Current status of ETH
1. From a technical perspective, Ethereum has undergone multiple upgrades over the past few years, such as the merge in 2022 (transitioning from PoW to PoS) and the upcoming Pectra upgrade (expected in Q1 2025). These upgrades aim to enhance scalability, security, and user experience, such as reducing gas fees and increasing throughput through Layer 2 (L2) solutions. It can be said that, technically, ETH is still making steady progress and has not reached a point of being 'useless.' However, compared to some competitors (like Solana's high throughput), ETH's mainnet does seem a bit 'slow and expensive,' which is a point of criticism for many.
2. Economic model and deflation: Since EIP-1559, the supply of ETH decreases during high network activity (deflation), but recent low gas fees have led to a decline in burning volume, with some even saying it has 'shifted from deflation to inflation.' This has indeed disappointed some investors, as deflation expectations were a selling point for ETH's value storage. However, whether it is deflation or not is more a reflection of short-term market sentiment, while in the long term, it depends on network usage and the dynamic balance of staking.
3. Market performance: The price of ETH and the exchange rate with BTC (ETH/BTC) indeed performed poorly at the beginning of 2025, with some mentioning it fell to near historical lows (specific data I can check, but it depends on real-time markets). In contrast, other Layer 1 chains like Solana have surged, attracting a lot of funds and attention. Although ETH's ecosystem is large (DeFi, major NFT players), the on-chain activity and capital flow seem to have been diverted, leading many to feel it has 'fallen out of favor.'
4. Community and ecosystem: ETH remains the largest smart contract platform, with an active developer community, and L2 (like Arbitrum, Optimism) is thriving. However, some believe that in this cycle, ETH's on-chain ecosystem has not erupted with new growth points, such as the meme coin craze mostly going to Solana. This makes ETH seem a bit 'old-fashioned,' and its attraction is not as strong as emerging chains.
• The mainnet performance bottleneck remains, and while L2 alleviates some issues, it also makes ETH's 'body' seem less useful.
• Market performance is weak, with capital flowing to other high-yield chains, and the decline in the ETH/BTC exchange rate raises questions about its value storage capability.
• The deflation narrative has been hindered, and in the short term, there are no strong price catalysts.
• Ethereum's ecological foundation is strong, with DeFi locked value and developer numbers still among the industry's best.
• The Pectra upgrade may bring new opportunities, such as optimizing staking and reducing L2 costs.
• Institutional adoption (like ETH ETFs) is still progressing, and long-term potential has not disappeared.
