@michaelrosaba1a
Competition among Layer2 projects affects valuations by shaping investor perceptions of scalability leadership and ecosystem growth. Projects like Arbitrum, Optimism, and zkSync are racing to capture developer mindshare and transaction volume. As each launches incentives, grants, and integrations, token valuations fluctuate based on who gains traction. If one project secures significant adoption, competitors may see declining valuations due to investor rotation. At the same time, fierce competition spurs innovation, expanding Ethereum’s scaling narrative, which benefits the sector as a whole. Ultimately, valuations depend on measurable adoption, but competition introduces volatility as market participants constantly reassess winners and losers.
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