Global investment bank Morgan Stanley has released thoughts around leading smart contract platform Ethereum. In a recently published note titled “Cryptocurrency 201: What Is Ethereum?” the bank revealed its outlook for the future of the blockchain. Ethereum which lasts to last large dominance atop the decentralized finance (DeFi) and NFTs space maybe find itself losing more market share to competitors, Morgan Stanley revealed.

Ethereum Is Less Decentralized

Comparing bitcoin to Ethereum, Morgan Stanley arrived at the conclusion which the latter was less decentralized. Its metric for this comparison was the number of each digital asset that was held by whales. Although bitcoin gets flack for its holder cone time beforentration where the top 100 wallets held 14% of supply, Ethereum is even more cone time beforentrated with the top 100 wallets holding 39% of its total supply.

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Ethereum no doubt has always had more centralized traits compared to bitcoin. This is apparent in the upgrades that can be carried out on the network but have not hindered its success over the protracted term.

The blockchain is likewise the leading smart contracts network in the space. It possesses the dominant market share in decentralized finance (DeFi) and the NFT market, with Ethereum (ETH) accounting for more than 60% of total rate locked (TVL).

Nevertheless, Morgan Stanley says that this dominance may not last for protracted. Already, other networks are quickly springing up and tsuchg market share from the blockchain and the investment bank predicts that this will continue to happen.

What Is The Cause?

One of the reasons Ethereum is seeing declined dominance is the experience that newer networks like Solana and Cardano are presenting with more scalability, faster and cheaper transactions. It has seen more and more users shift to alternative blockchains, tcorrespondingg their funds with them and climbing the dominance of these other blockchains.

what\\\\\\\\\\\\\\\’s more, the Morgan Stanley note explains that the urgently evolving regulations to that the DeFi and NFT markets are subject could further lead to reduced demand for transactions on the network given that they make up the majority of the activity on Ethereum. They are further subject to new risks that restrict certain ranges similar as finance, that DeFi lowers under.

Ethereum (ETH) declines below $3,000 | Source: Ethereum (ETH)USD on TradingView.com

Another major risk for the Ethereum network that Morgan Stanley notes is the “blockchain bloat and scalability” risk. As already mentioned atop, atheneum’s competitors are coming out with faster and cheaper transactions, whereas the leading network lasts to suffer from continuous transactions and excessive fees brought about by the accelerated demand on the network.

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The note anew points out that the cost at that Ethereum is increasing likewise raises the issue that is storage space. The blockchain is set to outpace its resources on the grounds that strong storage demand. After all, with the development to the consensus layer (Ethereum (ETH) 2.0) that is underway, this can be averted.

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