Since 2024, as Bitcoin breaks its previous high ($69,000), Ethereum has increasingly distanced itself from its previous high ($4,800), leading to growing market skepticism towards Ethereum.
By February 2025, Ethereum fell below $3000, in March it fell below $2000, and in April it even fell below $1500. The market sentiment towards Ethereum has gradually shifted from doubt to despair and abandonment. Many ancient addresses from the ICO era have begun to gradually clear their Ethereum holdings. Many leading institutions that once supported Ethereum have also begun to waver.
What exactly happened to Ethereum?
Does Ethereum still have hope?
This article will focus on these two questions from the following five aspects, reviewing Ethereum's rise and fall and looking forward to its possible future.
1. The glorious years of Ethereum (2017-2022)
In July 2014, Ethereum began its ICO.
From 2014 to 2016, Ethereum's price remained below $10. During this phase, Ethereum had the title of Blockchain 2.0, and its smart contract technology was very cool, but at that time, Ethereum was not very useful.
In 2017, the frenzied ICO era began, and Ethereum became very useful as everyone began to buy ETH to participate in ICOs. By January 13, 2018, Ethereum had risen from $10 at the beginning of 2017 to $1430, reaching its first historical high.
According to incomplete statistics, from 2017 to early 2018, over 2500 tokens used ETH to launch ICOs. During this phase, Ethereum's biggest value was issuing tokens. ETH was not only the most consumed GAS token on-chain but also the only chip to participate in the wealth wave of ICOs.
Although this phase also gave birth to many new public chains such as NEO, QUTM, EOS, and TRON, in the ICO and smart contract market monopolized by Ethereum, the combined market share of other public chains can almost be ignored.
During this phase, Ethereum enjoyed the enormous dividends of being an innovator!
Immediately followed by, 2018-2019.
This is an era of a hundred chains blossoming.
Because of Ethereum's success, countless new public chains have emerged in the market. In addition to those mentioned above, let's list a few other public chains that many people may no longer be familiar with, such as GXC, NULS, ELF, Algorand, and so on.
Of course, during this phase, some public chains still remain active, such as TON, ADA, Cosmos, Avalanche, and of course, Solana. Solana wasn't particularly outstanding among many new public chains at the time, but years later, it has become Ethereum's biggest challenger, which is quite remarkable.
Although during this phase, countless new public chains attempted to challenge Ethereum, Ethereum still absolutely monopolized the smart contract market. Smart contracts were first created by Ethereum, and the era of smart contracts was opened by Vitalik. Vitalik holds a huge appeal and influence in the global Crypto field, second only to Satoshi Nakamoto. The Ethereum ecosystem also gathers the most smart contract developers worldwide, along with countless native Crypto technology and thought innovators. All of this was vividly demonstrated in the upcoming 2020.
Finally, in 2020, the much-longed-for DeFi summer arrived, marking Ethereum's absolute highlight moment.
After the silent fermentation and continuous exploration from 2018 to 2019, the earliest batch of Crypto-native applications, DeFi Protocol, finally erupted in concentrated form in the summer of 2020 within the Ethereum ecosystem.
Compound's miraculous liquidity mining directly detonated the market, and a large amount of ETH was used to mint COMP, leading to skyrocketing TVL and platform tokens, starting the liquidity mining wave.
Uniswap, personally invested in by Vitalik, opened the era of on-chain DEX with the minimalist formula X*Y=K.
Yearn.Finance launched a DeFi yield aggregator, and the #YFI token surged ten thousand times in 30 days, becoming a standout.
DAI, launched by MakerDAO, was the first decentralized stablecoin born on Ethereum.
Curve's stablecoin DEX provided smooth liquidity for many stablecoins and DeFi tokens on Ethereum.
…
DeFi Summer raised everyone's expectations for Ethereum to the peak because Ethereum could not only be used to issue tokens but also to build truly valuable decentralized applications. The future decentralized world will be built on Ethereum. Ethereum is devouring the world.
Following the DeFi Summer of 2020, in 2021 and 2022, the Ethereum ecosystem also saw the emergence of waves such as GameFi, SocialFi, and NFTs, one after another, creating a flourishing scene in the Ethereum ecosystem.
On November 10, 2021, Ethereum reached its historical high of $4800, and Ethereum's prosperity peaked.
However, as more funds, users, and applications are carried on the Ethereum chain, Ethereum has also started to become increasingly expensive and slow.
The performance expansion issue has become the biggest obstacle on Ethereum's development path.
2. The expansion and transition path of Ethereum (POS-Layer 2)
Ethereum's expansion plan has always had two main directions—transitioning to the POS mechanism and developing Layer 2.
The transition from the POW mechanism to the POS mechanism was the direction set by Vitalik at the beginning of Ethereum's creation. Vitalik believes that POS is more resource-efficient than POW, and at the same time, the POS mechanism can enhance Ethereum's network performance and provide higher scalability.
Layer 2 solutions are also a direction that Vitalik has always promoted for expanding the Ethereum network, exploring from the initial state channels (Raiden Network), subnets (Plasma, Sharding), to later mainstream Rollup solutions. The OP-Rollup and ZK-Rollup concentratedly exploded in 2022-2023, bringing hope to Ethereum's expansion path.
