Standard Chartered analysts warn of a further decline in the Ethereum price in 2025 due to the stiff competition that Layer 2 networks pose to the main network.
A Standard Chartered report projects a bearish trend for Ethereum this year, linking its outlook to the rise of Layer 2 networks. In its analysis, the bank explores how these scalability solutions are redefining the blockchain ecosystem and what challenges they pose for the second-largest cryptocurrency.
Standard Chartered's projection: Layer 2 as a disruptive factor in Ethereum
The price of Ethereum is facing a critical crossroads, according to the latest analysis from Standard Chartered. The British bank, renowned for its macroeconomic reporting on crypto assets, projects that the second-largest cryptocurrency by market capitalization could maintain a downward trend until the end of the year. The central argument revolves around a paradoxical phenomenon: the very mechanism designed to solve Ethereum's scalability problems, Layer 2 networks, may be contributing to its slowdown.
According to reportThe rise of L2 platforms like Arbitrum, Optimism, and Polygon, originally created as add-ons to relieve congestion on the mainnet, are attracting capital and developers who previously focused on Ethereum. The bank has identified that this gradual shift is impacting the economic model of ETH, whose valuation has historically been tied to its role as a base settlement layer.
The Standard Chartered report coincides with data from the Dune Analytics platform, which shows that 62% of DeFi transactions already occur on Layer 2, reducing direct demand for Ethereum's native token, ETH, and thus affecting its value.
Source: DeFi Llama
The bank's analysis identifies three key dynamics: liquidity migration, fee fragmentation, and infrastructure competition. So, while Ethereum processes 15-30 transactions per second on its base layer, networks like StarkNet reach 9.000 TPS. This efficiency is attracting projects that prioritize low operating costs, from decentralized exchanges to NFT platforms. A prime example is Uniswap, whose volume on the Arbitrum network surpassed that of Ethereum in the first quarter of 2024, according to CoinGecko.
Scalability vs. Economic Sovereignty
Standard Chartered's prediction reveals fundamental tensions in the evolution of the Ethereum blockchain ecosystem. While Layer 2s solve immediate scalability issues, their success could be diluting ETH's core value proposition.
The bank analyzed how, since the Dencun upgrade, which was implemented in March 2024, Ethereum's lower fees have led to increased net token issuance, in an attempt to offset competitive pressure from other blockchains with more affordable operating costs. However, blockchain GDP data reveals an unexpected twist: not only have fees been reduced, but Layer 2 chains, originally created to alleviate congestion on the Ethereum mainnet, are capturing a significant portion of the economic value that previously belonged exclusively to the mainnet.
TRADE WITH STABLECOINSFor example, Base, an L2 solution designed to address Ethereum's scalability issues, is transferring all of its profits—calculated as fee revenue less data recording costs—to Coinbase, its corporate owner. This value stream illustrates how, rather than strengthening Ethereum's economy, Layer 2 solutions may be reshaping the ecosystem for the benefit of outside actors, raising questions about the mainnet's long-term economic sustainability.
However, other experts, such as those from the Ethereum Foundation and even its co-founder Vitalik Buterin, argue that this situation is transitional and that ongoing technical improvements to the network would seek to restore economic value to the main chain.
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For investors, the challenge lies in discerning whether the current pressure on ETH's price reflects structural weakness or simply the growing pains of a transforming ecosystem. The truth is that the multi-layered model is rewriting the rules of blockchain valuation, making ETH a litmus test for the economic theory of decentralized protocols.
BUY ETHEREUMAt press time, the price of ETH is trading at around $1.920. The cryptocurrency's value has dropped 28% in the last month and nearly 50% in the last year.
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