The post Assessing Ethereum’s Post-Merge Performance Amid Rising Competition appeared on BitcoinEthereumNews.com.

Iris Coleman Sep 15, 2024 12:05 Two years post-Merge, Ethereum’s transition to Proof of Stake faces challenges from Layer 2 solutions and faster blockchains like Solana and Avalanche. Two years after Ethereum’s transition to a Proof of Stake (PoS) consensus mechanism, known as the Merge, the network has faced significant challenges. Despite initial expectations, Ethereum has struggled with high transaction costs and network congestion, while alternative Layer 2 solutions and faster blockchains like Solana, Avalanche, Base, and Aptos have gained traction, according to blog.bitfinex.com. Has the Merge had a Negative Overall Effect on Ethereum? Since the Merge on September 15, 2022, Ethereum’s anticipated benefits, such as improved scalability and reduced fees, have not materialized as swiftly as expected. The network’s high transaction costs and congestion have driven users and developers towards Layer 2 solutions like Optimism, Arbitrum, and ZK-rollups, which offer faster and cheaper transactions. Additionally, newer blockchains such as Solana, Sui, and Aptos provide higher throughput and lower fees, further eroding Ethereum’s market share. The muted impact of Ethereum spot ETFs has also dampened market sentiment. The launch of these financial products in the US this year did not generate the expected institutional inflows, resulting in underperformance relative to Bitcoin. The migration of economic activity to Layer 2 solutions and competing blockchains has led to a noticeable decline in Ethereum’s on-chain activity and network fees, which are critical revenue sources for validators. Can Ethereum Remain Competitive Amongst Faster, More Efficient Blockchains? Layer 2 solutions and competing blockchains have become attractive alternatives for users seeking lower transaction fees. Platforms like Arbitrum, Optimism, and zkSync enable cheaper and faster transactions while maintaining a connection to Ethereum’s security. Competing blockchains like Solana and Avalanche offer similar DeFi capabilities but with even lower fees and faster transaction speeds. The proliferation of EVM-compatible chains…

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Filed under: News - @ September 15, 2024 12:12 pm