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Investing.com – has struggled with its own success for years as the high demand for blockchain transactions has taken the network to the limits of what is technically feasible.
Faced with this, so-called layer 2 solutions, such as , have developed, aggregating and processing transactions outside of Ethereum, to then send them to Ethereum in a single transaction. Transactions can thus be processed not only faster, but also much more economically.
By moving from proof-of-work to proof-of-stake, the blockchain certainly consumes 99 percent less energy, but it has not yet been possible to achieve a performance improvement in terms of transaction speed and reduction in transaction costs.
The merger was just an important first step towards the goal of making Ethereum scalable. And as Layer 2 solutions are now bumping up against regulations, Ethereum co-founder Vitalik Buterin talked about how implementing Layer 3 would lead to near infinite scalability.
While Layer 2 is designed for scaling only, a Layer 3 can contain bespoke functions. According to Buterin, such an operation would be predestined for applications based on data protection and would also open up possibilities that no one yet dares to dream of in the field of “corporate blockchain”.
Another advantage is that within a layer 2 instance a complete ecosystem can be created, which is connected by 3 different layers, as Buterin explained:
“A possible argument in favor of the three-layer model over the two-layer model is that a three-layer model allows the emergence of an entire sub-ecosystem within a single rollup, which allows ‘transact within this ecosystem in a very cost-effective way, without having to go through the expensive layer 1’.
This does not automatically make Ethereum more efficient as a mainchain, but increases the possibilities for new use cases. Technological advances of this type are further expected to have a positive impact on the diffusion and demand for ethers.
Ethereum Technical Benchmarks
Ethereum is one of the few cryptocurrencies to post a loss of -2.98% at a price of $1310 today. On a weekly basis, the price decline amounts to -17.84 percent, which puts Ether at the top of the list of biggest losers among the top 20 cryptos.
Yesterday, the closing price broke below the support of the 61.8% Fibo retracement at $1320. The low of the day was reached at $1222, which is now immediate support. We are currently seeing a rally that is testing the resistance of the 61.8% Fibo retracement.
The RSI is not yet in the oversold zone and therefore further losses should be expected towards the 78.6% Fibo retracement at $1128.
The negative momentum will temporarily subside only if the daily closing price is above the 61.8% Fibo retracement. Beyond that, the room for an extension of the rally towards the 50 percent Fibo retracement of $1455 would increase.
By Marco Oehrl