Share this article
Ethereum Faces 'Intense' Competition From Other Networks: JPMorgan
The blockchain's native token ether has underperformed bitcoin and other altcoins in recent months, the report noted.
Feb 7, 2025, 9:24 a.m.
What to know:
- The Ethereum blockchain is faced with intense competition, the report said.
- JPMorgan said ether has underperformed due to this competitive pressure, and because it lacks a compelling narrative like bitcoin.
- The network's growth lags that of competitors such as Solana, the bank said.
Ether has underperformed other cryptocurrencies in recent months as the Ethereum blockchain has faced "intense" competition from other networks, Wall Street bank JPMorgan (JPM) said in a research report on Wednesday.
The token lacks a compelling narrative like that of its larger peer bitcoin (BTC, the bank said, adding that bitcoin benefits from its perception as a store of value and as digital gold.
STORY CONTINUES BELOW
Don't miss another story.Subscribe to the Crypto Daybook Americas Newsletter today. See all newsletters
Despite upgrades, such as Dencun, activity has shifted from the main Ethereum network to its layer 2's, which is detrimental to the blockchain's growth, the report said. The network's latest upgrade, Pectra, is likely to happen in early April.
"Competitive pressures have led some decentralized applications (dapps) to migrate from Ethereum to other application-specific chains for better performance," analysts led by Nikolaos Panigirtzoglou wrote.
Examples include decentralized exchanges (DEXs) such as Uniswap, dYdX and Hyperliquid, the bank said.
Uniswap's upcoming move to Unichain is important because it is one of Ethereum's "largest gas consuming protocols," and its migration could result in a significant loss to the network's fee pool, the bank noted.
JPMorgan said this trend of dapps moving to other layer 2s or alternative layer 1s could negatively impact Ethereum by lessening activity on the main network, which could result in lower transaction fees and validator revenue.
Layers 2s are separate blockchains built on top of layer 1s, or the base layer, that reduce bottlenecks with scaling and data. In terms of supply, this could make ether inflationary as "fewer transactions imply reduced token burning," the authors wrote.
The bank noted that Ethereum's growth is behind that of competitors such as Solana, which saw a surge in activity linked to memecoins.
The Ethereum ecosystem still dominates the stablecoin, decentralized finance (DeFi) and tokenization spaces in spite of these challenges, the bank said.
The network could see increased institutional demand from tokenization enterprises but "competition from other networks is likely to remain intense in the foreseeable future," the report added.
Read more: How to Fix Ethereum's Fragmentation Problem
More For You
What to know:
- As of October 2025, GoPlus has generated $4.7M in total revenue across its product lines. The GoPlus App is the primary revenue driver, contributing $2.5M (approx. 53%), followed by the SafeToken Protocol at $1.7M.
- GoPlus Intelligence's Token Security API averaged 717 million monthly calls year-to-date in 2025 , with a peak of nearly 1 billion calls in February 2025. Total blockchain-level requests, including transaction simulations, averaged an additional 350 million per month.
- Since its January 2025 launch , the $GPS token has registered over $5B in total spot volume and $10B in derivatives volume in 2025. Monthly spot volume peaked in March 2025 at over $1.1B , while derivatives volume peaked the same month at over $4B.
More For You
Japan’s Higher Rates Puts Bitcoin in the Crosshairs of a Yen Carry Unwind
A stronger yen typically coincides with de-risking across macro portfolios, and that dynamic could tighten liquidity conditions that recently helped bitcoin rebound from November’s lows.
What to know:
- The Bank of Japan is expected to raise interest rates to 0.75% at its December meeting, the highest since 1995, affecting global markets including cryptocurrencies.
- A stronger yen could lead to de-risking in macro portfolios, impacting liquidity conditions that have supported bitcoin's recent recovery.
- Governor Kazuo Ueda indicated a high probability of a rate hike, with officials prepared for further tightening if their economic outlook supports it.
Top Stories
