Ethereum’s dominance of decentralized finance (DeFi) is at risk as the scaling of the network, which is needed to maintain its dominance, may arrive too late, JPMorgan said in a report.

The final phase of the sharding, which is crucial for scaling the network, won’t arrive before next year, the bank’s strategists led by Nikolaos Panigirtzoglou wrote in the note published on Wednesday.
Full scaling is at least a year away and the risk is that during that time, the Ethereum network will continue to lose market share to competing networks, the bank warned.
Alternative blockchains such as Terra, Binance Smart Chain, Avalanche, Solana, Fantom, Tron and Polygon have been gaining the most market share in the DeFi market, and those competitors have received a lot of funding and have set up incentives to increase usage in their own systems, JPMorgan said.
The risk with Ethereum is that by the time sharding is implemented other ecosystems would have grown by so much that activity won’t return en masse to the Ethereum network, the bank noted.
Ethereum’s share of total value locked in DeFi has fallen from almost 100% at the start of 2021 to around 70% and will likely drop further before sharding is implemented in 2023, the report added.
Last month, Bank of America said that smart contract Avalanche is a credible alternative to Ethereum for DeFi projects, non-fungible tokens, gaming and other assets.

Wormhole’s W Token Has a 999% Weekly Return; Why VanEck Is Bullish on Ethereum Layer 2s

05:25

What Does State Inquiry Mean for Ethereum?

01:15

Solana Passes Ethereum on DEX Volume

02:09

Bee Movie Script Buzzing on Ethereum; Robinhood Benefits From ‘Monster’ Crypto Cycle

01:59

Spot Bitcoin ETFs See Record $1B in Net Inflows; Ethereum's 'Dencun' Upgrade Goes Live

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Consensus

01

11

56

44

JPMorgan Says Ethereum’s DeFi Dominance at Risk Due to ‘Sharding’ Delays

Analysts from the bank said that the scaling of the network might arrive too late.

Wormhole’s W Token Has a 999% Weekly Return; Why VanEck Is Bullish on Ethereum Layer 2s

10 Years of Decentralizing the Future

Wormhole’s W Token Has a 999% Weekly Return; Why VanEck Is Bullish on Ethereum Layer 2s