Global fund manager VanECK has predicted that Ethereum Layer 2 (L2) networks have the potential to reach a valuation of over $1 trillion by 2030. The company, however, expressed skepticism about the long-term future of some of these networks. In a comprehensive report, VanECK analyzed 46 L2 networks across different aspects and foresees the emergence of numerous new networks in the near future.
VanECK identified a crucial challenge faced by Ethereum, which is its limited capacity to handle financial transactions through processing, storing, and computing data. The report suggests that this issue can be resolved by offloading some of the data processing to Layer-2 blockchains. If Ethereum manages to secure 60% of the market share among public blockchains, the predicted market cap for L2 networks alone is estimated to reach $1 trillion.
Smart contracts on Ethereum are widely popular but face scalability issues due to high transaction fees and processing times during peak usage periods. Analysts believe that L2 networks will outperform the base network in terms of generating revenue due to improved transaction efficiency and user experience. However, the overall assessment of most L2 networks remains pessimistic.
Developments on Ethereum are currently focused on enhancing the network's ability to process L2 transaction data, such as the recent Dencun upgrade to reduce L2 transaction fees. The future is expected to see numerous specialized L2 solutions dominating the market, while general-purpose chains with strong network effects will also gain prominence.
One major technological advancement in L2 solutions is the zero-knowledge framework (ZKU), which offers significant advantages and is seen as essential for most roll-ups in the L2 ecosystem's evolution. VanECK awaits a decision from the SEC on its Ethereum ETF filing while predicting a surge in the total value locked in the top seven L2 networks, with estimates reaching $100 billion in the near future.
