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January 23, 2022
According to JP Morgan, Ethereum’s high network fees are driving developers over to its rival Solana.
Skyrocketing transaction volumes on the Ethereum blockchain have increased the so-called ‘gas fees.’ High transaction costs mean that users pay tens of Euros even for free NFTs.
Ethereum 2.0 would theoretically remedy this situation, but it will take developers months to roll out the upgrade.
Ethereum has been bleeding market share to its rivals for months, and Solana has been the main beneficiary of this process. Solana offers a low-cost, high-speed alternative to Ethereum, but it still struggles with stability.
In September, Solana went offline for 20 hours. Though alarming, the event did not translate to a significant price swing.
Ethereum’s NFT market share was 95 percent at the beginning of 2021. It has now fallen to 80 percent.
NFTs are the fastest-growing segment in the crypto market. Losing traction there may affect Ethereum’s price, according to JP Morgan.
Since the beginning of 2021, Etherum has also been yielding DeFi market share. From 100 percent, its share of the market has declined to 70 percent. According to JP Morgan’s analysts, only the rollout of ETH 2.0 may curb this trend.
Alternative blockchains, such as Solana, Avalanche, and Polygon, have been nipping away at Ethereum’s DeFi advantage.
In December, Bank of America singled out Avalanche as a viable Ethereum alternative for DeFi, NFTs, and gaming.
Read more about buying cryptocurrency.