Ethereum Faces Scalability Challenges as L2 Networks Grow

As Ethereum (ETH) continues to support layer-2 (L2) networks through its ’blob’ mechanism, concerns are rising about its ability to handle increasing transaction volumes. A recent report by The DeFi Report highlights the potential for higher costs and network bottlenecks if scalability issues are not addressed promptly.

Ethereum’s Blob Capacity Insufficient for L2 Transaction Growth

Ethereum (ETH) must address its scalability constraints to sustain the growth of layer-2 (L2) networks and avoid future transaction bottlenecks, according to The DeFi Report. The firm stated in a recent report that as L2 networks scale user adoption and transaction throughput, competition for Ethereum’s limited blob space could increase costs and undermine the network’s broader scaling roadmap. Ethereum supports L2s through “blobs,” low-cost data storage mechanisms introduced with Ethereum Improvement Proposal 4844 (EIP-4844). However, the current capacity of three target blobs per block risks becoming inadequate, and even after the upcoming Pectra upgrade, which raises the target to six blobs per block, forecasts suggest that rapid L2 expansion could outpace available bandwidth.

Ethereum May Be Headed for Better Days After Reclaiming $1,600

Ethereum (ETH) has recently reclaimed the psychological threshold of $1,600 after traversing murky waters. market analyst Greg Miller believes that with the falling wedge breakout and reclaiming momentum, ETH could move to $2,150 soon. If it clears that level, it may mark the beginning of the next leg up. Crypto investor Ted Pillows echoed similar sentiments, stating that Ethereum needed to hold the $1,550 to $1,600 level to have a chance of breaking above $1,670 and reclaiming $2,000. At the time of writing, Ethereum was hovering around $1,567, indicating a high likelihood of better days ahead after enduring a prolonged period.

The Explosion Of L2s Could Break Ethereum For Good

Ethereum could soon face a technical deadlock due to the rapid growth of layer 2 (L2) solutions, which are threatening to saturate its processing capacity despite planned improvements. The current capacity of three blobs per Ethereum block is becoming insufficient, and even after the Pectra upgrade, which will double this capacity, simulations predict rapid saturation. A tenfold increase in L2 transactions could push fees up to $0.64 per transaction, making it unviable. Ethereum needs to reach at least 33 blobs per block to maintain viable costs, highlighting the urgency for scalability solutions.

Is Ethereum About to Crash? Peter Brandt Predicts Drop to $800

Veteran trader Peter Brandt has predicted that Ethereum could fall back to $800. He shared a chart showing a descending triangle pattern, which often signals a bigger price drop ahead. Currently, the key support level is around $1,500. If ETH falls below this level, Brandt believes it could crash down to around $800, similar to its 2022 low. Brandt’s prediction comes as ETH continues to struggle with resistance and market uncertainty. Ether has had a rough year, dropping over 46% over the past 12 months.