Ethereum’s price has scaled recently in the cryptocurrency market. And this can be ascribed to the current price of gas. Recently, gas cost about $45 on average; hence, it is no surprise that all layer two networks are increasing usage. Also, with simple contract interactions presently costing almost a fortune, Vitalik Buterin is focused on scaling Ethereum.
In recent years, people’s interest in blockchain networks and their technology has soared, and exchange fees prevent many users from using the newly sought-after decentralized finance (DeFi) ecosystem and non-fungible token (NFT). This article discusses Ethereum, its layer 2 network, Ethereum price and the current layer 2 networks, and the future of layer 2 network and Ethereum price.
Brief History of Ethereum
Ethereum was founded by Vitalik Buterin, Gavin Wood, Charles Hoskinson, Amir Chetrit, Anthony Di Iorio, Jeffrey Wilcke, Joseph Lubin, and Mihai Alisie. Although several people founded the Ethereum blockchain, Vitalik Buterin was the first to publish in November 2013. Ethereum released a white paper explaining the concept. Following Buterin’s initial efforts, other minds jumped on board to help bring the project to fruition in various capacities.
Ethereum rose to prominence in early 2014, when Buterin introduced the blockchain project to the public at a Bitcoin conference in Miami, Florida. Later that year, the project raised capital through an initial coin offering (ICO), selling millions of ETH coins in return for funds to be used for project development. Between July 22 and September 2, 2014, the asset sale sold more than $18 million in ETH, paid for in Bitcoin.
Even though ETH coins were available in 2014, the Ethereum blockchain did not go live until July 30, 2015, requiring ETH buyers to wait for the blockchain to launch before moving or using their ETH. Why was the Ethereum blockchain created in the first place? One reason is that the Ethereum blockchain allows for greater flexibility in building on the blockchain and its surrounding ecosystem.
A lot has changed since the beginning of the Ethereum blockchain. Ethereum is a major player in the crypto space, as evidenced by its market capitalization and the wide range of solutions built on the Ethereum blockchain.
Ethereum
Ethereum is one of the famous blockchain networks being used today. There is no denying that most people utilize the services of Ethereum regularly. In June 2020, the overall number of decentralized applications (or DApps) created on the Ethereum platform was about 3000.
Moreover, this can be attributed to Ethereum’s capacity to support the DeFi space; hence, this creates the opportunity for a huge expansion in the number of applications and users on the Ethereum platform.
The endless rising number of clients using the Ethereum platform unconsciously brought about Ethereum encountering a few constraints. Some of the constraints are that the blockchain takes a long time to complete transactions, is frequently clogged, and has high gas fees. These constraints led to the thought and creation of the Ethereum Layer 2 network.
Ethereum layer 2 network
The name Layer 2 network gives an overview of its use. Ethereum layer 2 is a network that sits on top of Ethereum’s main network. Ethereum layer 2 network uses smart contracts to stay above the Layer 1 network. Layer 2 can communicate with the leading network without requiring its base protocols. The Ethereum Layer 2 network can provide additional functions such as payment scalability and off-chain computation.
On the layer 2 network, layer 1 receives snapshots of rollup chains’ blocks. Transactions are confirmed, and funds are available after accepted proof of validity. The confirmation of optimistic rollups takes seven days, during which a transaction can be challenged. And ZK Rollups (zero-knowledge rollups) are smart contracts that hold funds.
Ethereum’s price and the current layer 2 network
According to recent discoveries, layer 2 network scaling for Ethereum has been adopted in recent months as gas prices rebounded, and the layer two ecosystems now process more transactions daily than the Bitcoin network. The Layer 2 network processes about 250,000 transactions daily, while bitcoin processes about 210,000. Some recent data indicated more transactions on Ethereum Layer 2 than on the Bitcoin network.
Some analysts believe Ethereum will likely return to its lows. However, the price has maintained a bullish market structure on the 4-hour weekly chart, with $3,000 serving as the make-or-break point.
The future of layer 2 network and Ethereum price
Vitalik Buterin, one of the co-founders of the Ethereum network, has proposed a solution to give transitory help to scalability issues and exchange costs on Ethereum layer-2 network without sharding.
Ethereum layer 2 network will continue to meet the Ethereum network’s standards on security, decentralization, and liquidity. Beginning phase rollups like Optimism, Arbitrum, and StarkNet anticipate further enhancements in 2022. Buterin recommended “mass conveying exchanges” that drop exchange charges by multiple times or more before the end of 2022.
However, Ethereum layer-2 might still be expensive; nonetheless, its higher scalability and zero-knowledge(zk) rollups can offer the least expensive charges to clients. In the end, clients would utilize zk rollups only rather than interacting directly with the Ethereum organization.
This is because rollups are Ethereum’s only trustless scaling solution in the short and medium-term, and possibly in the long term. Many alternative layer 1 blockchains have attempted to create expandable systems outside of vertical rollups, but at the expense of liveliness, state growth, and other factors, which the Ethereum developer community has strongly opposed.
The future of the layer 2 network and Ethereum price looks favorable. Investors are expected to be encouraged by the low cost of this new Ethereum and its other features that enhances scalability. Analysts have also assessed the Ethereum price trend and concluded that the altcoin is approaching a critical juncture.
However, in recent predictions, and with the arrival of Ethereum 2.0, it is predicted that the average price of Ethereum will reach nearly $7,800 by the end of 2022, $10,000 in 2023, and over $16,000 by 2025, based on price predictions calculated using Machine Learning.
