Ethereum’s Monumental Year: 2024

2024 is poised to be a monumental year for the Ethereum blockchain. With the potential approval of an Ether spot exchange-traded fund (ETF) in the US and the first bull cycle since the Merge in 2022, there are high expectations for the network. The Merge update has made Ethereum deflationary during periods of high network usage, with 0.2% of the Ether supply already being burned. This number is expected to increase as network usage rises in the coming months. Ethereum Improvement Proposal 4844, scheduled for this year, aims to make layer-2 (L2) blockchains built around Ethereum up to 10 times cheaper, marking a significant turning point in this cycle.

The success of Ethereum hinges on the existence of valuable applications on the platform. While some Web3-native applications already exist, the majority will come from traditional companies adapting their systems and integrating with the blockchain. There have been challenges in achieving this in the past. Many companies lack the knowledge and expertise to leverage blockchain technology and identify blockchain solutions for their problems. In previous cycles, there was a lack of consistent guidance to assist these companies, resulting in unsuccessful projects.

In 2024, the situation is expected to change. The blockchain ecosystem is undergoing a period of specialization, with more leadership positions at large companies and a mature mindset towards building on-chain. The largest L2 blockchains, including Polygon and Optimism, are segmenting into subchains with specific configurations and specialized teams to cater to different use cases. For example, Polygon has introduced its Chain Development Kit (CDK) that allows the creation of subchains dedicated to specific niches such as rollups for Bitcoin, oracle extractable value (OEV), gaming, tokenized assets, and loyalty actions for e-commerce. Other major L2 blockchains are following a similar path.

This specialization and diversification within L2 blockchains will lead to increased competition among subchains and business development teams in the same segments. 2024 will be a decisive year in this battle, with the emergence of killer apps from Web2 in Web3. Companies and users will incorporate blockchain technology into their daily lives, marking the beginning of the retention cycle. The year will belong to L2 blockchains and will undoubtedly be the biggest year for the Ethereum network.

The developments in 2024 create a favorable environment for Ethereum’s growth and adoption. With the potential introduction of an ETF, the deflationary nature of the Merge update, and the cost-saving benefits of Ethereum Improvement Proposal 4844, the stage is set for Ethereum and its L2 blockchains to achieve new heights.