Ethereum: Once a King, Now at a CrossroadsOnce a shining star, Ethereum is now facing numerous challenges. Despite its past glory, many old supporters still harbor dreams about its future, explaining the lingering loyalty some have for it
Ethereum: Once a King, Now at a Crossroads
Once a shining star, Ethereum is now facing numerous challenges. Despite its past glory, many old supporters still harbor dreams about its future, explaining the lingering loyalty some have for it. However, looking at on-chain ecosystem activity and price, it has been left far behind by SOL. At the beginning of the year, ETH reached a high of $4,000, but now it has been hovering around $2,500 for a month. Why has ETH been on a downward trajectory for half a year? Lets analyze the reasons.
I. The Demand Dilemma
Ethereums L2 and Restraking narratives have failed to stimulate ETH demand as effectively as past ICOs and DeFi. L2 and the main chain are highly overlapping, resulting in low transaction activity. While Restraking locks ETH, reducing liquidity, it has not encouraged more assets to be priced in ETH, drastically limiting ETH demand.
II. External Pressure
The macroeconomic environment has shifted from loose to tight, and the flexibility of ETFs (freedom to enter and exit) has led both old and new whales to cash out through ETFs, further suppressing ETH prices.
III. Challenges of the PoS Era
In the PoW era, miners, due to higher fiat costs, would stop selling ETH below the cost, thus raising the lower limit of ETH price. However, in the PoS era, validators and stakers have relatively lower costs and a primarily coin-based approach, lacking a clear "shutdown price" that could maintain the lower limit of ETH price, leading to significant pressure on ETH price.
IV. Historical Scars
The painful experience of the ICO crash in 2018 has made the Ethereum core circle more conservative, emphasizing orthodoxy and the roadmap. This has resulted in a "toV entrepreneurship" and "authenticity=high valuation" ecosystem. Low split rates, insufficient liquidity, and market returns inferior to competitors have further weakened Ethereum's market performance.
V. The Ethereum Foundation's Guilt
The Ethereum Foundation recently transferred nearly $100 million worth of ETH to exchanges, once again sparking community outrage. Ethereum's cryptocurrency market share (ETH.D) has been declining since the end of 2021, falling by 32.5%. The Ethereum Foundation bears responsibility, with the following six major issues:
1. Corruption: Core developers or researchers of the Ethereum Foundation gain income through consulting for projects built on Ethereum; the Foundation has become "congressionalized," hunted by various funds and interests.
2. Bloating and Inefficiency: As many as 300 members receive ETH stipends, parasitizing and bleeding Ethereum. Most are armchair theorists, indifferent to innovative projects seeking funding.
3. Lack of Transparency: Annual spending of $100 million is not publicly disclosed, and individual stipends are kept secret. Foundation members only know how to please their superiors.
4. Ideology Above All: Over the past year, the Ethereum community has focused on "orthodoxy" instead of development and application scenarios. Resources are obtained within the ecosystem through "licking."
5. Inaction: Protocols and applications on Ethereum are fleeing to other public chains. The Foundation only threatens to sell coins, failing to actively communicate and salvage, serve high-quality potential projects, or actively market Ethereum, failing to bring in new users.
6. Lack of Innovation: Slow iteration, with only one or two minor updates per year, complacent, lacking sharpness.
Conclusion:
In the world of investment, we are all seeking better and more stable returns. If you seek stability, BTC is undoubtedly the first choice. If you yearn for a relatively stable asset within a more aggressive approach, SOL's youthful vitality is hard to resist. And if you want a potential "golden shovel mother hen asset," BNB is the best choice. Looking at POS ETH, it's hard to find reasons to choose it as an investment target. Without comparison, it's difficult to distinguish good from bad. Today's POS Ethereum is no longer comparable to the POW Ethereum of the past.
We must recognize that the challenges facing Ethereum are not easily solved overnight. Investors need to carefully weigh various factors when making decisions, avoiding blind following. If Ethereum wants to regain its former glory, it must bravely face its own problems, actively seek innovation and change, and adapt to the ever-changing market environment. Only then can it stand out in fierce competition, once again become a dazzling star in the blockchain world.
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