Coinbase has alerted on their analysis regarding the price movement of Ether that other scaling solutions out there, such as Matic and many others, are going to have a deep impact on the prevailing price momentum of Ether in the coming weeks. This is not suspicion but something that is based on pure facts and whatnot.
The research conducted is based on the hypothesis that as another layer 2 scaling solutions emerge, and they are emerging at a standard rate, the business portfolio of Ether is going to get shifted, which means less revenue for the cryptocurrency as compared to another layer two scaling solutions.
Ether has seen a huge price momentum return to the cryptocurrency, for it is going to be updated with the merge update, and that has got investors all riled up. Not only are they showing tremendous interest in cryptocurrency for the time being, but they are also pouring investment into Ether like crazy.
No wonder the price of Ether has gone all the way to $2K, and the sentiment is looking more elementary every passing second. But all of that might come to a standard halt, according to this new report made available by Coinbase.
Layer 2 Competition is Rising
There are many layer 2 solutions present out there that are the direct competitors of Ether. Ether does provide its users with a myriad of services, from direct crypto trading to staking one’s crypto for earning rewards and from the development of NFTs, Decentralized apps, and smart contracts to launching a private crypto project on the blockchain. But so do many other layers 2 blockchain solutions out there, such as Matic.
Presently Ether is at the top of its game, but after the merge update, that is going to change the consensus protocol of Ether from proof of work to proof of stake. It means that the need for miners would come to a halt, and people will be able to validate transactions by staking their personal crypto stash; this is going to cut the yield for staking by half and, therefore, will have a direct impact on the price of Ether.