Author: Hotcoin Research
1. Introduction: A Breakthrough Signal in the Era of ETH Slump?
Since 2024, ETH price growth has significantly lagged behind BTC and SOL, creating a substantial gap from previous market expectations. Bitcoin has performed strongly during this cycle, while Ethereum faces competition from emerging Layer 1 networks like Solana and Sui, as well as Layer 2 solutions like Base and Arbitrum, making it difficult for ETH prices to rise in tandem. On the other hand, the decrease in mainnet revenue due to lower usage has weakened the ETH burning effect, further suppressing price performance. Additionally, this is related to the poor performance of Ethereum spot ETFs, low institutional adoption, and reserves. In this market environment where 'BTC shines while ETH struggles', many believe the traditional system can no longer effectively boost Ethereum's value for protection and growth. Discontent has also emerged within the Ethereum ecosystem regarding the current state. Some community members attribute the price slump to strategic mistakes and governance issues within the Ethereum Foundation (EF), including 'inaction, centralized governance, low transparency, organizational bloat, and lack of strategic vision'. Although the EF announced a strategic reorganization in June 2025, it has not fully dispelled external doubts.
Against this backdrop, Ethereum core developer Zak Cole announced the establishment of the Ethereum Community Foundation (ECF) at the 8th Ethereum Community Conference (EthCC 8) held in Cannes, France, in July 2025, proclaiming that 'ETH reaching $10,000 is not a joke, but a necessary demand!' He pointed out that the ECF would 'say what the Ethereum Foundation dares not say, do what the Ethereum Foundation is unwilling to do', clearly stating that the ECF's core mission is to support the Ethereum ecosystem in the form of assets, pushing ETH to $10,000. This declaration reflects community disappointment with previous governance methods and has sparked widespread discussion about whether it can leverage the Ethereum market.
This article will analyze the founding background of the Ethereum Community Foundation, explore the fundamental reasons for ETH's price slump during this cycle, conduct an in-depth analysis of the ECF's mission and strategy, compare the differences and conflicts between the ECF and the Ethereum Foundation (EF), and discuss the actual impact the establishment of the ECF will have on the Ethereum ecosystem and ETH prices. Finally, it will look at market reactions and possible future paths, forecasting the development trends of the Ethereum ecosystem.
2. Why is ETH Lagging? — An Analysis of Five Reasons for the Price Slump
Source: https://www.tradingview.com/symbols/ETHBTC/
Since the beginning of this year, the ETH/BTC price ratio has continued to decline, reaching a short-term low of 0.01867 on May 25. According to the latest data from July 10, the current ETH/BTC price ratio is 0.02493, a decrease of 52.8% compared to the same period last year. The reasons for Ethereum's underperformance during this cycle are multifaceted and can be summarized in the following five points:
1. The Impact of the Ethereum Economic Model and Upgrades
From a technical perspective, the Dencun upgrade in March 2024 significantly altered Ethereum's economic model. This upgrade introduced blob transactions that drastically reduced Layer-2 fees, leading users to turn to Layer-2 solutions like Polygon and Optimism, which dispersed liquidity and trading demand from the mainnet, causing Ethereum mainnet fee income to plummet by nearly 99%, while low fees resulted in fewer ETH being burned, shifting the network from deflation to inflation, thus lowering value support in the long run. Moreover, the activity level on the mainnet also showed a downward trend, with some data indicating that trading volume fell to several-year lows after the Dencun upgrade, raising market concerns about the effectiveness of the upgrade.
The Pectra upgrade plan, scheduled for launch in 2025, focuses on improving staking efficiency, contract performance, and scalability. However, at present, this upgrade has not significantly improved market expectations. The negative impact brought by the completion of key upgrades (low burning, high supply) is greater than expected, putting pressure on prices.
2. Market Risk Aversion and Spot ETF Capital Flow
Since the second half of 2024, various macro events have triggered significant market volatility, leading to a rise in global risk aversion. Historical data shows that during price declines, Ethereum often experiences larger drops. Grayscale has pointed out that Ethereum's average decline in recent rounds of downturns is about 1.2 times that of Bitcoin, and in this round, it is close to 1.8 times.
