VanECK Envisions Ethereum Layer 2 Networks Surpassing $1 Trillion Valuation by 2030, Despite Bearish Outlook

As per the latest insights from global investment giant VanECK, Ethereum's Layer 2 (L2) networks are poised to achieve a staggering valuation of over $1 trillion by the year 2030. Despite harboring ambitious expectations for L2s, VanECK maintains a cautious stance on the long-term viability of certain networks within this ecosystem. Analyzing 46 L2 networks across five key dimensions, the report anticipates the emergence of "thousands" of additional networks in the near future.

VanECK's analysts emphasized Ethereum's fundamental challenge, primarily its limited capacity to process, store, and compute data related to financial transactions. To tackle this bottleneck in data throughput, considerable efforts are being directed towards offloading data processing and computation tasks to Layer-2 blockchains.

Highlighting Ethereum's potential to capture 60% of the market share across all public blockchains, VanECK predicts a substantial $1 trillion market cap for L2 networks alone, factoring in the volume of assets within the Ethereum ecosystem.

While acknowledging Ethereum's unparalleled security and decentralization in smart contracts, the report underscores scalability as a critical hurdle. Transaction fees and processing times surge during peak usage periods, necessitating enhancements to the network's ability to handle L2 transaction data.

Recent developments on the Ethereum network, such as the Dencun upgrade aimed at reducing L2 transaction fees through innovative data-saving features like "Blobs," underscore the ongoing efforts to bolster L2 transaction efficiency.

VanECK's analysts anticipate L2 networks to outperform the mainnet significantly, driven by superior transaction efficiency and user experience. However, they maintain a cautious outlook on the long-term value prospects of the majority of L2 tokens, citing intense competition and reliance on network effects as key factors.

The top seven L2 networks currently account for a substantial $40 billion in total value locked, a figure expected to surge to $100 billion as several prominent projects prepare to launch over the next 18 months.

Looking ahead, VanECK envisions a landscape dominated by "thousands" of use-case-specific L2 solutions, alongside a handful of major players in the broader market. Additionally, the shift towards zero-knowledge frameworks (ZKUs) is deemed inevitable for most roll-ups, representing a pivotal evolution in the L2 ecosystem.

VanECK's prediction coincides with its anticipation of a decision from the SEC regarding its Ethereum ETF filing, highlighting the firm's keen interest and involvement in the evolving cryptocurrency landscape.