Author:

ABC Alpha Researcher - Twitter ID @Cyrus_G3

Since Bitcoin broke its previous high (69,000 USD) in 2024, Ethereum has been moving further away from its previous high (4,800 USD), leading to increasing skepticism about Ethereum in the market.

By 2025, Ethereum fell below 3,000 USD in February, below 2,000 USD in March, and even below 1,500 USD in April. The market sentiment towards Ethereum has gradually shifted from skepticism to despair and abandonment. Many ancient addresses from the ICO era have begun to clear out their Ethereum holdings. Prominent institutions that once supported Ethereum have also started to waver.

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

This article will address these two questions by reviewing the rise and decline of Ethereum from the following five aspects, as well as looking ahead to Ethereum's possible future.

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

July 2014, Ethereum Launches ICO

However, from 2014 to 2016, Ethereum's price remained below 10 USD. During this period, Ethereum had the title of Blockchain 2.0, and the smart contract technology was impressive, but Ethereum had little practical use at that time.

In 2017, the explosive ICO era began, and Ethereum became very useful as everyone rushed to buy ETH to participate in ICOs. By January 13, 2018, Ethereum had risen from 10 USD at the beginning of 2017 to 1,430 USD, reaching its first historical high.

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

Although many new public chains such as NEO, QUTM, EOS, and TRON emerged during this period, Ethereum still held an absolute monopoly in the ICO and smart contract market, with the combined market share of other public chains being negligible.

During this phase, Ethereum enjoyed the enormous benefits of being an innovator!

2018-2019, The Era of Multiple Chains

Due to Ethereum's success, countless new public chains emerged in the market. In addition to the ones mentioned above, we can list several public chains that many may no longer be familiar with, such as GXC, NULS, ELF, and Algorand.

Of course, this period also saw the emergence of some public chains that are still active today, such as TON, ADA, Cosmos, and Avalanche. Among them, the most famous is Solana. At that time, Solana was not particularly outstanding among the new public chains, but years later, it became Ethereum's biggest challenger, which is quite remarkable.

Although numerous new public chains attempted to challenge Ethereum during this period, Ethereum still absolutely dominated the smart contract market. Smart contracts were first created by Ethereum, and the era of smart contracts was initiated by Vitalik. Vitalik has immense influence and appeal in the global crypto space, second only to Satoshi Nakamoto, and the Ethereum ecosystem gathered the most smart contract developers and countless native crypto technology and thought innovators globally. This was vividly demonstrated in the upcoming year of 2020.

Finally, in 2020, the summer of DEFI that countless people longed for arrived, marking Ethereum's absolute highlight moment.

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

The liquidity mining of Compound ignited the market, with a large amount of ETH being used to mint COMP, leading to skyrocketing TVL and platform tokens, thus initiating the liquidity mining wave.

Uniswap, personally invested in 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 token skyrocketed by ten thousand times in 30 days, leaving others far behind.

MakerDAO's DAI gave birth to the first decentralized stablecoin on Ethereum.

Curve's stablecoin DEX provided smooth liquidity for various stablecoins and DEFI tokens on Ethereum.

…….

DEFI Summer raised everyone's expectations for Ethereum to new heights, as Ethereum could not only be used for token issuance but also to build truly valuable decentralized applications. The future decentralized world would be built on Ethereum. Ethereum was consuming the world.

Following the DEFI Summer of 2020, in 2021 and 2022, the Ethereum ecosystem saw the emergence of trends like GameFi, SocialFi, and NFTs, with waves of innovation creating a thriving ecosystem.

On November 10, 2021, Ethereum reached a historical high of 4,878 USD, marking the peak of Ethereum's prosperity.

However, as more funds, users, and applications were hosted on the Ethereum chain, it began to become increasingly expensive and slower.

The issue of performance scalability became the biggest obstacle on Ethereum's path to development.

2. Ethereum's Scalability and Transition Path (POS-Layer2)

Ethereum's scalability solutions have always focused on two main directions—transitioning to a POS mechanism and developing Layer2.

The shift from a POW mechanism to a POS mechanism was a direction set by Vitalik from the very beginning of Ethereum's creation. Vitalik believed that POS is more resource-efficient than POW, and the POS mechanism could also enhance Ethereum's network performance, providing greater scalability.