Whether transitioning to POS or developing Layer 2 was regarded as the right choice for ensuring Ethereum's continued greatness and prosperity within the Ethereum community at that time.
Although the transition to the POS mechanism has caused dissatisfaction among many miners, Ethereum officially transitioned to the POS mechanism on September 15, 2022. The era of Ethereum's POW has ended, miners have left, and the only thing Ethereum can rely on in the future is developers and Layer 2.
However, is Layer 2 really Ethereum's savior?
After the development from 2022 to 2024, many Layer 2 solutions of Ethereum have been successively launched. The ones we can name include: Arbitrum, Optimism, zkSync, StarkNet, Mantle, BASE, Blast, Scroll, Linea, Polygon zkEVM, etc.
However, after each Layer 2 was launched, it did not bring more benefits to Ethereum; instead, it continuously drained and retaliated against Ethereum. Each Layer 2 was engaged in a TVL competition, all doing similar Dapps, and few Layer 2s truly created applications that the Ethereum mainnet did not have.
In the end, Ethereum became a nominal emperor, while Layer 2s became independent vassal states, continuously carving up Ethereum's market and harboring ambitions to replace it.
Later, a group of initial Ethereum native applications like Uniswap began to build their own Layer 2, even using their own tokens to replace ETH as GAS, which is a complete betrayal.
Ethereum has cultivated a large number of Layer 2s, which have ultimately almost all become competitors for the mainnet's liquidity and developers.
The expansion path of Layer 2 has been discredited.
Looking back, Ethereum's abandonment of POW also seems like a self-inflicted wound.
Having lost miners, the ETH token has lost its basic manufacturing cost and the fundamental price-bearing mechanism.
Assuming that Ethereum did not transition to POS but continued to develop Layer 2 under the POW mechanism, even if Layer 2 development was unfavorable, the presence of miners and the constant investment of computing power and electricity into Ethereum would still keep ETH's price support mechanism effective, then Ethereum's price would likely not be as it is today, at least it wouldn't be so dire.
The price of Ethereum when it transitioned to POS is shown below, around $1500. Even today, three years later, Ethereum is still around $1500.
Everything seems so absurd, yet seemingly destined.
3. The innovator's dilemma of Ethereum (being pursued and blocked by public chains like Solana)
Whether transitioning to POS or developing Layer 2 is a success or failure, one undeniable point is that Ethereum has always been the leader in Crypto innovation.
Before 2022, all innovations in the Crypto field were born and developed from Ethereum, then copied and imitated by other chains.
Ethereum had DeFi, and other chains followed suit; Ethereum had GameFi, and other chains also followed; Ethereum had NFTs, and other chains wanted to have NFTs too.
Ethereum has always been innovating, while other chains have been imitating.
However, innovators often fall into the innovator's dilemma.
"The innovator's dilemma" usually refers to industry leaders focusing on optimizing existing technologies and meeting current user needs while neglecting emerging disruptive technologies or market trends, ultimately being surpassed by more flexible competitors.
After 2020, in order to optimize Ethereum's performance and meet the needs of existing DeFi users, Ethereum has been seeking expansion methods, summarized as making Ethereum faster and cheaper. The core developers are basically betting on the transition to the POS mechanism and supporting Layer 2 development.
From Ethereum's development perspective, there is nothing wrong with this, and it may even be the only path available. However, this is the unavoidable dilemma of the innovator.
Since users need faster and cheaper blockchains, why can't it be BSC, why can't it be Tron, why can't it be Solana?
By 2020, what does the market need? What do users need? How can it be played? Top players have long figured it out. It's just about issuing assets, trading assets, finding scenarios for assets, and then letting everyone play faster and more conveniently.
Now, Ethereum is busy expanding, and it's slow and expensive, so there’s an opportunity for a blockchain that is both fast and cheap.
Thus, TRON seized the stablecoin market.
BSC and BASE have also closed the loop on the logic of project issuance and trading around their own exchange ecological barriers.
The most frightening competitor is Solana, whose foundation has personally stepped in, using a simple and crude Meme strategy, uniting various forces, and continuously creating wealth myths. Sol has become the golden stone that everyone desires in the Meme craze.
Ethereum is being surpassed by competitors.
Ethereum has always been an innovator and leader in underlying public chain technology, whether it is the original smart contract technology or the later various decentralized applications, both are products leading the era.
However, everything about public chains is open source, and there are no secrets.
If you innovate a technology today, I can use it tomorrow.
If you come up with a new gameplay today, I can immediately imitate it.
From 2017 to 2022, the continuous brilliance of Ethereum came from its always leading technology and continuously innovative ecological gameplay. However, after 2022, as Ethereum's core developers focused their energy on expanding performance and other underlying research, the innovation regarding applications and gameplay began to slow down. New chains that do not have performance issues can focus their efforts on model innovation, so while Ethereum is buried in basic research, flexible competitors that concentrate on model innovation can quickly overtake.
