JPMorgan analysts say Ethereum (ETH) could lose its top spot in DeFi

Ethereum has been facing issues with scalability, and while Ethereum 2.0 is expected to solve this issue, the solution is not being delivered as fast as other rival networks are growing. While Ethereum (ETH/USD) remains the king of decentralized finance (DeFi), it is losing its dominance in the area.

Analysts from JPMorgan confirmed this, saying that Ethereum’s dominance in the DeFi sector is dropping. However, the analysts noted that Ethereum could regain its dominance after the rollout of Eth 2.0.

Ethereum losing its dominance

Analysts from the investment bank noted that rival networks were fast outperforming Ethereum. These networks include Terra, Avalanche and Solana, which now stand as the strongest rivals of Ethereum. As these networks continue to grow over the next year, Ethereum will increasingly be at risk of being overshadowed.

According to a Bloomberg report, Nikolaos Panigirtzoglou, a managing director at the investment bank, notes that Ethereum currently accounts for around 65% of the DeFi market share. While it still holds the largest share, the numbers show it is losing dominance, given that at the beginning of 2021, it accounted for 100% of the DeFi market share.

The analysts further noted that Ethereum would regain its dominance after the Eth 2.0 upgrade. This will happen after the final stage of this update, sharding is conducted. This will happen in 2023. However, by the time this is achieved, other projects could have dominated the market, given the fast adoption that other networks such as Binance Smart Chain, Avalanche, Terra and Solana are receiving.

“In other words, Ethereum is currently in an intense race to maintain its dominance in the application space with the outcome of that race far from given, in our opinion,” the analysts noted. 

JPMorgan analysts prefer Ethereum to Bitcoin

While analysts at JPMorgan have shown a positive stance regarding Ethereum, the same has not been extended to Bitcoin (BTC/USD). The CEO of the banking giant, Jamie Dimon, is one of the biggest critics of Bitcoin. He has previously urged investors to stay away from the coin, noting that it was “worthless.”

In April 2021, the analysts stated that Ethereum was outperforming Bitcoin, which could continue into the future. Additionally, they noted that Bitcoin was a store of value, but Ethereum had better technology backing.

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