2. The key reason why Ethereum fell behind
Technical bottlenecks limit ecological development
Performance ceiling: Despite the completion of the Pectra upgrade, the Ethereum mainnet is still limited to a throughput of 15-20 TPS, with gas fees as high as $200 during peak periods, causing DeFi users to migrate to Solana (100,000 TPS, fees of $0.0001).
Developer loss: The number of Ethereum core protocol developers will decrease by 18% in 2024, while competing chains such as Solana will attract a 235% increase in developers, resulting in insufficient motivation for ecological innovation.
Competition and shrinking market share
Impact of new public chains: Solana’s TVL increased by 120% in a single month with its high throughput and low cost, capturing 38% of the NFT market share; the XRPL-AMM mechanism reduced slippage by 60%, further squeezing the Ethereum ecosystem.
Capital shift: XRP whale addresses increased their holdings by 17% in April, accounting for 41% of total holdings, far exceeding Ethereum's 29%; institutional funds flowed to compliant ETFs and BTC-linked products, and ETH staking yield dropped to 3.8%, far lower than Solana's 6.2%.
Regulatory and governance dilemma
Compliance pressure: The US SEC has included 75% of ERC-20 tokens under securities regulation. The Ethereum deflation model is in conflict with the decline in staking returns, weakening market confidence.
Governance deadlock: The developer community has serious disagreements on key paths such as sharding technology and Layer 2 integration, resulting in delayed upgrades and difficult ecological transformation.
3. Ethereum’s Breakout Possibility
Fusaka's upgraded technical attempt
Performance improvement: We plan to increase the Gas limit from 30 million to 150 million, optimize Layer 1 throughput, and reduce node burden through PeerDAS technology, paving the way for sharding technology.
Controversy and risks: The originally planned EOF (EVM object format) upgrade was removed due to complexity, reflecting the community’s conservative attitude towards radical technological reforms and may delay ecological innovation.
Future challenges and opportunities
Modular transformation: If the ZK-Rollup and sovereign Rollup solutions are successfully integrated, Ethereum may be able to achieve 100,000 TPS, but it needs to balance decentralization and commercialization needs.
Compliance path: If the U.S. stablecoin legislation clarifies the exemption of ETH’s securities attributes, it may attract institutional capital to flow back, but it will need to cope with SEC regulatory pressure.
4. Investor strategy implications
Short-term strategy: Bitcoin is driven by institutional funds and favorable policies. The trend may continue until the end of 2025, with a target price of US$120,000-150,000.
Long-term perspective: Ethereum needs to pay attention to the ecological recovery signals after the Fusaka upgrade, such as the recovery of TVL, the return of developers and breakthroughs in cross-chain interoperability. If the technical route is clear, it may usher in a reassessment of value.
Risk warning: Bitcoin needs to be wary of high leverage liquidation risks (such as open interest reaching $48 billion), while Ethereum faces pressure from technological substitution from competing chains such as Solana.
Bitcoin's "digital gold" narrative continues to strengthen under institutionalization and policy dividends, while Ethereum's breakthrough needs to find a balance between technological idealism and business reality. Investors need to be wary of market differentiation, embrace Bitcoin trends in the short term, and pay attention to the possibility of Ethereum's ecological reconstruction in the long term. As Vitalik said: "Every evolution of Layer1 is releasing more possibilities for the ecosystem.
Click on the avatar to follow me and join our army of bottom-fishing in the cryptocurrency circle. You will not be fighting alone. Don’t be afraid of slow or fast bull markets. This is a good opportunity to bottom-fish. The plan to double your positions in the cryptocurrency circle is about to start. Doubling your money is not a dream!