Ethereum (ETH) is a cryptocurrency that has stood out since its launch in 2015, being today the second largest cryptocurrency in market capitalization, behind only Bitcoin (BTC). It has been regarded as one of the most promising and innovative cryptos on the market due to its network’s ability to be used as a platform for creating decentralized applications (dApps) and smart contracts.
The Ethereum Foundation, the organization responsible for developing cryptocurrency, has ambitious plans for network upgrades in 2023 — check out some examples.
Shanghai is expected in March
For 2023, Ethereum is expected to continue to grow and evolve. In this sense, one of the main expected developments is an improvement called Shanghai, which is an update that contains several EIPs.
EIPs (Ethereum Improvement Proposals), which is translated as “Ethereum Improvement Proposals”, are the means by which updates are made to Ethereum. All of this happens publicly and is open to anyone.
Within the Shanghai update there is EIP 4844 , which promises to make the network more scalable through what we call proto-danksharding, which is a proposed concept as part of Ethereum scalability. The purpose of this EIP is to allow the network to support more transactions per second, making it more competitive with other cryptocurrencies and smart contract platforms.
Technically speaking, sharding is a scalability technique that consists of dividing the network into several smaller pieces, which are known as shards. Each shard is responsible for processing a portion of transactions, allowing the entire network to process more transactions per second.
Proto-danksharding is an approach to sharding that uses a technique known as “shard-at-a-time processing”, which allows the Ethereum network to process transactions on multiple shards simultaneously. This is different from traditional sharding approaches, which process transactions on only one shard at a time.
One of the big competitions we have seen in recent years in the crypto industry was for the dominance of smart contract blockchains or Layer 1 blockchain. We saw several that called themselves Ethereum Killers, posing as a competitor that would dethrone Ethereum as Layer 1.
Now, in the bear market, this competition has become less intense, leaving Ethereum without a competitor to date. With that, layer 2 blockchains, which are built on Ethereum itself, gained more notoriety.
With the increase in users and transactions in layer 2 of the network coupled with the implementation of EIP 4844, the transaction volume on the main net is expected to increase significantly — which could lead to ETH becoming deflationary in the year 2023, as that the more transactions are made on the network, the more coins are burned, thus affecting the amount of ETH in circulation.
Adoption by companies and industries
Another key trend to watch is the increasing adoption of Ethereum by companies and industries. The platform is already used by several companies to build supply chain solutions, insurance contracts and other business applications.
This adoption is expected to continue to grow in 2023, which should drive the cryptocurrency’s price and usage of the cryptocurrency and its network.
All in all, Ethereum has a bright future ahead of it in 2023. With the rollout of upgrades and EIPs, increased enterprise adoption and possible increased use of ETH as a means of payment, it is expected to continue to be one of the main cryptocurrencies on the market.
However, it is important to remember that the cryptocurrency market is highly volatile and price predictions should be treated with caution.