Standard Chartered Revises Downward Ether Price Prediction 2025 Layer 2 Impact

Geoffrey Kendrick, a lead analyst at Standard Chartered, suggests that the ascent of Layer 2 platforms, with Base at the forefront, has had a considerable negative impact on Ethereum’s market capitalization.

“Our calculations indicate that Base, as the dominant Layer 2 solution, has alone diverted an estimated $50 billion in market capitalization away from Ethereum,” Kendrick stated, underlining the core reason behind the price target reduction. This perspective was detailed in a recent report authored by Kendrick titled “Ethereum — Midlife Crisis.” According to Kendrick, Layer 2 networks, and particularly Base, are currently profiting substantially from the Ethereum network, effectively capturing value that would have previously accrued to the Layer 1 blockchain.

Kendrick argues that Ethereum has, in effect, become a “commoditized” base layer within its own ecosystem due to the rise of Layer 2s.

Past Ethereum Upgrades Seen as Detrimental to Value by Standard Chartered

Kendrick’s report further analyzes the factors contributing to Ether’s recent underperformance.

He contends that strategic changes enacted within the Ethereum network over the past several years, while possibly intended to be beneficial, have paradoxically undermined its value proposition.

However, representatives from Base offer a contrasting view.

A spokesperson emphasized to The Block that “Base facilitates broader access to blockchain technology by offering rapid and cost-effective transactions, thereby fostering growth within the Ethereum ecosystem by attracting a larger influx of users, developers, applications, and digital assets – all of whom transact in ETH and generate demand.”

The spokesperson further highlighted Base’s contributions to the Ethereum community through grants, incentive programs, and resources, as well as the allocation of a portion of revenue towards funding public goods within the ecosystem.

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