The early stage of the Ethereum spot ETF listing attracted a wave of capital, but this enthusiasm gradually waned as 2025 began. Bitcoin continued to attract capital, while ETH performed flat. Although this situation began to improve in late April, it still fell short compared to Bitcoin's performance. As of July 10, 2025, the assets of the U.S. Bitcoin spot ETF were approximately $137.5 billion, while the assets of the Ethereum spot ETF were only about $11.4 billion, indicating weak institutional buying.
Source: https://www.coinglass.com/eth-etf
3. Intensifying market competition and diversion of attention
Recent diversification of market hotspots has led to dispersed investor attention. On one hand, the U.S. plans to establish a Bitcoin strategic reserve, with multiple state governments openly supporting BTC, attracting substantial investor attention and capital inflow. On the other hand, competitive public chains like Solana (SOL) and Binance Chain (BNB) have rapidly expanded their ecosystems by leveraging the meme frenzy, significantly increasing the prices of related assets. Additionally, other blockchain networks represented by Base, Sui, and Tron briefly attracted large speculative capital, which somewhat diminished Ethereum's market attention.
In contrast, Ethereum has recently lacked breakout applications or innovative concepts that could generate widespread market consensus, particularly in the DeFi sector, where the pace of innovation has significantly slowed, leading to Ethereum’s ecosystem being marginalized in hotspot competition. At the same time, the rapid rise of Ethereum Layer-2 networks (such as Arbitrum and Optimism) has effectively solved the scalability issue but has objectively dispersed ecosystem resources, resulting in reduced trading activity on the mainnet and further declining market attention.
Source: https://dune.com/Henrystats/ethereum-vs-solana
4. Institutional demand and interest remain low
Institutional capital remains highly concentrated in Bitcoin, with demand and attention for Ethereum significantly lower. Currently, the strategic reserves of most countries or institutions are still mainly in BTC, with very few incorporating ETH into long-term asset allocations. Although in July 2025, the New York-listed company Bit Digital announced a complete abandonment of Bitcoin, almost fully shifting its assets to ETH and planning to become one of the largest publicly listed ETH holding companies, such actions remain rare in the institutional market. Additionally, some established blockchain companies like BTCS and Sharplink Gaming have begun to engage in Ethereum staking, but these companies are relatively small and have a limited impact on overall market sentiment.
It is evident that large institutions, listed companies, and government strategic reserves hold far less ETH than BTC, and the clear preference of institutional capital limits the valuation upside for Ethereum. In the current market environment, ETH has yet to establish sufficient institutional recognition and capital attraction.
5. Large Holder Sell-offs and Liquidity Uncertainty
Recently, there has been a phenomenon where large holding entities represented by Jump Crypto, Paradigm, and Golem Network have reduced their holdings in Ethereum, with these institutions previously holding a combined total of $1.5 billion worth of ETH. Some of these assets were transferred to exchanges and sold, exacerbating the market's selling pressure.
At the same time, changes in the staking reward rate of the Ethereum network and fluctuations in the number of active validators also suggest that the circulating supply of ETH is undergoing dynamic adjustments. These uncertainties on the supply side not only increase the volatility of the ETH market but also create additional downward price pressure in the short term, significantly affecting market sentiment negatively.
In summary, changes in the technical economic model, macro and leverage risks, competitive dynamics, institutional preferences, and liquidity structure are the five factors contributing to Ethereum's recent relative stagnation.
3. The Mission of the ECF and Its Comparison with the EF
The ECF approaches with a 'market mindset', trying to elevate ETH's status as a core asset through funding and policy tools. The Ethereum Community Foundation (ECF) claims to 'serve ETH holders, say what EF is unwilling to say, and do what EF is unwilling to do'. They set Ethereum's 'North Star' at the price target of $10,000, believing that only when the coin price rises in sync with network security can the long-term value of ETH be guaranteed.
1. The mission and positioning of the Ethereum Community Foundation (ECF)
The ECF claims to have raised millions of dollars worth of ETH from anonymous ETH holders and community donors, and will fund projects that do not issue their own tokens, are deployed on the Ethereum mainnet, and directly promote ETH burning based on the three principles of 'promoting destruction, no tokens, and immutability'. The strategies disclosed by the ECF include:
Promoting high-burning applications: Funding on-chain high-transaction-volume projects (such as financial derivatives and RWA tokenization) to facilitate ETH burning through generating large transaction fees, compressing circulating supply to boost coin prices.
