2024: A Revolutionary Year for Ethereum and L2 Blockchains
2024 is poised to be a groundbreaking year in the history of the Ethereum blockchain. Not only is there a potential approval of an Ether (ETH) spot exchange-traded fund (ETF) in the United States on the horizon, but it also marks the network’s first bull cycle since the Merge in 2022.
The Merge update has made ETH deflationary during periods of high network usage. Since its implementation, 0.2% of the Ether supply has been burned, and this number is set to increase further in the coming months as network usage continues to rise.
Furthermore, Ethereum Improvement Proposal 4844, the next network update, is scheduled to take place this year. Its goal is to make the entire ecosystem of layer-2 (L2s) blockchains built around Ethereum up to 10 times more cost-effective.
This upcoming update will be a major turning point in the cycle, propelling Ethereum and L2s to their most significant year in history. The concept is simple: without L2s, Ethereum cannot scale, and without subchains and specialized business developer teams, L2s cannot grow at the necessary speed.
But what exactly is Ethereum? Unlike Bitcoin (BTC), Ether is not merely an asset with value tied solely to the functioning of a blockchain. Ethereum aligns more with the idea of a shared and programmable database or a decentralized application (DApp) development platform. To have value, Ethereum requires valuable applications to exist on its platform.
While some native Web3 applications already exist, the majority of valuable applications are expected to come from traditional companies adapting their systems and integrating with the blockchain. This has never been accomplished before. Few companies have successfully maintained their on-chain applications after the last bull cycle due to the scarcity of individuals capable of “thinking in blockchain” and leveraging its potential for business opportunities.
In the past, assistance was inconsistent, as most actors in the blockchain space were generalists. Consequently, some operations were hindered by competing with meme coins and the nonfungible token (NFT) boom for block space.
However, 2024 will bring about a significant shift as more leadership positions at large companies with a mature understanding of on-chain development emerge. Specialization is becoming prevalent in the blockchain ecosystem.
For example, Polygon is diversifying into various subchains dedicated to specific use cases instead of relying on one generalist blockchain and regional business development teams. This shift is made possible by providing the market with Chain Development Kits (CDKs) on which subchains are built, and all liquidity is connected by an aggregation layer.
Other major L2 blockchains are following a similar path, segmenting into subchains with specific configurations and specialized teams. Optimism, for instance, refers to its CDK as “Op-Stack.”
This paradigm shift sets the stage for a major battle in 2024 as specialized subchains and business development teams from various L2 blockchains compete in the same segments. It is in this year that the killer apps of Web2 are expected to emerge in Web3, marking the beginning of the retention cycle where blockchain becomes an integral part of daily life for companies and users.
Ultimately, 2024 will be the year of L2 blockchains and, consequently, the most significant year for the Ethereum network.
Lugui Tillier is the Chief Commercial Officer of Lumx, a Web3 studio based in Rio de Janeiro and backed by BTG Pactual Bank, the largest investment bank in Latin America.
Disclaimer: This article is for general information purposes only and should not be considered legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect the views and opinions of Cointelegraph.