Thoughts on the Current Predicament of Ethereum

After the technical narrative and the market's mainstream tone of long-termism are set, Ethereum will still occupy a central position.

Written by: haotian

Following this discussion, I would like to add my thoughts on the current predicament of Ethereum @VitalikButerin, as follows:

1. The "ivory tower" mindset has restricted innovation: the Ethereum Foundation (EF) has had a tendency towards an elitist culture that has detached from the market during the period from 2020 to 2024, continuously stacking technical concepts while ignoring the real needs of users.

In the face of overwhelming criticism and directional guidance, the EF management chose to "ignore" it, which caused them to miss the critical time window for fixing the issues, allowing competitors like Solana and Sui to break free from the oligopolistic effects of the Ethereum ecosystem and grow wildly.

2. Overstacking of technical narratives leads to market fatigue: From DeFi, NFTs to various Layer 2 scaling solutions, the Ethereum ecosystem resembles a narrative production factory, continuously launching new technical narratives but failing to capture effective value.

This has led users to gradually feel fatigued by the development path that is purely technology-oriented but does not respond to the ecosystem and coin price. Ethereum has always hoped to stimulate market build enthusiasm by raising technical thresholds, but it has proven difficult to sustain continuous market prosperity by relying solely on technical narratives.

3. The Layer 2 strategy leads to ecological fragmentation and liquidity dispersion: Layer 2 projects such as Optimism, Arbitrum, and Base have technically solved certain scalability issues, such as reducing gas fees to a negligible level and significantly increasing TPS, but they have also resulted in a complex abstraction of user experience and excessive dispersion of liquidity.

The compatibility issues of cross-chain standards among various factions of OP Stack, ZK Stack, and Ethereum's native ecosystem, as well as the interoperability barriers, have made these market darlings become vampires that issue tokens for the sake of issuing tokens. Not only do they fail to provide effective nourishment to the Ethereum ecosystem, but they also contribute to its ongoing stagnation.

4. $ETH Value Capture Model Failure: After the implementation of the EIP-1559 burn mechanism, the value capture effect of ETH has not continued to perform as expected. ETH lacks a value accumulation mechanism directly linked to network usage, and the prosperity of the layer2 market has not fully transmitted transaction fees to the mainnet. The modular architecture concept advocates for the separation of the base layer and application layer, resulting in ETH becoming a basic infra settlement layer rather than a necessary "value hub."

Therefore, when competitors like Solana achieve several times growth in a short period, ETH still fails to effectively break through its historical high.

5. The geek community culture is detached from the market mainstream: Ethereum's community, primarily composed of geeks, has long embraced technological purism, creating a rift with the current mainstream players in the market. The refusal to embrace seemingly "low-level" innovative forms such as "Meme culture" has resulted in a cognitive gap with the new generation of users.

In contrast, the Solana ecosystem has successfully attracted a large influx of new talent and market attention with its inclusive and innovative attitude, creating a positive cycle of development.

Above.

However, like many friends who have a deep love-hate relationship with Ethereum, even though they can see the various problems that exist with Ethereum, they still believe that the current predicament of Ethereum is not irreversible. It is undeniable that its vibrant developer ecosystem and the accumulated security consensus of DeFi infrastructure remain the strongest.

After the technical narrative + the market's main theme of long-termism is set, Ethereum will still occupy a core position. For most Ethereum enthusiasts and Hodlers, giving up the overly optimistic expectations of being the "second in the crypto universe" and viewing ETH from the perspective of a purely decentralized network asset from a global market perspective may lead to a more correct choice.