Accelerating institutional adoption: Providing integrated solutions for banks and enterprises to position Ethereum as a global settlement layer and bring in traditional financial capital.
Community governance empowerment: Establishing the Ethereum Validators Association (EVA) and introducing a token-based voting mechanism to give PoS validators a greater say in protocol upgrades and fund allocation.
Transparent funding allocation: All funding decisions are determined through community token voting, with 100% transparency in the flow of funds, aiming to avoid the 'black box operations' criticized in the past regarding the EF.
The ECF indicates that its key focus areas include infrastructure construction, ETH value enhancement, maximizing ETH burning, extreme transparency, institutional participation, and government cooperation across multiple dimensions. The ECF plans to enhance Ethereum's basic layer economy through improving network infrastructure and data availability, engaging with regulatory authorities, and optimizing 'blob space' pricing, aiming to build an ecological model centered on ETH value appreciation.
2. The Main Differences with the Ethereum Foundation (EF)
The significant differences in vision and operation between the ECF and the existing Ethereum Foundation (EF) mainly include:
Goal-oriented: The ECF clearly sets the increase of ETH prices as its primary goal, viewing 'ETH value surge' as a key to validating network security; while the EF has traditionally emphasized long-term ecological and technical construction (such as protocol upgrades and zero-knowledge research) without making price a direct pursuit.
Funding principles: The ECF adheres to the funding conditions of 'no tokens, promoting destruction, and immutability': all approved projects must be deployed on the Ethereum mainnet, no new tokens can be issued, and smart contracts cannot be arbitrarily upgraded to ensure that all economic value directly benefits ETH holders. In contrast, projects funded by the EF (such as Uniswap, ENS, Optimism, etc.) eventually issued their own tokens. The ECF criticizes this practice of 'genesis project token issuance' as 'economic feudalism', while the EF prefers diverse ecological investments without insisting on 'fat protocol' theory.
Governance model: The ECF emphasizes 100% transparency: all funding proposals and allocation flows are determined by community voting and publicly disclosed. Its goal is to allow holders to directly supervise the use of funds and critique the EF's existing system of 'centralized decision-making and lack of transparency'. The EF, as a traditional non-profit organization, mainly derives its funding from annual ETH sales, with internal decision-making driven by a core team and committee, often questioned by the community for lacking real-time supervision and decentralization.
Ideology: The ECF publicly claims to represent 'the interests of holders', with its founding team boasting a path of 'ETH-centered capitalism'; the EF, on the other hand, prides itself on 'trusted neutrality' and support for public goods, focusing more on protocol neutrality and long-term development. For instance, the EF actively promotes community education, consensus layer, and execution layer research, often avoiding direct statements about price; while the ECF unabashedly intends to treat ETH as an asset class, using price targets to 'calibrate' all decisions.
Overall, the emergence of the ECF is both an expression of discontent with the traditional foundation model and a discussion within the Ethereum community about balancing 'ecological construction' and 'asset value'. Whether the ECF can fulfill its grand ambitions, enhance ETH value, and maintain network security in the future; whether the EF can reform its governance to respond to community concerns; all of these will influence the development direction of the Ethereum ecosystem. The clash of different ideologies and strategies may bring new evolutionary opportunities to this decentralized network.
4. Analysis of the ECF's Impact on the Ethereum Network and ETH Prices
The establishment of the ECF has multiple potential impacts on the Ethereum network and ETH prices. If the ECF can operate as planned, the potential impact on the Ethereum network could be profound.
1. The Impact on the Ethereum Network Ecosystem
Infrastructure and Technical Aspects: The public product projects focused on by the ECF (such as improving blob data pricing) are expected to enhance the mainnet performance and Layer 2 collaboration, strengthening the overall technical ecosystem of Ethereum.
On-chain activities and ETH burning: If the ECF successfully promotes high-transaction-volume applications such as real asset tokenization, it will directly increase Ethereum mainnet transactions and gas consumption, amplifying the EIP-1559 burning effect and enhancing ETH scarcity.
