With one company dominating and fierce competitors surrounding it, is Ethereum still viable?

Author:

ABC Alpha Researcher - Twitter ID @Cyrus_G3

Since Bitcoin broke its previous high (69000 USD) in 2024, Ethereum has been moving further away from its previous high (4800 USD), leading to increasing skepticism in the market regarding Ethereum.

By 2025, Ethereum fell below $3000 in February, below $2000 in March, and even below $1500 in April. The market sentiment towards Ethereum has gradually shifted from doubt to despair and abandonment. Many ancient addresses from the ICO era have also started to gradually clear their Ethereum holdings. Major institutions that once supported Ethereum have begun to waver.

**What happened to Ethereum?**Is there still hope for Ethereum?

This article will focus on these two questions from the following five aspects, reviewing the rise and fall of Ethereum together with everyone, and looking forward to the possible future of Ethereum.

I. The Glorious Years of Ethereum (2017-2022)

In July 2014, Ethereum launched its ICO

However, from 2014 to 2016, the price of Ethereum remained below $10. During this period, Ethereum had the title of Blockchain 2.0, and the smart contract technology was quite cool, but at that time, Ethereum was not very useful.

In 2017, the explosive ICO era began, and Ethereum started to become very useful, with everyone buying ETH to participate in ICOs. By January 13, 2018, Ethereum had risen from $10 at the beginning of 2017 to $1430, reaching its first historical peak.

According to incomplete statistics, from 2017 to early 2018, over 2,500 tokens launched ICOs using ETH. During this phase, the greatest value of Ethereum was in issuing tokens; ETH was not only the most consumed GAS token on-chain, but also the only chip to participate in the wealth wave of ICOs.

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

Ethereum has enjoyed enormous dividends as an innovator at this stage!

2018-2019 was the era of a hundred chains blossoming

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

Of course, at this stage, there are also some public chains that are still active today, such as: TON, ADA, Cosmos, Avalanche, of course, the most famous of them is Solana, yes, Solana was not prominent among the new public chains at that time, but a few years later, it became the biggest challenger to Ethereum, which is quite emotional.

Although, at this stage, there are countless new public chains in the market that are trying to challenge Ethereum, Ethereum still absolutely monopolizes the smart contract market. Smart contracts were first created by Ethereum, the era of smart contracts was opened by Vitalk, V God has a huge appeal and influence second only to Satoshi Nakamoto in the global Crypto field, and the Ethereum ecosystem has also gathered the world's largest number of smart contract developers and countless native Crypto technology and thought innovators, all of which will be vividly performed in the coming 2020.

Finally, the year 2020 has arrived, the summer of DEFI that countless people dream of and long for, the absolute highlight moment of Ethereum, has finally come.

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

The liquidity mining of Compound has directly ignited the market, with a large amount of ETH being used to mint COMP, leading to a surge in TVL and platform tokens, starting a wave of liquidity mining.

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

Yearn.Finance launched a DEFI yield aggregator, and the #YFI surged a thousand times in 30 days, leaving others far behind.

DAI, launched by MakerDAO, has created the first decentralized stablecoin on Ethereum.

Curve's stablecoin DEX provides smooth liquidity for various stablecoins and DeFi tokens on Ethereum.

…….

DEFI Summer has heightened everyone's expectations for Ethereum, as it can not only be used for issuing tokens but also for building truly valuable decentralized applications. The future decentralized world will be built on Ethereum. Ethereum is swallowing the world.

After the DEFI Summer in 2020, the Ethereum ecosystem saw the emergence of trends like GameFi, SocialFi, and NFT in 2021 and 2022, with wave after wave of innovation, creating a thriving scene in the Ethereum ecosystem.

On November 10, 2021, Ethereum reached a historic high of 4878 USD, marking the peak of Ethereum's prosperity.

However, as more and more funds, users, and applications are carried on the Ethereum chain, Ethereum is also starting to become more expensive and slower.

The performance scaling problem has become the biggest obstacle on the road to Ethereum's development. **

2. The Expansion and Transition Path of Ethereum (POS-Layer2)

The expansion solutions of Ethereum have always had two main directions - transitioning to a POS mechanism and developing Layer 2.

Transitioning from the POW mechanism to the POS mechanism was the direction set by Vitalik at the inception of Ethereum. Vitalik believes that POS is more resource-efficient than POW, and at the same time, the POS mechanism can enhance the performance of the Ethereum network, allowing for greater scalability.

The Layer 2 solution is also the direction of Ethereum network expansion that Vitalik has been promoting, from the initial exploration of state channels (Raiden Network), subnets (Plasma, Sharding) and other directions, to the Rollup solution that has become mainstream in the later stage. and the outbreak of OP-Rollup and ZK-Rollup in 2022-2023, all of which have brought hope for Ethereum's expansion.

Whether it was transitioning to POS or Layer 2, at that time in the Ethereum community, it was considered the right choice to continue making Ethereum great and prosperous.

