Ethereum Scalability Upgrades Key To Growth – Krug

According to Bloomberg, Pantera hedge fund CEO Joey Krug thinks that Ethereum (ETH) would be a major part of the financial space in the decade ahead. Krug also made a provisional prediction stating that in the next 10 years 50% of the global financial transactions might involve Ethereum. He also sounded optimistic about the future for the world’s number one network for smart contracts. Also, Krug does not think the well-known competing networks, like Polkadot, Solana, and Cardano, would prove a major threat to Ethereum’s dominance.

Was it just an exaggeration in an attempt to present an original judgment? Let’s see all the pros and cons.

The rise of DeFi, high Ethereum fees and lucrative incentive programs have fueled the continuing upward trend. So, once again, the catalyst for change was an explosion in demand for DeFi services. In 2021, according to The Block Research, Ethereum, the network where DeFi was born, saw total locked value (TVL) in its DeFi protocols rise from $16.1 billion at the beginning of the year to $101.4 billion as of November 30.

But while Ethereum essentially had a monopoly on DeFi at the start of year, by the end of last month its share of Defi TVL had fallen to 63%. One reason is that Ethereum’s transaction fees jumped to record highs during the first half of the year, and DeFi enthusiasts began looking for cheaper alternatives.

But still Ethereum's network value locked in smart contracts (TVL) increased nine-fold to $155 billion as of now, and its current $370 billion market capitalization makes it one of the world's top 20 tradable assets, right behind the two-century-old Johnson & Johnson (JNJ) conglomerate.

There’s little doubt that scalability must be seriously considered for Ethereum to achieve Krug’s prediction. Ethereum’s so-called “gas fees'' continue to be a big turn-off for many investors. While solutions by the likes of Polygon (POLY) Network have proven effective, it is not still wide enough for it to achieve the level of dominance. It will take alot more for Ethereum to become the genuinely global platform.

However, the outlook is sound and valid, as many such initiatives are already underway. Back in August 2021, Ethereum's much-anticipated "London" hard fork was finally launched. The Ethereum 2.0 upgrade, originally known as Serenity, was one of the most highly anticipated updates in the protocol’s history. It was intended for switching from Proof-of-Work (PoW) to Proof-of-Stake (PoS). Also, the migration to PoS allowed the network to increase its throughput.

Investors can have some reassurance knowing that the next 12 or so months will see many more such upgrades.