Polygon not too long ago commissioned a report to review the Layer 2 scaling options and create a framework for comparability. It makes use of the instance of the Ethereum for finding out layer-1 ecosystem challenges and throws gentle on ETH layer-2 scaling options.
Notably, the Ethereum market cap elevated multifold from its earlier excessive of $125 billion to roughly $500 billion in 2021. It was an enormous 12 months for the Ethereum community with the growth of DeFi initiatives and NFTs on the planet.
The statistics are additionally suggestive of an enormous surge in exercise on the well-known blockchain. The typical each day transactions have been round 1.5 million via 2021 exhibiting a 35% improve 12 months over 12 months. The each day lively addresses clocked at 600,000 on the community exhibiting a 40% surge 12 months over 12 months.
The Whole Worth Settled confirmed an enormous leap in its year-over-year worth. The full worth settled was $7.7 trillion which represented a 500% improve. Stablecoin accounted for the biggest share inside this, with a share of 54% at $4.2 trillion.
One of many key findings within the report places the Ethereum worth settled in opposition to apex bank card corporations comparable to Visa and Mastercard. The full buy quantity on Visa stood at $8.9 trillion (in 2020) whereas Mastercard recorded $4.7 trillion (in 2020). Ethereum, nevertheless, was far away from fintech big PayPal which accounted for $1.3 trillion (in 2021) on reflection.
Ethereum’s TVL reported an incredible 12 months with the quantity surpassing $150 billion in 2021 and rising ~750% 12 months over 12 months. The decentralized exchanges elevated by an element of ten in 2021 on Ethereum.
Standing at $750 billion, they have been nonetheless unable to compete with conventional exchanges comparable to Coinbase at $1.7 trillion. 2021 was particularly an excellent 12 months for the NFT market with Ethereum on the coronary heart of it.
The rise of NFT marketplaces immensely elevated the exercise on Ethereum. OpenSea alone processed $13 billion value of NFT buying and selling quantity.
What’s the draw back right here?
Whereas these astronomical numbers have led to a widespread exercise quantity on the Ethereum community, they’re additionally the explanations for the headwinds. The dramatically elevated quantity has led to scaling challenges on the community. These challenges are seen with the rise in transaction charges.
The typical price per transaction on Ethereum elevated from $1.5 in 2020 to as excessive as $21.1 in 2021. The report additional states, “Some customers have stomached these excessive charges and continued to make use of the platform. Others have explored the ‘greener pastures’ of different layer-1 blockchains which have decrease transaction charges however distinct and, oftentimes, inferior safety profiles.”
It is a notably worrying pattern for the Ethereum community and it makes the case for Layer-2 options extra wise. The upcoming Merge occasion is trying to handle these points and the Ethereum group is unquestionably looking forward to that.