In fact, blockchain has been striving to become more efficient while not losing its decentralized characteristics. The rise of Layer 2 technology has significantly improved Ethereum's processing capability and speed while maintaining security and decentralization, making applications more diverse and fulfilling the needs of more people. This is the direction that blockchain should pursue and the inevitable result of its continuous progress.
Although Ethereum has delegated some work to Layer 2, Layer 2 still relies on Layer 1 for data. As Layer 2 becomes more popular, the amount of data returned to Layer 1 increases, which in turn raises Ethereum's GAS consumption.
Moreover, the development of Layer 2 has also increased the demand for Layer 1 bridging and staking. For example, when assets are cross-chain, smart contracts must lock them, which consumes Ethereum GAS. ETH remains an important tool for cross-chain verification, used to ensure that asset transfers are problem-free, which also consumes GAS. Some bridging protocols must also record transaction data on Ethereum, which similarly consumes GAS.
Some Layer 2 solutions want to save costs by using other data layers or changing GAS from ETH to other tokens, but ultimately, transaction settlement still relies on Ethereum. As long as asset and transaction security is involved, Ethereum cannot be bypassed.
In the Layer 2 era, Ethereum acts like a decentralized 'central clearing bank,' ensuring that all transactions are secure and effective. The more Layer 2 develops, the stronger Ethereum's network effect becomes, leading to greater demand for Ethereum's collateral and GAS. The current low coin prices are due to demand not picking up yet, but as soon as new applications are found, the problem will be solved.
Although high-performance public chains like Solana and SUI have taken some market share from Ethereum, Ethereum is still the leader in the POS field. First, Layer 2 allows Ethereum to scale while remaining decentralized, whereas other public chains have to sacrifice decentralization for scaling, which compromises security. Second, Ethereum's ecosystem development is far ahead. Currently, the TVL of the Ethereum ecosystem (including Layer 2) is 72 billion, with a stablecoin scale of 83.6 billion. In contrast, the TVL of Solana, the 'Ethereum killer,' is only 7 billion, with a stablecoin scale of 3.7 billion, showing a significant gap.
For assets like Ethereum that have cyclical demand, counter-cyclical buying and selling is a good strategy. This means buying when the price-to-earnings ratio and price-to-sales ratio are at their highest, and selling when they are at their lowest. With Ethereum's network activity being so sluggish right now, this is actually a good buying opportunity.
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