With a single one who is so powerful that it is surrounded by strong enemies, is Ethereum OK?

author:

ABC Alpha Researcher—Twitter ID @Cyrus_G3

Since Bitcoin broke through the previous high (US$69,000) in 2024, while Ethereum is getting farther and farther away from its previous high (US$4,800), doubts about Ethereum have become increasingly louder in the market.

By 2025, Ethereum fell below $3,000 in February, $2,000 in March, and even $1,500 in April. The market's sentiment towards Ethereum has gradually shifted from doubt to despair and giving up. Many ancient addresses in the ICO era have begun to gradually release Ethereum. The leading institutions that once supported Ethereum have also begun to shake.

What 's wrong with Ethereum? Is there still hope for Ethereum?

This article will focus on these two issues and start from the following five aspects to review the rise and decline of Ethereum, as well as looking forward to the possible future of Ethereum.

1. The glorious years of Ethereum (2017-2022)

In July 2014, Ethereum started ICO

However, since 2014 to 2016, the price of Ethereum has been below US$10. At this stage, Ethereum has the title of blockchain 2.0 and its smart contract technology is also very cool. However, Ethereum is useless at this time.

In 2017, the violent ICO era began, and Ethereum began to become very useful, and everyone bought ETH to participate in ICO. Until January 13, 2018, Ethereum had risen from US$10 in early 2017 to US$1,430, reaching the first new high in Ethereum's history.

According to incomplete statistics, from 2017 to the beginning of 2018, more than 2,500 tokens used ETH to initiate ICO. At this stage, the greatest value of Ethereum is issuing coins. ETH is not only the most consumed GAS token on the chain, but also the only bargaining chip to participate in the IOC wealth wave.

Although many new public chains such as NEO, QUTM, EOS, TRON were born at this stage, in the ICO and smart contract market exclusively monopolized by Ethereum, the combined market share of other public chains is almost negligible.

At this stage, Ethereum enjoys the huge dividends of innovators!

2018-2019 is the era of hundreds of chains being released in one go

Due to the success of Ethereum, countless new public chains have emerged in the market. In addition to the above mentioned companies, we will list a few public chains that many people may not be familiar with, such as: GXC, NULS, ELF, Algorand, etc.

Of course, some public chains that are still active at this stage have also appeared, such as TON, ADA, Cosmos, and Avalanche. Of course, the most famous of them is Solana. Yes, Solana was not outstanding among the new public chains at that time, but a few years later, it became the biggest challenger of Ethereum, which is quite touching.

Although at this stage, countless new public chains have appeared in the market that try to challenge Ethereum, Ethereum still absolutely monopolizes the smart contract market. Smart contracts were first created by Ethereum, and the era of smart contracts was initiated by Vitalk. V God has a huge appeal and influence second only to Satoshi Nakamoto in the global Crypto field. The Ethereum ecosystem also gathers the world's largest smart contract developers and countless native Crypto technology and thought innovators. All of this has been fully demonstrated in the upcoming 2020.

Finally, it was 2020. The summer of DEFI that countless people were fascinated by dreams, and the absolute highlight of Ethereum finally arrived.

After silent fermentation and continuous exploration from 2018 to 2019, the earliest batch of Crypto native applications - DEFI Protocol, finally broke out in the Ethereum ecosystem that summer in 2020.

Compound's liquidity mining directly ignited the market, and a large amount of ETH was used to mint COMP, the skyrocketing TVL and platform coins started a wave of liquidity mining

Uniswap, which Vitalik personally invested, opened the era of on-chain DEX with the minimalist formula of X*Y=K

Yearn.Finance launches DEFI revenue aggregator, #YFI, which has soared ten thousand times in 30 days, is even more powerful

DAI launched by MakerDAO has given birth to the first decentralized stablecoin on Ethereum

Curve's stablecoin DEX allows many stablecoins and DEFI tokens to gain silky liquidity in Ethereum

....

DEFI Summer has pushed everyone's expectations for Ethereum to a peak, because Ethereum can not only be used to issue coins, but also build truly valuable decentralized applications. The future decentralized world will be built on Ethereum. Ethereum is swallowing the world.

Following DEFI Summer in 2020, in 2021 and 2022, the Ethereum ecosystem has also experienced GameFi, SocialFi, NFT and other crazes, wave after wave of innovation, making the Ethereum ecosystem a prosperous scene.

On November 10, 2021, Ethereum reached an all-time high of US$4,878, and Ethereum 's prosperity reached its peak.

However, as the Ethereum chain carries more and more funds, users and applications, Ethereum has also begun to become more expensive and slower.

Performance expansion issues have become the biggest obstacle to Ethereum 's development path.

2. Ethereum’s expansion and turnaround path (POS-Layer2)

Ethereum's expansion plan has always had two main directions - changing POS mechanism and developing Layer2

The shift from the POW mechanism to the POS mechanism is the direction set by Vitalik when he first created Ethereum. Vitalik believes that POS is more resource-saving than POW, and the POS mechanism can also improve the performance of Ethereum network and make Ethereum more scalable.