Because if Ethereum does not innovate, it will fall behind, and that is the fate of open-source public chains.
But is this Ethereum's fault?
Not at all.
Ethereum is not wrong; focusing on performance expansion, underlying research, and providing better infrastructure are all correct. This is the dilemma that innovators inevitably face as they develop to a certain stage.
In addition, Ethereum's weakness also highlights a more serious issue: the Crypto industry is really underdeveloped.
4. The weakness of Ethereum is a sign of the industry's underdevelopment.
Aside from Bitcoin, Ethereum can be said to be the greatest innovation in the Crypto field.
But why did Ethereum suddenly become ineffective?
In addition to the fact that it has been surpassed by more flexible competitors due to focusing on basic research, are there any deeper reasons?
I think there is. That is, the Crypto industry still hasn't found a truly healthy development paradigm, or in other words, besides issuing assets and engaging in asset speculation, does Crypto have more application value?
Before finding this answer, the Crypto industry is a typical case of underdevelopment.
What is underdevelopment?
You see, in this cycle, aside from BTC, only memes remain with a wealth effect, and various VC-supported projects are going unsold.
Why is no one buying in? Because everyone knows that these projects are just telling stories and have no real value.
Since this is the case, it might as well be safer to buy BTC and then play with the simplest and most crude memes.
Therefore, before the Crypto industry develops truly valuable applications, it is likely to continue the current model. If one day even memes lose their wealth effect, then there will really be nothing left but endless bear markets.
Therefore, I say, rather than lamenting Ethereum's weakness and decline, what we should truly worry about is, where exactly is the road for Crypto?
5. In the future, it will be difficult for Ethereum to dominate alone.
So, what will Ethereum's future look like?
As mentioned earlier, the smart contract market and many models opened up by Ethereum can be easily replicated by other competing chains. In terms of technology and models, Ethereum has lost its competitive edge; what Ethereum can do, other chains can basically do too.
The only barrier that Ethereum currently has left is the funds settled on the Ethereum mainnet and the already formed closed-loop DeFi ecosystem. These DeFi protocols, covering lending, trading, stablecoins, on-chain leverage, etc., form a tightly integrated and organically combined DeFi ecosystem. When seeking liquidity for assets entering the chain, Ethereum's DeFi is an unavoidable link.
Therefore, many people say that RWA might be an opportunity for Ethereum, and I deeply agree. However, RWA is difficult and long, and whether Ethereum can continue to create more new on-chain gameplay remains one of the most effective breakthroughs.
However, Ethereum has indeed lost its monopoly position.
In any case, Ethereum's competitors have really developed, and each has formed its own barriers.
Ethereum's years of expansion have not improved its performance; Ethereum is still very slow and expensive. Applications with high-performance demands will still not choose Ethereum in the future, but rather new public chains like Solana, TON, BSC, Tron, and even SUI.
So, will Ethereum lose its position as the second largest for a thousand years? Will the title of King of Public Chains be replaced by other chains?
I dare not give a direct answer, but we can make a simple inference:
If Ethereum's remaining DeFi advantages are also taken away by new public chains like Solana.
If Ethereum cannot improve its performance for a long time.
If Ethereum's ecological innovation continues to lag behind the market.
If Ethereum's developers gradually leave.
So, in a situation where wolves are watching, how far will Ethereum, which is expensive, slow, and lacks innovation, fall?
We still hope that Ethereum can continue to innovate, and we expect Vitalik to keep leading the Ethereum developer community in continuously launching more innovative and valuable applications and development paradigms, because only continuous innovation is Ethereum's only barrier.
Summary:
This article reviews the eight-year journey of Ethereum from 2017 to the present. Ethereum represents the second possibility of blockchain technology, which is the largest Crypto innovation after Bitcoin. The rise of Ethereum originated from ICOs, using smart contracts to issue tokens for financing, which is the earliest application scenario of ETH. The DeFi, GameFi, SocialFi, NFT, and other waves in 2020-2021 pushed Ethereum's smart contract application scenarios to a peak while ETH's price also reached its peak.
However, from 2022 to 2023, Ethereum's focus has been on transitioning to POS and expanding Layer 2's underlying research direction. The Ethereum ecosystem lacks decent market and community-facing application innovation or model innovation, and no paradigm innovation that can surpass DeFi has appeared in the Ethereum ecosystem. Instead, competitors like Solana have played with new tricks. This is the core reason for the current slump and weakness of Ethereum and its related tokens.
When we ask about the future of Ethereum, we are actually asking about the future of the Crypto application market. Whether Ethereum thrives or not reflects, to some extent, the development of the Crypto application market. After all, our industry cannot only have Bitcoin and memes.
Bless Ethereum, bless Crypto. Even if one day Ethereum is no longer the sole leader in the smart contract market, the technological and paradigm innovations of the Ethereum ecosystem are still worth looking forward to.
Author's introduction:
CG｜Zhou Yijian Twitter ID: @Cyrus_G3
One sword per week, I write and I invest; 2017-2025;
Using sincere words to help excellent projects tell the Crypto story well.
