Analysts predict that the DenCun upgrade will continue the trend of smart contracts moving away from Ethereum, as layer-2 solutions become more advanced.
According to a recent report by Flipside, Ethereum is no longer the top choice for deploying smart contracts due to increased competition from layer-2 networks (l2). Since January 2022, nearly 640 million smart contracts have been deployed, with Polygon and BNB Chain (formerly Binance Smart Chain) leading the way.
Flipside’s data shows that Optimism, a layer-2 solution built on top of Ethereum, has been responsible for the majority of EVM smart contract deployments in 2024.
The number of contract deployers has also significantly increased, accounting for 34.7% of categorizable deployers across different chains since the beginning of the year. This marks a significant rise from 11.2% in both 2022 and 2023. Flipside also highlighted that it’s not just developers who can deploy contracts, as smart contracts can also deploy other contracts.
Meanwhile, NFT-related deployers have seen a decrease from 18.6% to 8.2% over the same period. Analysts suggest that the next bull run may prioritize decentralized finance over NFTs, which were dominant in the previous cycle.
In a research report, Galaxy Digital, Michael Novogratz’s crypto bank, stated that 2024 will be a crucial year for Ethereum as other layer-1 blockchains like Solana gain momentum. They believe that Solana, with its monolithic architecture, poses a significant challenge to Ethereum.
Galaxy Digital analysts pointed out that Ethereum’s modular architecture, especially various rollup types, will introduce new challenges and technological risks due to their early stage of development. They see Solana as the primary competitor to Ethereum in the general-purpose blockchain space.
Overall, despite challenges such as $1 billion liquidations and the SEC postponing ETH ETFs, the price of Ethereum remains bullish as it faces increased competition and technological advancements in the smart contract space.