Ethereum’s popularity ‘a double-edged sword’ — a16z’s State of Crypto report

Andreessen Horowitz, a crypto venture fund giant (a16z), has stated that demand and development on Ethereum are “unmatched”, despite its high transaction fees.

However, the firm warns that Ethereum’s popularity is a double-edged weapon. This is because Ethereum prioritises decentralization over scaling. As a result, competing blockchains will steal market share with promises of higher performance and lower fees.

Comments were made via a blog post that introduced a16z’s 2022 “State of Crypto”, which featured Daren Matsuoka (data scientist), Eddy Lazzarin (head of protocol design engineering), Chris Dixon (general partner), and Robert Hackett (head of content). The report provided five key takeaways.

The report covers topics other than Ethereum. It also discusses Web3 development, crypto adoption, Decentralized Finance (DeFi), and Stablecoins.

The 2022 State of Crypto Report by a16z. A lot has happened since we first started investing in crypto almost a decade ago. Here are 5 key takeaways from the a16z crypto web3 industry survey and data analysis by @darenmatsuoka, @eddylazzarin, @cdixon & @rhhackett pic.twitter.com/JFLXbNh03u
— a16z (@a16z) May 17, 2022

The report shows that Ethereum is the most popular network in terms of builder interest. It has approximately 4,000 active developers per month, compared to the second-ranked Solana (SOL), which has just 1,000. Cardano (ADA), Bitcoin (BTC), and Cardano(ADA) are next at around 500 and 400 respectively.

Analysts noted that “Ethereum’s lead has much do with its early startup, and the health of its communities”, but they also stressed the importance of the network’s continued development despite high transaction fees.

“Ethereum’s vast mindshare helps to explain why its users are willing to pay more that $15 million per day just to use it — remarkable for such an early project.”

The report shows the estimated transaction fees on Ethereum over seven days. This data was calculated as of May 12, and the data showed that Ethereum is worth $15.24million. BNB Chain and Avalanche, Fantom. Polygon, Polygon, and Solana, however, account for approximately $2.5 million in fees.

Layer-1 Transaction Fees: a16z

The report notes that Layer-2 scaling solutions have been working to lower Ethereum’s fees and speed up transaction speeds. It also points out long-awaited upgrades to Ethereum that will make it more efficient and less expensive.

However, the “long-awaited” upgrades cannot be delayed. a16z highlighted in its report that active addresses and transactions on other blockchains such as Solana and BNB Chain are already far ahead of Ethereum over a 30-day period (as of May 12, 2018).

Similar: Nansen, an Ethereum analytics company, acquires DeFi tracker Ape Board

According to the data, Ethereum has 5.5 millions active addresses which account for 1.1million daily transactions. Solana boasts a staggering 15.4 million active addresses with 15.3 million daily transaction. BNB Chain is third, with 9.4 million active addresses and 5. million transactions per day, while Polygon was at 2.6 million and 3.34 million respectively. Analysts concluded that it wouldn’t be a winner takes all situation.

“Blockchains are the new hit product of the new computing wave. They’re just like PCs and broadband in the ’90s, 2000s, or mobile phones in the past decade. There is a lot of innovation and we think there will be many winners.

The report also highlighted that the DeFi sector’s total market value of approximately $113 billion would place it 31st in the U.S. Banks, that estimates that Web3 adoption could reach 1 billion users by 2031, and that NFTs have so far generated $3.9 billion of revenue for creators.

https://cointelegraph.com/news/ethereum-s-popularity-a-double-edged-sword-a16z-s-state-of-crypto-report

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