VanEck predicts Ethereum layer 2s to achieve a market capitalization of $1 trillion by 2030.

Analysts from investment manager VanEck predict that Ethereum’s layer 2 scaling networks will reach a market capitalization of $1 trillion within six years. These networks will consist of numerous chains tailored to specific use cases. VanEck’s senior digital assets investment analyst, Patrick Bush, and digital assets research head, Matthew Sigel, state that layer-2 blockchains will address Ethereum’s primary challenge, which is its limited capacity to handle data processing, storage, and computation. The analysts estimate that Ethereum will account for 60% of the market share across all public blockchains and calculate the volume of assets within the Ethereum ecosystem to arrive at their $1 trillion market cap projection. At present, there are 46 Ethereum layer 2s with a total value of $39 billion locked, with Arbirtum being the largest at $18 billion, according to L2BEAT. While Ethereum’s smart contracts enjoy dominance, scalability remains a critical hurdle. Ethereum’s development efforts are currently focused on improving its layer-2 transaction data processing capability, as evidenced by the recent Dencun update, which introduced the “Blobs” feature to lower layer-2 transaction fees. The analysts believe that there is significant potential for generating higher revenues on layer 2s compared to the base Ethereum network. However, they express a bearish outlook on the long-term value of most layer 2-related tokens due to intense competition. The analysts note that the top seven Ethereum layer 2 tokens already have a fully diluted valuation of $40 billion, and this figure is expected to rise to $100 billion with the launch of several strong projects over the next 18 months. They caution that the crypto market may struggle to absorb this supply without significant discounts. Looking ahead, the analysts foresee a future where thousands of use-case-specific layer 2s exist, with only a few major players dominating the general-purpose layer 2 market. These specialized networks will be segmented by sector, application, or function, with some chains specifically built for decentralized social media or other specific purposes. The analysts attribute the existence of a handful of general-purpose chains to the network effect, where the value of these blockchains increases as more users join. They also anticipate that most roll-ups will eventually adopt the zero-knowledge framework due to its advantages.