Although the transition to the POS mechanism has caused a lot of dissatisfaction among miners, Ethereum officially switched to the POS mechanism on September 15, 2022. The era of Ethereum's POW has ended, miners have left, and the only support Ethereum can rely on in the future is developers and Layer2.

However, is Layer 2 really the savior of Ethereum?

With the development from 2022 to 2024, many Layer 2 solutions of Ethereum have been successively launched. The ones we can name include: Arbitrum, Optimism, zkSync, StarkNet, Mantle, BASE, Blast, Scroll, Linea, Polygon zkEVM, and so on.

However, after each Layer 2 goes live, it does not bring more benefits to Ethereum; instead, it is continuously draining and rebounding against Ethereum. Each Layer 2 is engaged in a TVL competition, all developing similar Dapps, with few Layer 2s truly creating applications that are not available on the Ethereum mainnet.

In the end, Ethereum has become a nominal emperor, while the Layer 2s have turned into independent vassal states, not only continuously carving up Ethereum's market but also having ambitions to potentially replace it.

Later on, a group of initial Ethereum native applications, such as Uniswap, began to build their own Layer 2 solutions, even using their own tokens to replace ETH as GAS, which is a complete betrayal.

Ethereum has nurtured a large number of Layer 2 solutions, which have ultimately become competitors for mainnet liquidity and developers.

The expansion path of Layer 2 has been debunked.

Looking back, Ethereum's abandonment of POW is almost like a self-inflicted wound.

Without miners, ETH tokens have lost their basic manufacturing cost and the most fundamental price-bearing mechanism.

Suppose Ethereum had not transitioned to POS back then, but instead continued to develop Layer 2 under the POW mechanism. Even if Layer 2's development was unfavorable, the presence of miners and the continuous investment of substantial computing power and electricity into Ethereum would still maintain the price support mechanism for ETH. Therefore, the price of Ethereum would likely not be what it is today, at least not as dire as it is now.

The figure below shows the price of Ethereum when it was converted to POS, which was about $1,500, and today three years later, Ethereum is still about $1,500.

Everything seems so absurd, yet it also feels as if it is destined in some way.

3. The Innovator's Dilemma of Ethereum (Being Surrounded and Blocked by Public Chains like Solana)

Whether the transition to PoS and the development of Layer 2 are successful or not, one thing that cannot be denied is that Ethereum has always been a leader in crypto innovation.

Before 2022, all innovations in the Crypto field originated from the birth and development of Ethereum, and then were copied and adapted by other chains.

Ethereum has DeFi, and other chains are also engaged in DeFi; Ethereum has GameFI, and other chains are also engaged in GameFI; Ethereum has NFTs, and other chains also want to engage in NFTs.

Ethereum has been innovating while other chains have been imitating.

However, innovators often fall into the innovator's dilemma.

The "Innovator's Dilemma" typically refers to the situation where industry leaders, by focusing on optimizing existing technologies and meeting current user demands, overlook emerging disruptive technologies or market trends, ultimately being surpassed by more agile competitors.

AFTER 2020, IN ORDER TO OPTIMIZE THE PERFORMANCE OF ETHEREUM AND MEET THE NEEDS OF EXISTING DEFI AND OTHER USERS, ETHEREUM HAS BEEN LOOKING FOR A WAY TO EXPAND. **Core developers are basically betting on the two routes of switching to the POS mechanism and supporting the development of Layer 2.

From the perspective of Ethereum's development, there is nothing wrong with this; it may even be the only path available. However, this is the inevitable dilemma of innovators.

Since, users need a faster and cheaper blockchain, why not BSC, why not Tron, why not Solana?

What did the crypto market need by 2020? What do users need? How can it be made engaging? Top players have already figured it out. It's simply about issuing assets, trading assets, finding scenarios for assets, and then making it faster and more convenient for everyone to engage.

Currently, Ethereum is busy with expansion, and it is very slow and expensive, so there is an opportunity for blockchains that are both fast and cheap.

Thus, TRON has seized the stablecoin market.

BSC and BASE have built a closed-loop logic around their exchange ecosystem barriers, integrating project issuance and trading on the exchange.

The scariest thing is Solana, with the foundation personally getting involved, leveraging the straightforward and brutal Meme tactics, uniting various forces, and continuously creating a wealth myth. Sol has become the touchstone that everyone desires in the Meme craze.

Ethereum is being surpassed by competitors.

Ethereum has always been an innovator and leader in underlying blockchain technology, whether it is the original smart contract technology or the various decentralized applications that followed, all of which are products that lead the era.

However, everything about public chains is open source, and there are no secrets involved.

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

You invented a new way to play today, and I can immediately imitate it.

Ethereum from 2017 to 2022 has enjoyed continuous brilliance due to its leading technology and innovative ecosystem gameplay. However, after 2022, as Ethereum's core developers focused their efforts on underlying research such as performance expansion, the innovation regarding applications and gameplay began to slow down. Meanwhile, new chains that were not troubled by performance issues could concentrate on model innovation. Therefore, while Ethereum was deeply engaged in underlying research, those flexible competitors focusing on model innovation could quickly overtake.

