Coinbase Addresses Dangers For Ethereum’s Price

It’s been revealed that Coinbase is addressing some dangers for the price of Ethereum. Check out the latest reports below about what could affect the price of the coin according to the important crypto exchange.

Crypto exchange Coinbase is analyzing the impact that scaling solutions could have on the Ethereum (ETH) blockchain.

In a research report, Coinbase said the fact that layer-2 scaling solutions (L2s) could cannibalize Ethereum’s revenue –  this is the term used by the online publication the Daily Hodl.

“The future of L2s could very well be a zero-sum game, as whichever L2 houses the majority of decentralized applications could one day power the entirety of the Ethereum ecosystem. That suggests that L2s could eventually divert revenue away from Ethereum itself.”

Coinbase also said that over the past 12 months, scaling solutions such as Polygon (MATIC), Optimism (OP), and Arbitrum have generated less than one percent of the revenue that Ethereum pulled in.

“Over the last 12 months, Token Terminal has reported that Ethereum has earned $9.971 billion in total revenue compared to an aggregate of only approximately $78 million on Arbitrum, Polygon and Optimism.”

As the online publication the Daily Hodl notes, the crypto exchange said that once Ethereum transitions to a proof-of-stake (PoS) consensus mechanism, the scaling solutions will potentially cause a decline in the staking yields.

It’s important to note the fact that this could negatively impact the price of ETH.

Coinbase has been making a lot of headlines these days. Not too long ago, we revealed that in a new analyst call, Coinbase chief financial officer Alesia Haas says that the firm recently offering crypto staking for institutions will be felt further down the line rather than in the near term.

Haas said that Coinbase has “onboarded institutional clients” by offering them a delegated staking service similar to what’s available for retail customers.