Ethereum Struggles: Investors Flock to These Altcoin Projects

Limitations in the current infrastructure of Ethereum (ETH) are directing users and capital to alternative blockchains. High transaction costs and slowness have accelerated the search for faster and more efficient networks for both users and developers. At this point, alternatives such as Layer 2 solutions and Solana are particularly prominent.

Transitioning Ethereum Limitations and Layer 2

Zeta Markets co-founder Anmol Singh attributes the rise of Layer 2 solutions on Ethereum to the network's inability to cope. Singh stated that Ethereum does not efficiently manage transaction and data congestion. Additionally, he notes that users are turning to alternative networks for more cost-effective and faster solutions. This migration has become an inevitable solution to meet the needs of users.

According to Singh, as congestion on Ethereum decreases, the demand for alternative networks is increasing. This allows Layer 2 solutions to be adopted more quickly. Users can transact at lower costs while capital is also flowing into different blockchains.

Layer 2 Networks Like Ethereum Also Have Problems

Qi Zhou, co-founder of QuarkChain and EthStorage, says that despite offering scalability for Layer 2 networks, they are facing issues such as liquidity fragmentation. While Layer 2 solutions like Arbitrum, Optimism, and zkSync improve transaction efficiency, isolated liquidity pools make it difficult and costly for users to move assets across different networks, leading to dilution of liquidity between transactions.

According to Zhou, this fragmented liquidity makes it difficult to achieve high liquidity in a single ecosystem. It also reduces transaction efficiency. However, new solutions such as cross-Layer 2 protocols and shared liquidity centers are being developed to prevent problems like slippage and reduce transaction costs.

Efficiency and Liquidity Advantage of Solana

While Ethereum (ETH) continues to face challenges, Solana attracts attention with its 'monolithic' architecture that can support large DeFi transactions. Singh points out that Solana can quickly execute transactions and maintain liquidity in a single layer thanks to its low latency and high efficiency. These features make Solana appealing for large-scale financial transactions.

According to a16z's 'State of Crypto' report, Solana's monthly active user count has reached approximately 100 million. This figure surpasses Ethereum's (ETH) user count of 57 million, indicating an increasing interest in Solana. Singh also notes that this growth is supported by Solana's strong infrastructure and the increase in user-friendly applications.

TVL Data and the Impact of Memecoins on Solana

Singh, states that there have been significant changes in Total Locked Value (TVL) data in recent times. Since June, Ethereum's TVL has decreased by 20 billion dollars. However, Solana's TVL has increased from 4.8 billion dollars to 6.3 billion dollars. This trend shows that investors' interest is shifting towards Solana.

The development of popular memecoins such as Dogwifhat, Bonk, Popcat, and Mew on Solana also supports this trend. Singh states that these memecoins are causing a significant change in the market by increasing individual investor demand. As we also reported at Kriptokoin.com, interest in meme coins continues to grow day by day.

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