Layer by Layer: Ethereum Sees Surging LST and LRT Growth Ahead of Upcoming Catalysts in 2024

In the second half of 2023, Ethereum effectively took a back seat to its Layer 1 (L1) blockchain counterparts that had seen a surge in both valuation and user activity. Perhaps the most notable example of this dynamic came from the Solana network, whose ability to sustain high transaction throughput at low cost via parallelized execution began to drive increased acceptance of integrated systems as compelling alternatives to Ethereum’s rollup-centric scaling vision. Solana’s native SOL token ended the year up ~897%, compared to ~184% for ETH over the same period, with the latter only slightly outperforming BTC as speculation over the now-approved Bitcoin ETFs captured much of the market’s attention late in the year. 

In some ways, Ethereum was also partly overshadowed by the launch of the data availability solution Celestia in late October, with the newly launched network establishing itself as the market leader in a sub-sector of the scaling landscape. Prior to Celestia’s arrival, Ethereum had served as the default data availability layer for rollups, alongside its existing roles as the de-facto settlement and consensus layers. In 2024, the tides appear to be turning for Ethereum, with a number of upcoming catalysts driving renewed attention to the world’s largest smart contract platform. In this report, we will take a closer look at the state of the Ethereum ecosystem and its future within the broader L1 landscape.