Layer2 solutions have also been a direction that Vitalik has consistently advocated for Ethereum's network expansion, exploring initial options like state channels (Raiden Network), subnets (Plasma, Sharding), and later mainstream Rollup solutions. The OP-Rollup and ZK-Rollup that exploded in 2022-2023 brought hope to Ethereum's scalability path.

Whether transitioning to POS or developing Layer2, both were seen as the right choices for ensuring Ethereum's continued greatness and prosperity within the Ethereum community at that time.

Although the transition to a POS mechanism drew significant dissatisfaction from miners, Ethereum officially transitioned to a POS mechanism on September 15, 2022. The POW era of Ethereum ended, miners departed, and the only reliance for Ethereum's future became developers and Layer2.

However, is Layer2 really Ethereum's savior?

From 2022 to 2024, many Layer2 solutions for Ethereum have been launched, including well-known names like Arbitrum, Optimism, zkSync, StarkNet, Mantle, BASE, Blast, Scroll, Linea, and Polygon zkEVM.

However, each Layer2 that launched did not bring more benefits to Ethereum; instead, they continuously drained and counteracted Ethereum. Each Layer2 engaged in a TVL competition and created similar DApps, with few Layer2 truly developing applications that the Ethereum mainnet did not have.

In the end, Ethereum became a nominal ruler, while Layer2s became independent fiefdoms, not only continuously eating into Ethereum's market but also harboring ambitions to replace it.

Later, a group of initial Ethereum native applications like Uniswap began to build their own Layer2, even using their own tokens to replace ETH as GAS, which was a complete betrayal.

Ethereum nurtured a large number of Layer2s, which ultimately became competitors for the mainnet's liquidity and developers.

The scalability path of Layer2 has been debunked.

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

Without miners, the ETH token lost its basic manufacturing cost and the most fundamental price-bearing mechanism.

Suppose Ethereum had not transitioned to POS and had continued to develop Layer2 under the POW mechanism. Even if Layer2 development faced challenges, the presence of miners and the continuous investment of computing power and electricity into Ethereum would have kept the ETH price-bearing mechanism effective. Therefore, the price of Ethereum would likely not be what it is today, at least not as dire as it is now.

The following chart shows Ethereum's price at the time of the POS transition, around 1,500 USD. Three years later, Ethereum is still around 1,500 USD.

Everything seems so absurd, yet it also feels predestined.

3. The Innovator's Dilemma of Ethereum (Pursued by Chains like Solana)

Whether the transition to POS or the development of Layer2 is successful or not, one undeniable point is that Ethereum has always been the leader in crypto innovation.

Before 2022, all innovations in the crypto space originated from Ethereum and were then copied and replicated by other chains.

Ethereum had DeFi, and other chains followed suit; Ethereum had GameFi, and other chains followed suit; Ethereum had NFTs, and other chains wanted to have NFTs too.

Ethereum has always 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 focus on optimizing existing technologies and meeting current user needs, while neglecting emerging disruptive technologies or market trends, ultimately being surpassed by more agile competitors.

After 2020, in order to optimize Ethereum's performance and meet the needs of existing DEFI users, Ethereum has been searching for scalability solutions, summarized as making ETH faster and cheaper. Core developers have primarily bet on transitioning to a POS mechanism and supporting Layer2 development.

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

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

As crypto evolved to 2020, what does the market need? What do users need? How can they engage? Top players have already figured it out. It's simply about issuing assets, trading assets, finding scenarios for assets, and then allowing everyone to play faster and more conveniently.

Now, Ethereum is busy with scalability, and it's slow and expensive, which opens up opportunities for faster and cheaper blockchains.

Thus, TRON seized the stablecoin market.

BSC and BASE have closed the loop on the logic of project issuance and trading by surrounding their own exchange ecosystem barriers.

The most frightening competitor is Solana, where the foundation has personally stepped in, leveraging a simple and crude Meme strategy, uniting various forces to continuously create wealth myths, making Sol a coveted touchstone in the Meme frenzy.

Ethereum is being surpassed by its competitors.

Ethereum has always been an innovator and leader in underlying public chain technology, whether it was the initial smart contract technology or the various decentralized applications that followed, all of which were products that led the era.

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

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

If you create a new gameplay today, I can immediately imitate it.

