Ethereum’s rollups are poised to realize its potential as a decentralized global computer; however, these same rollups are undermining Ethereum’s current strongest narrative as an appealing yield-generating asset. The promises of rollups will only counterbalance this undermining of Ethereum’s narrative as a productive asset in a few years.
Restaking of Ether, with initiatives like EigenLayer, has the potential to significantly enhance Ethereum, benefiting holders, stakers, developers, and the broader ecosystem. However, these benefits are not without their drawbacks. Engaging in restaking carries substantial risks for the individual holders involved and also poses systemic risks to the Ethereum network as a whole.
Over the weekend, geopolitical tensions sent Bitcoin and Ethereum tumbling, but the crypto market quickly rebounded, arguably thanks to Hong Kong’s new ETF approvals and the upcoming Bitcoin halving. Despite this recovery, ongoing Iran-Israel tensions could still disrupt the market.
Avalanche, despite its standing as the 10th largest cryptocurrency and a significant player among Layer 1 blockchains with smart contract capabilities, faces a grim outlook. With a nearly $40 billion fully diluted market capitalization, its onchain activity is declining, lagging behind competitors like Solana and Ethereum’s rollups. There is simply not much to celebrate for AVAX holders.
A week has passed since Proto-Danksharding was implemented on the Ethereum blockchain. This upgrade has transformed Ethereum and its rollup ecosystem, setting the stage for expansion into brand new territories. Our advice? It is not wise to go against this trend by placing bets on so-called “Ethereum killers.”
We are incredibly optimistic about the Ethereum Layer 2 space. We are backing this conviction up with a selection of rollup tokens in our portfolio. It appears the wider market has not yet caught on to the fact that rollups could soon render almost all other Layer 1 cryptocurrencies redundant, largely thanks to leveraging Ethereum’s unmatched network effect. These tokens also stand out as some of the rare cryptocurrencies that could genuinely become yield-generating in the not-so-distant future.