The Layer2 solution is also the Ethereum network expansion direction that Vitalik has been promoting, from the initial state channel (Raiden Network), subnet (Plasma, Sharding) and other directions to the later Rollup solution. As well as OP-Rollup and ZK-Rollup, which exploded in 2022-2023, have brought hope to Ethereum's expansion path.

Whether it was to switch to POS or Layer2, the Ethereum community at that time was considered the right choice to keep Ethereum great and prosperous.

Although the POS mechanism has attracted dissatisfaction from a large number of miners, Ethereum still officially switched to the POS mechanism on September 15, 2022. The POW era of Ethereum is over and miners have left. The only thing Ethereum can rely on in the future is developers and Layer2.

However, is Layer2 really the savior of Ethereum?

After the development from 2022 to 2024, many Layer2s on Ethereum have been launched one after another. The names we mentioned include: Arbitrum, Optimism, zkSync, StarkNet, Mantle, BASE, Blast, Scroll, Linea, Polygon zkEVM, etc.

However, after each Layer2 was launched, it did not bring more gains to Ethereum. Instead, it was constantly sucking blood and backlashing Ethereum. Every Layer2 was engaged in TVL competitions and was developing the same Dapp. Few Layer2 really had applications that were not available on the Ethereum main network.

Finally, Ethereum became the Zhou emperor who died in name only, and the Layer2 became the vassal states in their own right. They not only continued to share the market of Ethereum, but also had the ambition to replace it.

Later, a number of initial Ethereum native applications such as Uniswap began to build their own Layer2, and even used their own tokens to replace ETH as GAS, which was a complete betrayal.

Ethereum has trained a large number of Layer2s, and eventually almost all of them have become competitors for mainnet liquidity and developers.

Layer2 's expansion path has been falsified.

Looking back, Ethereum gave up POW is almost a self-destructive behavior.

Losing miners, ETH tokens lose their basic manufacturing costs and the most basic price bearing mechanism.

Assuming that Ethereum did not convert to POS, it continued to develop Layer2 in the POW mechanism. Even if Layer2 development is not good, because there are miners and a large amount of computing power and electricity are constantly investing in Ethereum, the price carrying mechanism of ETH is still valid. Then, the price of Ethereum is likely not to be what it is today, at least it will not be as miserable as it is now.

The following figure shows the price when Ethereum was converted to POS, about US$1,500. Three years later, Ethereum is still around US$1,500.

All of this seems so absurd, but it seems to be in a dark destiny.

**3. Ethereum’s innovator dilemma (surrounded by public chains such as

Solana)**

Whether it is successful or failed to switch to POS or Layer2, one thing no one can deny is that Ethereum has always been a leader in Crypto's innovation.

Before 2022, all innovations in the Crypto field will be born and developed from Ethereum, and will be copied and copied by other chains.

With DeFi on Ethereum, other chains also need to develop DeFi; Ethereum has GameFI, and other chains also need to develop GameFI; Ethereum has NFT, and other chains also need to develop NFT.

Ethereum has been innovating, and other chains have been imitating.

However, innovators often fall into innovator dilemma.

The “Innovator Dilemma” usually refers to industry leaders who are focused on optimizing existing technologies and meeting current user needs, ignoring emerging disruptive technologies or market trends, and are ultimately surpassed by more flexible competitors.

After 2020, Ethereum has been looking for ways to expand in order to optimize Ethereum's performance and to meet the needs of existing DEFI and other users. To sum up, it is to make ETH faster and cheaper. Core developers basically bet on the two routes of converting POS mechanism and supporting Layer2 development.

From the perspective of Ethereum's development, there is nothing wrong with this, or even the only alternative path. However, this is the inevitable dilemma for innovators.

Since users need faster and cheaper blockchains, why can't it be BSC, why can't it be Tron, why can't it be Solana?

What does the market need when Crypto develops into 2020? What do users need? Top players have already figured out how to play. It’s nothing more than issuing assets, trading assets, finding scenarios for assets, and then allowing everyone to play faster and more conveniently.

Now, Ethereum is busy expanding, and it is very slow and expensive, so there is a chance for fast and cheap blockchains.

Therefore, TRON seized the stablecoin market.

BSC and BASE also play a closed loop in the logic of project issuance and trading around their own exchange ecological barriers.

The most terrifying thing is Solana. The foundation personally came to the scene. With the simple and crude Meme technique, it united the forces of all parties to continuously create the wealth myth. Sol has become the gold and stone that everyone longs for in the Meme frenzy.

Ethereum is being surpassed by competitors.

Ethereum has always been an innovator and leader in underlying public chain technology. Whether it is the initial smart contract technology or the various decentralized applications later, it is a product leading the times.

However, everything in the public chain is open source and there is no secret to it.

If you innovate a technology today, I can use it tomorrow.

You have a new way of playing today, and I can imitate it immediately.

Ethereum's continued glory from 2017 to 2022 in recent years comes from its leading technologies and continuous innovation in ecological gameplay. However, after 2022, after Ethereum core developers focus on underlying R&D such as expanding performance, Ethereum's innovation in applications and gameplay has begun to slow down. New chains without performance problems can concentrate on model innovation. Then, when Ethereum is focused on underlying R&D, those flexible and concentrated model innovation competitors can quickly overtake.

