Analysts at the giant multinational investment bank, including the Managing Director – Nikolaos Panigirtzoglou – noted that Ethereum is gradually losing its dominance in the Decentralized Finance (DeFi) ecosystem.
Numerous cryptocurrency protocols such as Terra, Avalanche, and Solana have emerged as strong competitors in 2021. As such, Ethereum’s supremacy is at risk of being further eroded in the ongoing year, the experts added.
Still N1 But Losing Its Domination
Citing Nikolaos Panigirtzoglou, as well as other analysts at JPMorgan Chase & Co., Bloomberg reported that Ethereum currently accounts for nearly 65% of DeFi’s market share. However, the protocol is gradually losing its dominance, as at the beginning of 2021, it was almost 100%.
The experts opined that Ethereum will gain steam again only when the final phase of Sharding – the “most critical” development for scaling the ETH network – gets completed in 2023. Until then, projects such as Terra, Binance Smart Chain, Avalanche, and Solana might close the gap even more as they have been receiving large amounts of funding and public attention.
“In other words, Ethereum is currently in an intense race to maintain its dominance in the application space with the outcome of that race far from given, in our opinion,” the JPMorgan analysts said.
Ether – Ethereum’s native token and the second-biggest cryptocurrency by market capitalization – finished 2021 with a price increase of nearly 220%. Nonetheless, the experts argued that its USD value could suffer in the short term due to the network’s weakened supremacy in the DeFi sector.
JPMorgan Analysts Keen on Ethereum And Staking
The Wall Street banking giant, and specifically its CEO Jamie Dimon, has been one of the biggest opponents of bitcoin in recent years. The top exec urged investors numerous times to stay away from the primary digital asset, calling it “worthless.” On the other hand, JPMorgan seems to have a completely different stance on Ethereum.
In April last year, analysts at the financial institution stated that ETH is outperforming BTC, expecting the trend to continue. In their view, bitcoin is a store of value, while its rival is a technology and the backbone of the entire crypto-native economy.
A few months later, the same researchers said that protocols running on proof-of-stake mechanisms (like Ethereum aims to become soon) are much more energy-efficient than bitcoin, which employs proof-of-work. As such, some investors might be more inclined to invest in ETH rather than BTC.