Crypto Industry News:

Ethereum co-founder Vitalik Buterin shared his vision of Layer 3 protocols. While Layer 2 protocols focus on "scalability", the next protocols would serve different purposes.

Further changes to Ethereum

While Ethereum-based Layer 2 solutions focus on scaling networks, Buterin believes their Layer 3 counterparts will serve a completely different purpose - providing "tailored functionality". He shared his thoughts in a post from September 17th, outlining three "visions" of what Layer 3 solutions will be used for in the future.

Ethereum co-founder said that the third layer in a blockchain only made sense if it provided a different functionality than layer two.

"The 3-tier scaling architecture, which is to lay down the same scaling scheme on top of each other, usually doesn't work well," he said.

Except that "a three-tier architecture in which the second and third layers have different goals, can work" he added. One use case for Layer 3 would be what Buterin describes as "customized functionality" by referring to privacy-driven applications.

Another use case would be "customized scaling" for specialized applications that do not wish to use an Ethereum Virtual Machine (EVM) to perform computation.

Buterin also added that layer 3 can be used for scaling with the Validiums tool. This can be beneficial for enterprise blockchain applications by using a "centralized server that runs validation checks and regularly shortcuts the chain." However, Buterin also noted that since interchain transactions can be performed easily and cheaply between two tiers 2, building tier 3 does not necessarily improve network performance.

Technical Market Outlook:

The ETH/USD pair had broken below the last month's low seen at the level of $1,423 and made a new weekly low at the level of $1,281 before a shallow bounce occurred. The levels of $1,358, $1,407 and $1,424 will now act as the technical resistance for bulls as the market is trying to extend the bounce from the extremely oversold conditions on the H4 time frame chart. The next target for bears is seen at the level of $1,281, $1,267, $1,255 and below. Despite the extremely oversold market conditions on the H4 time frame chart, the momentum remains weak and negative, which might indicate the ETH is still in the short-term down trend.

Weekly Pivot Points:

WR3 - $1,460

WR2 - $1,386

WR1 - $1,346

Weekly Pivot - $1,312

WS1 - $1,272

WS2 - $1,238

WS3 - $1,164

Trading Outlook:

The Ethereum market has been seen making lower highs and lower low since the swing high was made in the middle of the August at the level of $2,029. The key technical support for bulls is seen at $1,281.9. If the down move will extend, then the next target for bears is located at the level of $1,000.

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Relevance up to 08:00 2022-09-22 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Read more: https://www.instaforex.eu/forex_analysis/293567