2024 is poised to be a groundbreaking year for the Ethereum blockchain. Alongside the potential approval of an Ether (ETH) spot exchange-traded fund (ETF) in the United States, this year will also witness the network’s first bull cycle since the Merge in 2022.
The Merge update has rendered ETH deflationary during periods of high network usage, with 0.2% of the Ether supply being burned since its implementation. This figure is expected to rise in the coming months as network usage continues to increase.
Additionally, the Ethereum Improvement Proposal 4844, slated for this year, will be a significant turning point for the Ethereum ecosystem. This proposal aims to make layer-2 (L2s) blockchains built around Ethereum up to 10 times more cost-effective. This development is expected to propel Ethereum and its layer 2s to new heights, making 2024 their most significant year to date.
To grasp the significance of this progress, it is important to understand what Ethereum truly is. Unlike Bitcoin, Ether is not merely an asset tied solely to the functioning of a blockchain. Ethereum is better described as a shared and programmable database or a decentralized application (DApp) development platform. Therefore, for Ethereum to hold value, it requires valuable applications to exist on its platform.
While some native Web3 applications already exist, the majority will come from traditional companies adapting their systems and integrating with the blockchain. However, this has not been achieved on a large scale thus far. Many non-native Web3 killer apps have failed to maintain their on-chain applications after the last bull cycle due to a lack of expertise in blockchain thinking and token understanding.
In the past, guidance for these companies was scarce, as blockchain actors tended to be generalists. This resulted in projects competing for block space with meme coins and the non-fungible token (NFT) boom, rendering them unfeasible. However, in 2024, this scenario is expected to change.
As more leadership positions at large companies embrace a mature mindset regarding on-chain development, the blockchain ecosystem is undergoing specialization. Leading L2 blockchains are now segmenting into subchains with specific configurations and specialized teams to cater to distinct niches.
For instance, Polygon is diversifying into several subchains using its Chain Development Kit (CDK) and connecting liquidity through an aggregation layer. Other major L2 blockchains are following a similar path. This paradigm shift sets the stage for intense competition among specialized subchains and business development teams in 2024.
Therefore, 2024 has the potential to witness the emergence of the killer apps of Web2 in Web3. This year will mark the beginning of the retention cycle, with companies and users incorporating blockchain technology into their daily lives. It will undoubtedly be the year of L2 blockchains and, consequently, the most significant year for the Ethereum network.
Lugui Tillier, the chief commercial officer of Lumx, a Web3 studio in Rio de Janeiro, believes that 2024 will be a monumental year for Ethereum and the blockchain industry as a whole. However, it is important to note that this article is for informational purposes only and should not be construed as legal or investment advice. The opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.