Because if Ethereum does not innovate, it will fall behind; this is the fate of open-source public chains.

However, is it Ethereum's fault?

No, it is not.

Ethereum is not wrong; focusing on performance expansion, developing the underlying technology, and providing better infrastructure are all valid pursuits. This is a dilemma that innovators inevitably face as they reach a certain stage of development.

In addition, the weakness of Ethereum highlights a more serious problem, which is that the Crypto industry is really underdeveloped.

4. The weakness of Ethereum is a sign of the entire industry's underdevelopment

Apart from Bitcoin, Ethereum can be considered the biggest innovation in the Crypto field.

But why has Ethereum suddenly stopped working?

Besides the fact that being focused on bottom-level research and development has been surpassed by more agile competitors, is there a deeper reason?

I think there is. That is, the Crypto industry has still not found a truly healthy development paradigm, or rather, besides issuing assets and engaging in asset speculation, does Crypto have more application value?

Before finding this answer, the Crypto industry was typically underdeveloped.

What is dysplasia?

You see, in this cycle, apart from BTC, only Meme remains with a wealth effect, and various types of projects supported by many VCs are going unsold.

Why is no one willing to pay? Because everyone knows that these projects are just telling stories and do not have real value.

In that case, it would be better to buy the safest BTC, and then, play around with the simplest and most straightforward Meme.

Therefore, before the Crypto industry develops truly valuable applications, it is highly likely that the current model will continue to cycle. If one day even Memes lose their wealth effect, then there will really only be an endless bear market left.

Therefore, I say that instead of lamenting the weakness and decline of Ethereum, what we should really be concerned about is, where is the road for Crypto heading?

5. In the future, it may be difficult for Ethereum to dominate alone

So, what will the future of Ethereum be like?

We mentioned earlier that the smart contract market opened up by Ethereum and the various models of Crypto can be easily replicated by other competing chains. In terms of technology and models, Ethereum has already lost its competitive barrier; what Ethereum can do, other chains can basically do as well.

The only remaining barrier for Ethereum is the funds that are locked in the Ethereum mainnet and the already established closed-loop DEFI ecosystem. These DEFI protocols, ranging from lending, trading, stablecoins, to on-chain leverage, form a tightly integrated and organic combination of the DEFI ecosystem. Any assets entering the chain cannot avoid Ethereum's DEFI when seeking liquidity.

Therefore, many people say that RWA might be an opportunity for Ethereum, and I deeply agree. However, the road to RWA is long and difficult, and whether Ethereum can continue to create more innovative on-chain gameplay remains one of the most effective breakthroughs.

However, Ethereum has indeed lost its monopoly status.

Regardless, the competitors of Ethereum have indeed developed, and each has formed its own barriers.

The years of expansion for Ethereum have not improved its performance; Ethereum is still slow and expensive. Applications with high performance demands will still not choose Ethereum in the future, but rather new public chains such as Solana, TON, BSC, Tron, and even SUI.

So, will Ethereum lose its position as the second oldest? Will the title of king of public chains be replaced by other chains?

I dare not give a direct answer, but we can make a simple inference:

If the only remaining DEFI advantage of Ethereum is taken away by new public chains like Solana.

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

If Ethereum's ecological innovation continues to lag behind the market.

If Ethereum's developers gradually leave.

So, under the pattern of wolves surrounding the tiger, how far will the expensive, slow, and lack of innovation Ethereum fall?

As a former Ethereum Maximalist, I still look forward to Ethereum continuing to innovate, and I hope that Vitalik can continue to lead the Ethereum developer community in continuously launching applications and development paradigms with greater innovative value, because only continuous innovation can be the sole barrier for Ethereum.

Summary

This article reviews Ethereum's eight-year history from 2017 to the present. Ethereum represents the second possibility of blockchain technology, which is the biggest innovation after Bitcoin. The rise of Ethereum stems from ICO, that is, the use of smart contracts to issue coins for financing, which is the earliest application scenario of ETH. From 2020 to 2021, DEFI, GameFi, SocialFi, NFT, etc. 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 shifting to POS and expanding the underlying R&D direction of Layer 2, and the Ethereum ecosystem lacks decent application innovation or model innovation for the market and community, and there is no paradigm innovation in the Ethereum ecosystem that can surpass DEFI, but competing chains such as Solana have played new tricks. This is the core reason why Ethereum and its eco-related tokens are so sluggish and weak in this cycle.

When we ask about the future of Ethereum, we are actually asking about the future of the Crypto application market. The prosperity of Ethereum to some extent reflects the development of Crypto. After all, our industry cannot consist only of Bitcoin and Meme.

Bless Ethereum, bless Crypto. Even if one day Ethereum is no longer the sole leader in the smart contract market, the technological and paradigm innovations of the Ethereum ecosystem are still worth looking forward to for all of us.