryptocurrency network, allowing company stocks, bonds, and even real estate to be tokenized.

The value of The tokenized RWA crosses the $3 billion marka fact reported by this medium on September 17th.

For Hashdex, Ethereum enables much of the tokenization of assets due to “its role as a dominant smart contract platform.”

“Ethereum is at the heart of all of these tokenization initiatives as the base layer for these applications. “The more tokenization is used, the greater the demand for ETH.”

Hashdex, Brazilian investment company

Despite the crypto winter and the market’s experiences over the last year, the firm believes Ethereum is driving “the next frontier of innovative investing.” In this sense, he believes that more and more investors understand the “important role” that Ethereum will play as “the technological infrastructure of the global economy” and do not hesitate to recognize that “this sleeping giant has never really slept.”

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