1. Ethereum's Scalability Bottleneck
Although the Ethereum 2.0 PoS (Proof of Stake) upgrade has been completed, its scalability remains limited, especially in terms of throughput when handling a large number of transactions. Existing Layer 2 solutions have seen improvements but have not yet reached the level needed for large-scale applications.
Ethereum's transactions per second (TPS) is still relatively low compared to other blockchains like Solana or Avalanche, making Ethereum prone to congestion when handling high transaction volumes, resulting in high transaction fees.
2. Decreased Decentralization of ETH
Ethereum 2.0's PoS mechanism has somewhat weakened its decentralization characteristics. An increasing amount of ETH is concentrated in the hands of a few large validators, making the control of the network more susceptible to centralized influences.
The dominance of large institutions or mining pools may raise security issues and weaken Ethereum's appeal as a decentralized platform.
3. Technical Limitations of EVM
Ethereum's EVM (Ethereum Virtual Machine) has some performance bottlenecks in executing smart contracts. Compared to other more efficient virtual machines (such as Solana VM or Move VM), the EVM lags behind in speed and cost.
With the rise of more emerging blockchain projects, these technological limitations may lead to Ethereum being gradually phased out of the market.
4. Market Competition
Blockchains like Solana and Ton are gradually expanding their ecosystems and providing a more efficient and cheaper trading environment than Ethereum. These platforms are gradually gaining market share in certain use cases (such as DeFi, NFTs, gaming, etc.) and slowly eroding Ethereum's market leadership.
Ethereum's market share is gradually declining, especially in application areas such as DeFi and NFTs, where ETH's technical challenges make these emerging platforms more attractive to users.
5. Network Fee Issues
Although Ethereum's upgrades have improved some network congestion issues, high transaction fees remain one of its main problems, especially during busy network periods, causing ETH transaction fees to rise significantly, reducing user experience. This leads users to prefer other cheaper and faster blockchain platforms.
6. Division of the Developer Community
Although Ethereum's developer community is large, the protocol's high complexity and ongoing upgrade process have caused some developers to turn to simpler, more innovative blockchain platforms like Solana and Polkadot. This division within the community may affect Ethereum's long-term development.
7. Inflation Pressure on ETH
The issuance of ETH under the PoS mechanism has not completely addressed its inflation problem. Although the ETH burning mechanism (such as EIP-1559) has somewhat reduced ETH supply, it has still failed to effectively curb its inflation pressure.
Compared to other fixed supply digital assets (such as Bitcoin), the relative supply of ETH is still relatively large, which may lead to further depreciation of its value.
Considering the above factors, the long-term bearish view on ETH argues that Ethereum faces multiple challenges in scalability, competition, technology, and decentralization, which may limit its future development space and market position.
