Key Points
The year 2024 is poised to be a landmark year for the Ethereum blockchain.
This prediction is based on two significant events: the potential approval of an Ether (ETH) spot exchange-traded fund (ETF) in the United States and the network’s first bull cycle since the Merge in 2022.
The Merge, which occurred in 2022, has made ETH deflationary during periods of high network use.
Since this update, 0.2% of the Ether supply has been burned, a figure expected to rise with increasing network usage.
Upcoming Ethereum Network Update
The Ethereum network is also preparing for another significant update, the Ethereum Improvement Proposal 4844.
This update, scheduled for this year, aims to make the entire ecosystem of layer-2 (L2s) blockchains built around Ethereum up to 10 times cheaper.
It’s expected to be a turning point in this cycle and could lead Ethereum and layer 2s to their most successful year in history.
Ethereum’s success is not solely dependent on L2s, but also on the growth of subchains and specialized business developer teams.
Unlike Bitcoin (BTC), Ether is not just an asset, but a shared, programmable database or a decentralized application (DApp) development platform.
Therefore, for Ethereum to hold value, valuable applications must exist on it.
While some applications have already emerged natively from Web3, most will come from traditional companies integrating with the blockchain.
However, this has never been achieved before.
The lack of major non-native Web3 killer apps on-chain today and companies maintaining their on-chain applications post-bull cycle underscores this point.
The main reason for this absence is the limited number of people capable of “thinking in blockchain”.
These individuals can see a problem and consider blockchain as the solution or understand tokens well enough to think about the business opportunities associated with them.
In past cycles, guidance was not consistently available to these players due to the broad and agnostic nature of the blockchain.
However, 2024 may bring about a change.
With more leadership positions at large companies and a more mature mindset about building on-chain, the blockchain ecosystem is experiencing a period of specialization.
Today, it’s clear that the largest L2 blockchains are segmenting into subchains with specific configurations and specialized teams for onboarding specific niches.
Polygon, for example, is diversifying into several subchains dedicated to specific use cases, moving away from having one generalist blockchain for all applications.
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 several initiatives, including B2, a CDK chain focused on building rollups for Bitcoin, and Hypr, a CDK chain with a focus on gaming.
Similar paths are being followed by other major L2 blockchains.
What Polygon refers to as CDK is called “Op-Stack” by Optimism, for instance.
With this shift in paradigm, 2024 promises to be a major battleground, with numerous specialized subchains and business development teams from these major L2 blockchains competing in the same segments.
Consequently, 2024 could be the year when the killer apps of Web2 finally emerge in Web3.
This year could mark the beginning of the retention cycle, where companies and users start incorporating blockchain into their daily lives.
It could be the year of the L2 blockchains and, as a result, the biggest year for the Ethereum network.