Validator governance: The Ethereum Validators Association (EVA), funded by the ECF, grants stakers a voice in the protocol improvement roadmap, potentially changing the governance landscape of the Ethereum network, giving validators greater influence over fee structures and proposal priorities.
Relationship with Layer 2: By encouraging the use of Ethereum blob space instead of third-party data networks, the ECF's initiatives may keep more Layer 2 activities on the Ethereum settlement layer, preventing the mainnet from being marginalized.
Long-term ecological impact: If the ECF guides more developers to focus on the construction of non-token public utilities, it may reshape the value perspective of the Ethereum DApp ecosystem, prompting more projects to return to the Ethereum mainnet, using ETH as a value carrier, consolidating Ethereum's 'trusted neutrality' position in the public chain competition.
2. The Impact on ETH Prices
Fundamental supply and demand: The large-scale destruction of ETH and increased actual applications promoted by the ECF will improve the supply-demand structure of ETH—supply deflation combined with increased demand is expected to form positive support for coin prices.
Market confidence and expectations: The ECF's bold proposal of the 'ETH $10K' target sets a new benchmark for expectations in the minds of investors. This clear price orientation may attract attention from both inside and outside the market, rekindling confidence in ETH.
Institutional capital inflow: The ECF is striving to promote Ethereum as a global financial settlement layer. If its cooperation with traditional institutions expands successfully, large institutional capital may enter ETH assets through corporate chain reform, spot ETFs, and other channels. This will provide potential new buying power for ETH.
Risks and uncertainties: It is necessary to be cautious, as overemphasizing price may trigger regulatory scrutiny or market skepticism. If the ECF fails to deliver results in the short term, it may disappoint investors instead. On the other hand, the concentration of the ECF's funding strategy also poses a risk of a few individuals influencing the market, viewed by some as a speculative gimmick. Additionally, ECF's core initiator Zak Cole has previously participated in several projects, but some of those projects did not achieve ideal price performance after airdrops or trades, which may lead to trust uncertainty.
Overall, the ECF, by focusing on public infrastructure, on-chain finance, and governance transparency, may inject new vitality into the Ethereum network. If these measures can be successfully executed, it will help improve the economic efficiency of the network and boost ETH prices. However, their actual effects still need to be tested by the subsequent project implementations and community participation. Even with the support of a foundation like the ECF, the key to driving price increases still hinges on whether macroeconomic conditions, regulatory policies, and technological upgrades are in place.
5. Conclusion and Outlook: Community Awakening or Speculative Gimmick?
The emergence of the Ethereum Community Foundation reflects both dissatisfaction with the current state of Ethereum by some groups and divergent interpretations of its prospects. This could represent a community awakening—a victory for grassroots power against centralization, maximizing ETH value; or it could merely be another speculative gimmick—a 'carefully packaged wealth code'. The high-profile slogans and aggressive roadmaps released by the ECF precisely capture the community's desire for price recovery, but whether it can deliver remains to be seen by the long-term market.
Looking ahead, the direction of the Ethereum network and ETH prices will be influenced by multiple factors. One of the driving factors is the continued inflow of institutional investors, as some listed companies and large institutions begin to treat ETH as a long-term asset for regular investment. The Pectra upgrade will further enhance data transmission efficiency, paving the way for on-chain applications, especially in AI/Web3 scenarios, expected to increase network utilization and lead to more ETH burning. Moreover, if the ECF successfully promotes on-chain asset issuance and infrastructure investment, it will inject new momentum into the Ethereum ecosystem and support ETH's value.
Regardless of the outcome, the emergence of the ECF has already reflected the internal divisions within the Ethereum ecosystem: some people long for quick returns and price prosperity, while others are more concerned about technical progress and long-term innovation of the protocol. The key in the future will be whether the ECF can promote substantial projects to fruition under its framework of 'transparency, no tokens, and promoting destruction', and whether these projects can withstand market scrutiny. If it can achieve this, the ECF may become a significant variable driving ETH to regain growth momentum; otherwise, it may just be a high-profile publicity stunt that fades into silence after the excitement.
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