I have always wanted to organize my understanding of ETH, but was afraid it would be too negative. Today I couldn't help it; I have to vent! Feel free to criticize.
It should be said that Ethereum is currently experiencing its most severe survival crisis since its inception — a tearing between technological idealism and market reality, the efficiency dilemma of decentralized governance, and external ecological deconstruction intertwining into a deadly vortex.
One. Internal crisis:
1. Upgrade roadmap obstructed
The Ethereum Foundation (EF) had originally planned to implement the 'Pectra upgrade' in Q1 2025, but it has been indefinitely postponed due to disagreements among core developers. This upgrade was supposed to introduce account abstraction and parallel transaction processing capabilities, aiming to raise TPS to over 100,000. The conflict between tech geeks and market pragmatists has become public, with internal EF reports showing that about 35% of technical personnel chose to leave due to direction confusion.
2. Staking rate plummeted
Currently, the ETH staking rate has dropped to 11.3%, a 65% decrease from the peak in 2023. The TVL of liquid staking platforms like Lido has shrunk to $12 billion, the validator queue has been reduced to zero, and the daily new staked ETH is less than 10,000. The annualized staking yield has fallen below 3%, far lower than US Treasury yields.
3. Foundation sell-off triggers trust crisis
The EF sold a total of 18,000 ETH by March 2025 and admitted the need to maintain an annual operating expense of $130 million. The community questioned its double standards between decentralization ideals and real financial pressures, with Vitalik's statement of 'never staking ETH' further exacerbating the conflict.
Two. External dilemma
1. Technical narrative collapses
Performance bottleneck: Daily transaction volume dropped to 870,000, less than 1/10 of Solana, Gas fees rebounded to an average of $5.3;
Developer exodus: The number of active developers on GitHub decreased by 42% year-on-year, with many shifting to new public chains like Sui and Aptos.
2. Economic model failure
Inflation returns: Due to sluggish on-chain activity, the EIP-1559 burning mechanism became ineffective, with ETH's annual inflation rate rising to 1.2%, undermining the ultra-sound money narrative;
Staking spiral: Price drops → Earnings decrease → Validators exit → Security decreases → Price drops further, forming a death loop.
3. External competition crushing
Solana ecosystem siphoning: SOL/ETH exchange rate breaks 3.7, Memecoin transaction volume exceeds 60%, user experience crushing Ethereum L2;
Institutional shift: Institutions like BlackRock and Fidelity reduced their ETH allocation from 15% to 5%, instead increasing their holdings in BTC and RWA track tokens.
Three. Optimal way out
1. Technical shock therapy
Pause all non-core development, concentrate resources to achieve 'instant finality' (Single-Slot Finality), compress block time to under 1 second;
Forced merger of ZK-Rollup, degrading L1 to a settlement layer, completely abandoning the 'world computer' narrative.
2. Economic system reconstruction
Launch the 'ETH 2.0 Bond' program, allowing stakers to lock ETH for fixed returns (e.g., annualized 5%), subsidized by EF finances;
Modify the EIP-1559 mechanism, setting a minimum burn amount of 0.5 ETH/block to reshape deflationary expectations.
3. Governance revolution
Dissolve the existing EF structure, establishing an 'Ethereum Alliance' led by commercial entities such as Coinbase and ConsenSys, adopting a BIP-style proposal voting mechanism;
Issue governance token ETHPOW, linking decision-making power with profit distribution, ending 'technocratic elite rule'.
4. Return to POW
Return to the original state, continue POW mining to produce ETH, enhancing the intrinsic value of the currency.
Can Ethereum go the way of EOS? History tells us that desperate situations often give birth to new life:
The 2016 DAO hack incident led to a hard fork and the rise of ETH.
The difficulty panic before the 2022 merge ultimately transformed into a technological leap.
This moment of darkest hour may be a good opportunity for whales to quietly accumulate, or the prelude to a new era of public chains ascending.