2024 will be the Ethereum network’s biggest year in history

(Coin Telegraph)-22/02/2024

2024 has everything to be the biggest year in the history of the Ethereum blockchain.

In addition to the possible approval of an Ether spot exchange-traded fund (ETF) in the United States, this year will also mark the network’s first bull cycle since the Merge in 2022.

This update makes ETH deflationary during periods of high network use.

Since the Merge, 0.2% of the Ether supply has been burned, and this number will increase further in the coming months with rising network usage.

Furthermore, the next Ethereum network update — Ethereum Improvement Proposal 4844 — is scheduled to occur this year. It aims to make the entire ecosystem of layer-2 (L2s) blockchains built around Ethereum up to 10 times cheaper. 

This will be the major turning point in this cycle, and it will lead Ethereum and layer 2s to their biggest year in history.

The idea is simple: Without L2s, Ethereum doesn’t scale. And without subchains and specialized business developer teams, the L2s don’t grow at the speed they need.

What is Ethereum?

To understand this, it’s worth taking a step back and asking: What is Ethereum?

Unlike Bitcoin, Ether is not simply an asset, with intrinsic value linked only to the functioning of a blockchain.

Ethereum is more aligned with the idea of a shared and programmable database or a decentralized application (DApp) development platform. Therefore, for it to have value, valuable applications must exist on it.

Some of these applications already exist and have emerged natively from Web3, but the large majority will come from traditional companies adapting their systems and integrating with the blockchain.

This has never previously been achieved. What are the major non-native Web3 killer apps that exist on-chain today? How many companies have seriously maintained their on-chain applications after the last bull cycle?

The main reason for their absence is that there are few people capable of “thinking in blockchain,” of seeing a problem and considering blockchain as the solution, or understanding tokens well enough to think about the business opportunities associated with them.

In past cycles, help was not consistently available to guide those players because — by the broad and agnostic nature of the blockchain — most actors have been very generalists.

As a result, some operations were unfeasible because they competed for block space with meme coins and the nonfungible token (NFT) boom.

Companies were eager to experiment with blockchain but didn’t know how and needed guidance from the business development teams of the blockchains themselves or other Web3 companies.

Business development segmentation is usually done by region, resulting in these teams having to cater to 20 different sectors, each with distinct needs and complex applications. The outcome was superficial guidance that ultimately doomed these projects over time.

But in 2024, the game will change.

With more leadership positions at large companies — with a much more mature mindset about how to build on-chain — the blockchain ecosystem is going through a period of specialization.

Today, it is evident that the largest L2 blockchains are segmenting into subchains with specific configurations and specialized teams and structures for onboarding specific niches.

Chain development kits

Using Polygon as an example, instead of having just one generalist blockchain for all applications and a regional business development team, Polygon is already diversifying into several subchains dedicated to specific use cases.

How is this happening? Polygon is providing the market with its Chain Development Kit (CDK) — on which subchains are built — and all liquidity is connected by an aggregation layer.

In recent weeks, Polygon has announced:

• B2, a CDK chain focused on building rollups for Bitcoin
• OEV Network, a CDK chain aimed at capturing all oracle extractable value (OEV)
• Hypr, a CDK chain with a focus on gaming
• Libre, a CDK chain dedicated to the issuance of tokenized assets for institutions
• FireDrops, a CDK chain designed for loyalty actions for FlipKart, India’s largest e-commerce.

And the same path is being followed by all the other major L2 blockchains. What is referred to as CDK by Polygon is called “Op-Stack” by Optimism, for example.

The paradigm shift is brutal, and 2024 promises to be a major battle, as a lot of specialized subchains and business development teams from each of these major L2 blockchains will be competing in the same segments.

With that said, 2024 has everything to become the year when the killer apps of Web2 are finally seen emerging in Web3.

The year will mark the beginning of the retention cycle, where companies and users will start and continue to incorporate blockchain into their daily lives.

It’ll be the year of the L2 blockchains and, consequently, the biggest year for the Ethereum network.