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Mike Novogratz's Galaxy Digital crypto bank says 2024 will be a crucial year for ethereum as other layer 1 blockchains raise the stakes.
ethereum appears to be navigating uncharted waters, as the network will face “unprecedented challenges” in 2024 presented by alternative layer 1 networks like Solana, Galaxy Digital writes in its “Watch This Space.” report.
While the report highlights ethereum's commitment to supporting Layer 2 networks and integrating technologies such as recovery, it recognizes the emergence of other networks such as Celestia, which promise an “unprecedented amount of flexibility” to meet diverse user needs related to with privacy, cost, security and compliance.
“It will be important to see greater competition and differentiation between Solana and other modular blockchains like ethereum and Celestia in 2024.”
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Galaxy Digital analysts note that ethereum's modular architecture, particularly the various cumulative types, will introduce new technological challenges and risks due to its early stage of development. By highlighting Solana as the most distinctive general-purpose blockchain that adopts a monolithic architecture, they position it as the main competitor to ethereum.
The ethereum blockchain uses validators to secure its network, but there is a limit on the number of validators that can join or leave the network in each period of time, called an epoch. As ethereum grew, the limit for validator inputs and outputs also increased. Looking ahead, Galaxy says ethereum developers may need to “weigh drastic changes” to staking dynamics and monetary policy in 2024 if the network sees a surge in usage, resulting in an increase in transactions and betting demand.
