While the SEC sought to qualify Ethereum as a security, JP Morgan analysts argued that Lido's declining market share could protect Ethereum from being classified as a security.
According to The Block, JP Morgan analysts also noted that in addition to the declining market share of the largest liquid staking protocol Lido, Ethereum's latest Dencun update is another positive development for the ETH network and ecosystem.
JP Morgan analysts led by Nikolaos Panigirtzoglou stated the following in the report:
“Lido's share of Ethereum has fallen from about a third a year ago to about a quarter now.
“This should reduce concerns about concentration on the Ethereum network, thus increasing the chances of Ethereum qualifying as a security in the future.”
Additionally, evaluating the effects of the Dencun upgrade, analysts noted that the Dencun upgrade significantly reduces transaction costs for Ethereum Layer 2 networks and increases the number of transactions and total value locked.
Analysts recently stated that the next major upgrade in Ethereum's roadmap is Petra, which is planned to be implemented later this year, and said that this upgrade will bring more benefits to Ethereum.
*This is not investment advice.