Ethereum is in danger: VanEck warns of report.

In its Crypto Monthly Roundup for August 2024, asset manager VanEck highlighted the critical factors for Ethereum.

The report divided the issues affecting the network into three main categories: an overall decline in network revenues, policy preferences, and value extraction from layer-2 solutions and service providers. According to VanEck, consumer migration to higher-throughput layer-1 blockchains like #Solana is partly responsible for the network revenue decline.

The report noted that Ethereum has an advantage in smart contracts and was the first network to benefit from speculation in digital assets. However, increasing competition from Solana (SOL), #Sui ($SUI ), and #Aptos ($APT ), which can process thousands of transactions per second, is pushing this speculative network away. It’s not just these three, but many other layer-1 projects have been giving ETH a hard time lately.

According to VanEck, Ethereum layer-1 revenues were exploited by competing layer-2 networks. This competition put the network in two different difficult situations. Second and third-generation layer-1 blockchains took market share from outside while squeezing revenue from inside the network.

As a result, Ethereum network fees have decreased by 99 percent since the introduction of the Dencun upgrade in March 2024. The Dencun upgrade, which significantly reduced fees for layer-2 networks, led to the rapid proliferation of #Ethereum layer-2 networks.

The sharp increase in scalable networks for $ETH caught the attention of Anoma co-founder Adrian Brink, who said he believes there is a layer-2 solution. According to Brink, the number of scaling solutions required to manage traffic in the industry is approximately 10 times greater. Brink’s future statements are eagerly awaited.