2021 was a breakthrough year for the crypto market. Various cryptocurrencies have experienced significant success in 2021. Cryptocurrencies have also become accepted in various sectors, including retail, online casino, and eCommerce. One of the most popular cryptocurrencies is Ethereum. 2022 is set to become the year of Ethereum. This is because every innovative and significant trend in blockchain work is currently happening in the Ethereum space.
Trends driving the growth of Ethereum in 2022
The following are some trends predicted to drive Ethereum’s growth in 2022.
• Decentralized autonomous organization
DAO is a system created to automate decision-making and voting in various enterprises. DOA systems have been around for a while. However, the Ethereum ecosystem intends to apply DOA as a preferred format for building new entities. This will not only transform the Ethereum space but DOA governance also. DOA governance will experience significant maturity as more people explore the different DOA features. In the long run, this could trickle to traditional markets.
• Decentralized finance ecosystem
DeFi ecosystems have become a significant trend in the crypto space. In 2022, the ecosystem will continue integrating with mainstream finance. Experts anticipate the growth and emergence of new decentralized identity management components to add a layer to the Ethereum space.
• Ethereum’s shift to multi-chain
The end game for Ethereum is to completely shift to proof of state and simultaneously shift its users from layer 1 to layer 2. This means that by the end of 2022, Ethereum will become a blockchain used by other blockchains to interact with each other (multi-chain).
While it is impossible to predict Ethereums future 100%, it is safe to say that regardless of the ecosystem that beats the layer two challenges, Ethereum will remain a winner. This is because of its dominance over the market in developing skills and participating capital. Therefore, experts argue that it may be too late for other cryptocurrencies to dethrone Ethereum.
Also, according to statistics, once a technology ecosystem enters its mass production phase, it isn’t easy to dislodge its early leaders. This is the case with Ethereum as an early leader in the multi-chain ecosystem.
Ethereum has discovered at least three applications to drive adoption and growth for many years to come. This means that Ethereum has already established a strong position in the crypto space, allowing it to reap significant rewards in the coming years.
• Lower gas fees
Despite the incredible success in 2021, one of the biggest challenges Ethereum has experienced is the high transaction or gas fees. While it is impossible to predict whether or not the transaction fees will increase or remain the same, Ethereum co-founders and developers are working towards resolving the high gas fee issue. Buretin, one of Ethereum’s co-founders, delivered a proposal for potential ways to lower Ethereum’s gas fees. Some experts still predict increased transaction fees thanks to the potential demand increase despite the efforts to lower gas fees.
• The merge
2022 is known as the year of the merge for Ethereum. The merge will see to numerous underlying improvements. The merge is where EIP 1559 and proof-of-stake are combined. It will also lay a foundation that allows Ethereum to onboard millions of users without setting aside decentralization. One of the improvements is lower energy consumption. Ethereum currently requires its miners to compete for hash power by consuming energy. However, Ethereum plans to adopt randomness when assigning block production. This will allow the proof-of-stake feature to consume less power.
The merge will also affect Ethereum’s circulating supply. The lower transaction fees and rewards and validation requirements will influence the circulating supply by driving the equilibrium to around 27 to 45 million ETH. You can compare the current circulating supply with last year’s to prove this statement.
While the merge will cause significant changes, users will not see much change. Existing users and application developers will interact with Ethereum the same way they did before the merge. After the merge, all impending upgrades to the Ethereum network will focus on improving scalability without sacrificing decentralization. Therefore, you can expect constant headlines about Ethereum in 2022. Regardless of what happens in the Ethereum network in 2022, you can count on Ethereum remaining at the top of the crypto space for a long time.