Research Summary
The report discusses the progress of Ethereum’s transition from Proof of Work to Proof of Stake, the impact of the Dencun upgrade, and the emergence of Layer 3 chains. It highlights the rise of Degen Chain and Sanko, two Layer 3 chains, and their potential impact on the Ethereum ecosystem.
Key Takeaways
Ethereum’s Progress and Dencun Upgrade
- Ethereum’s Transition: Ethereum has successfully transitioned from Proof of Work to Proof of Stake, marking a significant milestone in its roadmap. The transition has improved the infrastructure and scalability of the Ethereum network.
- Impact of Dencun Upgrade: The Dencun upgrade has significantly reduced Layer 2 transaction fees, making it cheaper for applications to scale on Ethereum. This has led to a noticeable increase in activity on the Ethereum network.
Emergence of Layer 3 Chains
- Introduction of Layer 3 Chains: Layer 3 chains, such as Degen Chain and Sanko, have emerged as a promising solution to further scale Ethereum. These chains offer high customizability, low cost, and high throughput, making them suitable for a variety of applications.
- Degen Chain’s Rapid Growth: Degen Chain, launched in January 2024, quickly gained attention as its Fully Diluted Valuation (FDV) reached over $2B within three months of launch. Despite the initial hype, the chain’s Total Value Locked (TVL) has since leveled off.
- Sanko’s Innovative Approach: Sanko, another Layer 3 chain, has shown an innovative approach by focusing on NFTs and gaming. Its native token, DMT, has had an impressive run in 2024, indicating sustained interest in the platform.
Actionable Insights
- Monitor the Development of Layer 3 Chains: Given the potential of Layer 3 chains to further scale Ethereum, it would be beneficial to keep track of their development and the types of applications they attract.
- Assess the Sustainability of Degen Chain and Sanko: Despite the initial hype and rapid growth of Degen Chain and Sanko, it’s crucial to assess their sustainability and long-term potential. This includes monitoring the volatility of their native tokens and the level of interest in their platforms.
- Explore the Potential of Social Applications: With social applications like Sanko gaining momentum, it’s worth exploring their potential impact on the Ethereum ecosystem and the opportunities they present for further scalability.
