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Tuesday, September 27, 2022

Ethereum Dominance Will Reduce As Competitors Increase

Morgan Stanley, a global investment firm, has shared opinions on Ethereum, the top contract platform. The bank shared its thoughts on the blockchain’s future. According to Morgan Stanley, Ethereum, which continues to have a substantial market share in the decentralized finance (DeFi) and non-financial tokens (NFTs) arena, may be losing market share to competitors. 

Ethereum Less Decentralized Than Bitcoin

When Morgan Stanley compared bitcoin and Ethereum, the latter was found less decentralized. It used the number of digital assets possessed by whales as a criterion for this comparison. Bitcoin has been chastised for its high holder concentration, with the top 100 wallets controlling 14% of the whole supply. However, Ethereum is much more concentrated, with the top 100 wallets controlling 39% of the total supply.

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In comparison to bitcoin, Ethereum has always had more decentralized characteristics. This is evident in the network improvements that may be performed, but it has not hampered the network’s long-term viability.

The blockchain is still the most popular smart contract network. It dominates the decentralized finance (DeFi) and network finance (NFT) markets, with ETH accounting for more than 60% of total value locked (TVL).

Morgan Stanley, however, believes that this supremacy will not endure long. Other networks are rapidly emerging and stealing market share from the blockchain, according to the investment bank, and this trend is expected to continue.

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One of the reasons Ethereum’s popularity is waning is that other networks like Solana and Cardano provide more scalability, quicker transactions, and lower transaction fees. As a result, more users are migrating to other blockchains, bringing their cash with them and strengthening the dominance of these other blockchains.

Furthermore, the Morgan Stanley paper argues that the fast-shifting rules that the DeFi and NFT markets are subject to might result in lower demand for Ethereum transactions, given that they account for the majority of the network’s activity. They are also exposed to new hazards that limit specific industries, such as banking, which includes DeFi.

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