Layer 2 Blockchain May Benefit Most From Shanghai Upgrade: Analyst By CoinEdition

by Arthur · April 13, 2023

Crypto analyst predicts that Layer 2 blockchains could outperform Ethereum in the Shanghai upgrade.
Ethereum and the Layer 2 cryptos will probably grow together, only that the Layer 2 coins will move faster.
Smaller market cap will support higher volatility among Layer 2 blockchains.

Layer 2 blockchain protocols could be the biggest beneficiaries of the recent Shanghai upgrade on the Ethereum blockchain, according to cryptoanalyst Aaron Arnold. He observed this during an interactive session with other cryptanalysts on the Around The Blockchain YouTube channel.

According to Arnold, Layer 2 blockchains have the potential to surpass Ethereum in the wake of the Shanghai upgrade. His primary reason for this prediction is that most of the Layer 2 protocols have less market capitalization, and therefore are subject to more volatility. He observed that Ethereum and the Layer 2 cryptos would likely grow together, only that the Layer 2 coins would move faster.

Hinting at a bullish outcome for Ethereum and other altcoins, Arnold noted that the Shanghai upgrade represents an “added feather to the cap” for Ethereum. In his opinion, the crypto community will perceive the upgrade as a step forward for the Ethereum blockchain and the Ethereum Foundation.

This perception will further strengthen the impression that Ethereum is here to stay, and improve the level of trust of the community towards the blockchain. Arnold also expects it to pass as a motivation for Layer 2 protocols built on the Ethereum blockchain, as improved trust will encourage adoption of their products.

Ethereum’s Shanghai upgrade sets the stage for more implementations on the network, according to Arnold. He believes the focus will be on the Layer 2 protocols, which represent the likely beneficiaries of the recent upgrade.

Ethereum’s Shanghai Upgrade went live on Wednesday, April 12, 2023, at 6:27 PM EST. The process completed Ethereum’s transition to a Proof-of-Stake (PoS) consensus mechanism and unlocked over $34 billion in ETH.

With the implementation of the Shanghai upgrade, ETH users who previously locked their tokens in the staking process can now withdraw them. However, the withdrawal process is expected to take a couple of days due to demand and limited block space.

The post Layer 2 Blockchain Could Benefit Most From Shanghai Upgrade: Analyst appeared first on Coin Edition.

See the original at CoinEdition