Why Is Ethereum Struggling?
Ethereum, the second-largest cryptocurrency by market cap, has been underperforming compared to Bitcoin and other altcoins.
Its market share in the crypto space recently hit a four-year low, partly due to competition from more scalable and cost-efficient blockchains.
Despite upgrades like Denali, which aimed to reduce fees and improve scalability,
Ethereum has struggled to maintain network activity. Many transactions have shifted to layer-2 solutions, reducing the main chain's engagement.
Additionally, major dApps like Uniswap and dYdX are moving to their own chains or alternative platforms for better performance and cost efficiency.
This migration trend could weaken Ethereum's transaction revenue, validator earnings, and token burn mechanism, leading to inflationary pressure. However, Ethereum still dominates key sectors like DeFi, stablecoins, and tokenization.
To attract institutional interest, the Ethereum Foundation has supported initiatives like Etherealize, focusing on smart contracts and real-world asset tokenization.
Major institutions, including the European Investment Bank, BBVA, BlackRock, and Franklin Templeton, are exploring tokenization on Ethereum. Still, the network faces growing competition from other blockchains.
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