From 2017 to 2022, Ethereum's sustained brilliance stemmed from its leading technology and continuous innovative ecosystem gameplay. However, after 2022, as Ethereum's core developers focused on performance expansion and other underlying research and development, innovation regarding applications and gameplay began to slow down. New chains that do not face performance issues can concentrate their efforts on model innovation. Thus, while Ethereum is focused on underlying research and development, those agile competitors concentrating on model innovation can quickly overtake.

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

However, is this Ethereum's fault?

No, it is not.

Ethereum is not at fault for focusing on performance expansion, underlying research and development, and providing better infrastructure. These are all challenges that innovators inevitably face as they develop to a certain point.

In addition, Ethereum's weakness also highlights a more severe issue: the Crypto industry is truly underdeveloped.

4. Ethereum's Weakness Reflects the Underdevelopment of the Entire Industry

Aside from Bitcoin, Ethereum can be said to be the biggest innovation in the Crypto space.

But why has Ethereum suddenly faltered?

Beyond the fact that it has been surpassed by more agile competitors while focusing on underlying research and development, is there a deeper reason?

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

Until this answer is found, the Crypto industry is a typical case of underdevelopment.

What does underdevelopment mean?

You see, in this cycle, aside from BTC, only Memes and their wealth effects remain, while various VC-supported projects are left without buyers.

Why is no one buying? Because everyone knows that these projects are just telling stories and have no real value.

If that is the case, it is better to buy the safest BTC and then engage in the simplest and most crude Memes.

Therefore, until the Crypto industry develops truly valuable applications, it will likely continue to cycle through the current model. If one day even Memes lose their wealth effects, then we will be left with an endless bear market.

Thus, I say, rather than lamenting Ethereum's weakness and decline, the real concern should be: where is the path for Crypto?

5. In the Future, Ethereum May Find It Hard to Dominate Alone

So, what will the future of Ethereum look like?

As we mentioned earlier, the smart contract market and various models opened up by Ethereum 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 barrier that Ethereum currently has left is the funds settled on the Ethereum mainnet and the already closed-loop DEFI ecosystem. These DEFI protocols, ranging from lending, trading, stablecoins, to on-chain leverage, have formed a tightly integrated and organically combined DEFI ecosystem. Any asset entering the chain, when seeking liquidity, cannot bypass Ethereum's DEFI.

Therefore, many people say that RWA may be an opportunity for Ethereum, and I deeply agree. However, RWA is a long and difficult path. 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 position.

Regardless, Ethereum's competitors have truly developed and formed their own barriers.

Ethereum's years of expansion have not improved its performance; Ethereum remains slow and expensive. Applications with high-performance demands will still not choose Ethereum in the future, but rather new public chains like Solana, TON, BSC, Tron, and even SUI.

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

I cannot directly provide an answer, but we can make a simple inference:

If Ethereum's remaining DEFI advantages are also 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.

Then, in a landscape where wolves are circling, what will happen to Ethereum, which is both expensive and slow and lacks innovation?

As a former Ethereum Maximalist, I still hope that Ethereum can continue to innovate, and I hope Vitalik can continue to lead the Ethereum developer community to continuously launch applications and development paradigms with innovative value, because only continuous innovation is Ethereum's only barrier.

Conclusion

This article reviews Ethereum's journey from 2017 to the present. Ethereum represents a second possibility for blockchain technology, the greatest innovation following Bitcoin. Ethereum's rise originated from ICOs, specifically using smart contracts for token financing, which was the earliest application scenario for ETH. The DEFI, GameFi, SocialFi, and NFT trends from 2020 to 2021 pushed Ethereum's smart contract application scenarios to their peak. At the same time, the price of ETH also reached its zenith.

However, from 2022 to 2023, Ethereum's focus has been on transitioning to POS and expanding Layer2 underlying research and development. The Ethereum ecosystem lacks substantial market-facing and community-oriented application or model innovation, and there has been no paradigm innovation that surpasses DEFI within the Ethereum ecosystem. Instead, competing chains like Solana have played out new tricks. This is the core reason for the current bleak and weak state of Ethereum and related tokens in this cycle.

When we ask about Ethereum's future, 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 only consist of Bitcoin and Memes.

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 by all of us.

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