Because if Ethereum does not innovate, it will lag behind, which is the fate of open source public chains.

However, is this Ethereum’s fault?

Not.

There is nothing wrong with Ethereum. It is nothing wrong with performance expansion, underlying research and development, and providing better infrastructure. This is a dilemma that innovators will inevitably face when they develop to a certain extent.

In addition, Ethereum 's weakness also highlights a more serious problem, that is, the Crypto industry is really underdeveloped.

4. Ethereum’s weakness is a sluggish development in the entire industry

In addition to Bitcoin, Ethereum can be said to be the biggest innovation in the Crypto field.

But why did Ethereum suddenly fail?

In addition to the fact that the fact that the focus on the underlying R&D is surpassed by more flexible competitors, is there any deeper reason?

I think there is. That is, the Crypto industry has not yet found a truly healthy development paradigm. In other words, in addition to issuing assets and engaging in asset speculation, does Crypto have more application value?

Before finding this answer, the Crypto industry is typical of maldevelopment.

What is dysplasia?

You see, in this cycle, besides BTC, only Meme has a wealth effect, and no one pays for all types of projects supported by VCs.

Why no one paid the bill? Because, everyone knows, these projects are just telling stories and have no real value.

Since that's the case, it's better to buy the safest BTC and then play the simplest and most rough Meme.

Therefore, before the Crypto industry develops truly valuable applications, it is highly likely that the current model will still be cycled. If one day, even Meme loses the wealth effect, then there will be only an endless bear market left.

Therefore, I said, instead of lamenting the weakness and decline of Ethereum, what we really should worry about is, where is Crypto's path?

5. In the future, Ethereum may be harder to dominate

So, what will happen to Ethereum in the future?

As we mentioned earlier, other competitive chains can be simply replicated by Ethereum in its smart contract market and Crypto. At the technical and model level, Ethereum has lost its competitive barriers. Ethereum can basically do what Ethereum can do, and other chains can basically do it.

The only barrier that Ethereum still has is the funds accumulated in the Ethereum main network and the DEFI ecosystem that has formed a closed loop. These D EFI protocols form a DEFI ecosystem that is tight and organically combined from lending, trading, stablecoins, on-chain leverage, etc. Ethereum's DEFI is an inescapable link when seeking liquidity for all assets that enter the chain.

Therefore, many people say that RWA may be an opportunity for Ethereum, and I also deeply agree with it. However, RWA has a long road blockage. Whether Ethereum can continue to create more newer on-chain gameplay is still one of the most effective breakthroughs.

However, Ethereum has indeed lost its dominant monopoly.

In any case, Ethereum competitors have really developed and each has formed barriers.

Ethereum’s years of expansion have not improved its performance. Ethereum is still very slow and expensive. For applications with high-performance demand, it will not choose Ethereum in the future. Instead, it will be new public chains such as Solana, TON, BSC, Tron and even SUI.

So, will Ethereum lose its position as the second-year-old? Will the title of the King of Public Chain be replaced by other chains?

I dare not give the answer directly, but we can do simple reasoning:

If Ethereum's only remaining DEFI advantage is also taken away by new public chains such as Solana.

If Ethereum is unable to improve performance for a long time.

If Ethereum's ecological innovation is still half a beat slower than the market.

If Ethereum developers gradually leave.

So, in the situation where the expensive, slow and lack of innovation will Ethereum fall to?

As a former Ethereum Maximalist, I still look forward to Ethereum continuing to maintain innovation, and Vitalik continues to lead the Ethereum developer community and continuously launch more innovative applications and development paradigms, because only continuous innovation is the only barrier to Ethereum.

Summarize

This article reviews the eight-year journey of Ethereum since 2017. Ethereum represents the second possibility of blockchain technology, the biggest innovation after Bitcoin. The rise of Ethereum originated from ICO, that is, using smart contracts to issue coins to raise funds, which is the earliest application scenario of ETH. DEFI, GameFi, SocialFi, NFT, etc. from 2020 to 2021 have pushed Ethereum's smart contract application scenarios to a peak. At the same time, the price of ETH has also reached its peak.

However, from 2022 to 2023, Ethereum's focus will be on changing POS and expanding the underlying R&D direction of Layer2. The Ethereum ecosystem lacks decent market-oriented application innovation or model innovation. The Ethereum ecosystem has no longer had paradigm innovation that can surpass DEFI. Instead, competitive chains such as Solana have played new tricks. This is the core reason why Ethereum and Ethereum ecosystem-related tokens are so depressed and weak in this cycle.

When we are asking about the future of Ethereum, we are actually asking about the future of the Crypto application market and whether Ethereum is prosperous or not, to a certain extent, reflects the development of Crypto. After all, our industry cannot be just Bitcoin and Meme.

Bless Ethereum and Crypto. Even if one day Ethereum is no longer dominant in the smart contract market, the technology and paradigm innovation of the Ethereum ecosystem are still worthy of our expectations.