Share this article
JPMorgan Says Ethereum’s DeFi Dominance at Risk Due to ‘Sharding’ Delays
Analysts from the bank said that the scaling of the network might arrive too late.
By Will Canny
Updated Apr 10, 2024, 2:45 a.m. Published Jan 6, 2022, 1:19 p.m.
Ethereum’s dominance of decentralized finance (DeFi) is at risk as the scaling of the network, which is needed to maintain its dominance, may arrive too late, JPMorgan said in a report.
- The final phase of the sharding, which is crucial for scaling the network, won’t arrive before next year, the bank’s strategists led by Nikolaos Panigirtzoglou wrote in the note published on Wednesday.
- Full scaling is at least a year away and the risk is that during that time, the Ethereum network will continue to lose market share to competing networks, the bank warned.
- Alternative blockchains such as Terra, Binance Smart Chain, Avalanche, Solana, Fantom, Tron and Polygon have been gaining the most market share in the DeFi market, and those competitors have received a lot of funding and have set up incentives to increase usage in their own systems, JPMorgan said.
- The risk with Ethereum is that by the time sharding is implemented other ecosystems would have grown by so much that activity won’t return en masse to the Ethereum network, the bank noted.
- Ethereum’s share of total value locked in DeFi has fallen from almost 100% at the start of 2021 to around 70% and will likely drop further before sharding is implemented in 2023, the report added.
- Last month, Bank of America said that smart contract Avalanche is a credible alternative to Ethereum for DeFi projects, non-fungible tokens, gaming and other assets.
Read more: BofA Says Avalanche’s Scaling Capability Offers Viable Alternative to Ethereum
STORY CONTINUES BELOW
Don't miss another story.Subscribe to the Crypto Daybook Americas Newsletter today. See all newsletters
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
Foundation behind restaking protocol EigenLayer plans bigger rewards for active users
An Incentives Committee would direct programmatic token emissions, focusing allocations on participants that secure AVSs and contribute to the EigenCloud ecosystem.
What to know:
- The Eigen Foundation has unveiled a governance proposal aimed at ushering in new incentives for its EIGEN token, shifting the protocol’s reward strategy to prioritize productive network activity and fee generation.
- Under the plan, a newly formed Incentives Committee would manage token emissions, prioritizing participants who secure Actively Validated Services and expand the EigenCloud ecosystem.
- The proposal includes a fee model that channels revenue from AVS rewards and EigenCloud services back to EIGEN holders, potentially creating deflationary pressure as the ecosystem grows.
Top Stories
