The popularity of Ethereum "double-edged sword" - a16z's State of Crypto Report

The popularity of Ethereum “double-edged sword” – a16z’s State of Crypto Report – Mail Bonus

Crypto venture capitalist Andreessen Horowitz (a16z) has pointed out that the development and demand for Ethereum is “unmatched” despite the network’s high transaction fees.

However, the company warns that “its popularity is also a double-edged sword” as Ethereum prioritizes decentralization over scaling, leading to competition blocs stealing market share with “promises of better results and lower fees.

The comments came through a blog post where a16z presented the “State of Crypto” report 2022, where Daren Matsuoka, the company’s data scientist, communications design and engineering chief Eddy Lazzarin, Chris Dixon’s chief executive, and Robert Hackett’s chief of staff all work together to provide five key points. from the study.

Outside of Ethereum, the report focuses on topics such as Web3 development, cryptocurrencies, distributed finance (DeFi) and stablecoins.

According to the report’s data, Ethereum outperforms the competition in terms of builders’ interest, as the network has about 4,000 active monthly programmers compared to the second place Solana (SOL) per 1,000. Bitcoin (BTC) and Cardano (ADA) are next in line at approximately 500 and 400 each.

The experts noted that “Ethereum’s leadership has a lot to do with its early start and the health of its community” but emphasized the importance of continuing to grow online despite high business costs:

“Overwhelming mindshare Ethereum helps explain why its users have been willing to pay more than $ 15 million in fees a day on average just to use blockchain – remarkable for such a young project.

Demand for Ethereum can also be seen in the report’s estimated transaction fees paid on the blockchain over the seven-day average (as of May 12), as the data shows that Ethereum is $ 15.24 million. To contrast, BNB Chain, Avalanche, Fantom, Polygon and Solana account for approx. $ 2.5 million in fees in total.

Layer-1 Transaction Fee: a16z

The report states that Layer-2 benchmarking solutions are working to lower Ethereum fees and speed up conversions, but also points out that long-awaited updates are coming to Ethereum to make the network more efficient and cost-effective.

However, the “long-awaited” updates may not happen soon enough and a16z also emphasized in the report that over the 30-day average (as of May 12) active addresses and transactions on competing blocks, including Solana, BNB Chain and Polygon, in the long run from Ethereum.

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The data shows that Ethereum has 5.5 million active addresses, which represents 1.1 million daily transactions, while Solana has a dramatic 15.4 million active addresses and 15.3 million daily transactions. BNB Chain is in third place with 9.4 million and 5 million, while Polygon was a total of 2.6 million and 3.4 million. The experts concluded that this would not be a winner.

“Blockchains are the product of a new computer wave, just as computers and broadband were in the nineties and nineties and just as mobile phones were in the last decade. There is a lot of room for innovation and we believe that there will be many winners. “

Other key points from the report were that the total value of the DeFi sector was unlocked at approx. $ 113 billion would make it the 31st largest bank in the United States, estimates that Web3’s adoption could reach 1 billion users by 2031 and that NFTs have generated $ 3.9 billion in revenue for authors to date.