Crypto venture capital giant Andreessen Horowitz (a16z) emphasized that despite Ethereum's high transaction fees, its development and demand for it from crypto users is "unrivaled."
However, the company warned that given Ethereum’s priority of decentralization over scaling, its “popularity is also a double-edged sword,” leading competing blockchains to “promise better performance and lower fees.” "Grab market share.
The comments were published via a blog post introducing a16z’s 2022 “State of Cryptocurrency” report, by the firm’s data scientist Daren Matsuoka, protocol design and engineering lead Eddy Lazzarin, general partner Chris Dixon and content lead Robert Hackett Together, five key conclusions of the study are provided.
In addition to Ethereum, the report focuses on topics including Web3 development, cryptocurrency adoption, decentralized finance (DeFi), and stablecoins.
According to the report’s data, ethereum has attracted more developer interest than its competitors, as the network has about 4,000 monthly active developers, compared with 1,000 for second-placed Solana. Bitcoin and Cardano are next at around 500 and 400 respectively.
The analyst noted that “Ethereum’s lead has a lot to do with its early start and the health of its community,” but also emphasized the importance of the network continuing to grow by leaps and bounds despite high transaction costs:
"Ethereum's overwhelming reach helps explain why its users are willing to pay an average of over $15 million per day just to use the blockchain, which is remarkable for such a young project .”
Demand for Ethereum can also be seen in the report’s estimated seven-day average (as of May 12) transaction fees on the blockchain, which puts Ethereum’s transaction fees at $15.24 million. To provide comparison, transaction fees for BNB Chain, Avalanche, Fantom, Polygon, and Solana total about $2.5 million.
Layer-1 transaction fee: a16z
The report noted that Layer-2 scaling solutions are working to reduce Ethereum’s fees and speed up transactions, while also stating that a long-awaited upgrade is coming that will make the Ethereum network more efficient and cost-effective.
However, the "long-awaited" upgrade is unlikely to happen anytime soon, with a16z also highlighting in the report that during the 30-day average (as of May 12), competing blocks including Solana, BNB Chain, and Polygon The number of active addresses and transactions on the chain is far ahead of Ethereum.
The data shows that Ethereum has 5.5 million active addresses and a daily transaction volume of 1.1 million, while Solana has 15.4 million active addresses and a daily transaction volume of 15.3 million. BNB Chain ranks third with 9.4 million active addresses and 5 million daily transactions, while Polygon's active addresses and daily transactions are about 2.6 million and 3.4 million, respectively. Analysts concluded that it would not be a winner-take-all situation.
“Blockchain is the hot product of the new computing wave, just like PCs and broadband in the 90s and early 2000s, and mobile phones in the past decade. There is a lot of room for innovation, and we believe there will be multiple winners.”
Other key takeaways from the report include: the roughly $113 billion in total locked value in the DeFi space that would make it the 31st largest bank in the U.S., estimates that Web3 adoption could reach 1 billion users by 2031, and how NFTs have created so far for creators generated $3.9 billion worth of revenue.
Cointelegraph Chinese is a blockchain news information platform, and the information provided only represents the author's personal opinion, has nothing to do with the position of the Cointelegraph Chinese platform, and does not constitute any investment and financial advice. Readers are requested to establish correct currency concepts and investment concepts, and earnestly raise risk awareness.
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