Ethereum layer-2 cryptos are estimated to grow at the rate of 103% annually to reach a $1 trillion market cap by the turn of the decade i.e., 2030. The market cap of these cryptos is at $14.3 billion.
Report by VanEck
The VanEck report on Layer-2 markets predicts a $1 trillion market cap by 2030. Further, the report indicates that of all public blockchains, ETH L2s will have a share of 60%.
Currently, there are 46 Layer-2 blockchains for Ethereum.
The report also says that it will be difficult to understand which L2 might dominate others in the future because of the presence of high competition among layer-2 chains.
NOTE: You will also find this later in our article Layer-2s provide almost identical services at almost identical costs and support almost identical support for cryptocurrencies.
SWOT Analysis
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, is a common evaluation technique to understand the present and future of any situation, company, asset, or liability.
- Strength stands for internal factors that contribute to growth.
- Weakness stands for internal weaknesses in the crypto.
- Opportunities mean the future events that could turn out in the favour of these cryptos.
- Threats refer to the regulatory, competitive, and other external threats that could derail growth.
Strengths
What works best for Layer-2 chains is that with time, as Ethereum deploys more use cases on its chain, some of them will need scaling solutions to keep costs in check. Some examples include on-chain stock markets (RWA), metaverses, supply chain management systems, and the usual crypto transactions.
Weaknesses
Layer-2 markets have been vulnerable to attacks, mostly those involving compromised private keys. One series of such hacks shook the markets when an ImmuneFi report showed that out of the 33 hacks that took place in Q3, 2024, 9% took place on layer-2 chains.
Opportunities
As the era of CBDC comes, many smaller countries and economies will find it nearly impossible to launch CBDCs on their own blockchain. This would greatly help Layer-2 markets since these projects would find it safer as well as cheaper to use these solutions.
The Altcoin Rally of 2024-2026, and of 2029 is expected to push these cryptocurrencies towards the $1 trillion market cap. An Alt Seasons is a period of high growth in cryptocurrencies that usually takes place after a few months of Bitcoin Halving.
Threats
The Layer-2 markets are highly saturated. There are multiple Layer-2 blockchains like Linea, Arbitrum, Polygon, Optimism, Base, Shibarium, Pepe Unchained, and many others. All of these projects are identical in their work with almost similar fees and similar support for cryptocurrencies.
Further, there is a high dominance of corporate-backed Layer-2 solutions like Base (backed by Coinbase). Despite being one of the latest entrants, Base had reached 750 million transactions within 1 year of its launch (Aug 09, 2023). An improvement in Base over other blockchains is that it accepts ETH for paying gas fees, unlike others who rely on their native coins.