Ethereum: From Dominance to Competitive Surrounding

Since Bitcoin reached a new high in 2024 while Ethereum lagged behind, doubts about Ethereum in the market have been growing increasingly loud. By April 2025, the price of Ethereum fell below $1500, and market sentiment shifted from skepticism to despair and abandonment. Many early investors began to sell off their Ether, and former supporters also started to waver.

This article will review the rise and fall of Ethereum from five aspects and look forward to its possible future.

1. The Glorious Years of Ethereum ( 2017-2022 )

In July 2014, Ethereum launched its ICO. However, until 2016, its price remained below $10, and despite being referred to as Blockchain 2.0, its actual applications were limited.

In 2017, the ICO boom erupted, and Ethereum began to shine. People rushed to buy ETH to participate in ICOs. On January 13, 2018, Ethereum soared from $10 at the beginning of 2017 to $1430, setting a historical high.

According to statistics, from 2017 to early 2018, over 2,500 tokens were issued on Ethereum. During this period, the greatest value of Ethereum lay in token issuance; ETH was not only the main gas token but also the only chip for participating in ICOs.

Although some competing public chains have emerged, Ethereum still dominates the ICO and smart contract market. Ethereum has enjoyed the enormous benefits of being an innovator.

In 2018-2019, numerous new public chains emerged. However, Ethereum still dominated the smart contract market. Smart contracts were pioneered by Ethereum, and Vitalik's influence in the global crypto space is second only to Satoshi Nakamoto. The Ethereum ecosystem has attracted the most developers and innovators, which was fully reflected in the summer of DEFI in 2020.

In the summer of 2020, a batch of early DEFI projects exploded in the Ethereum ecosystem. Compound's liquidity mining ignited the market, Uniswap pioneered the era of on-chain DEXs, Yearn.Finance launched yield aggregators, MakerDAO issued the decentralized stablecoin DAI, and Curve provided liquidity for stablecoins.

The summer of DEFI has filled the market with expectations for Ethereum. Ethereum can not only issue tokens but also build valuable decentralized applications, and the future decentralized world seems to be built on Ethereum.

In 2021-2022, the Ethereum ecosystem saw the emergence of trends such as GameFi, SocialFi, and NFTs. On November 10, 2021, Ethereum reached an all-time high of $4878, marking the peak of its prosperity.

However, as on-chain activities increase, Ethereum is becoming more expensive and congested. Performance scalability has become the biggest obstacle.

2. The Expansion Road of Ethereum ( POS-Layer 2)

The scaling solutions for Ethereum mainly have two directions: transitioning to POS and developing Layer 2.

Switching to POS is the direction originally envisioned by Vitalik, believing it can save resources and improve performance. Layer 2 is also the scaling direction that Vitalik has been promoting, from early state channels and subnets to the later Rollup solutions.

On September 15, 2022, Ethereum officially transitioned to POS. Miners left, and Ethereum could only rely on developers and Layer 2.

However, is Layer 2 really the savior? From 2022 to 2024, numerous Layer 2 solutions have been launched one after another, but they have not brought any benefits to Ethereum; instead, they have continuously siphoned off users. The Layer 2 solutions are acting independently, competing for TVL, with few true innovations.

In the end, Ethereum has become a "Zhou Tianzi" that exists in name only, while Layer 2 has turned into "feudal states" acting independently. Some native applications have even begun to build their own Layer 2, using their own tokens to replace ETH as gas.

The path of Layer 2 expansion has been debunked. Abandoning POW has also become a self-inflicted injury. After losing miners, ETH has lost its basic manufacturing cost and price support mechanism.

If Ethereum had not transitioned to POS and continued to develop Layer 2 based on POW, even if Layer 2 performed poorly, the price support mechanism for ETH would still be effective due to the presence of miners, and the situation today might be much better.

3. The Innovator's Dilemma of Ethereum

Before 2022, innovations in the crypto space originated from Ethereum, while other chains merely followed and imitated. However, innovators often find themselves in a predicament.

Ethereum focused on performance scaling after 2020, with core developers betting on POS and Layer 2. This seems to be the right choice, but it is also a dilemma that innovators cannot avoid.

Since users need a faster and cheaper blockchain, why can't it be BSC, Tron, or Solana?

TRON has seized the stablecoin market. BSC and BASE have formed a closed loop around the exchange ecosystem. Solana, on the other hand, continues to create wealth myths through memes and other means.

Ethereum is being surpassed by competitors. As an open-source public blockchain, Ethereum's innovations are easily imitated. While Ethereum focuses on underlying research and development, agile competitors can quickly overtake.

This is not Ethereum's fault, but rather a predicament that innovators inevitably face. At the same time, it also reflects the overall immaturity of the cryptocurrency industry.

4. The Weakness of Ethereum Reflects Poor Industry Development

Apart from Bitcoin, Ethereum is the biggest innovation in the cryptocurrency space. But why has it suddenly declined?

Apart from being surpassed by competitors, a deeper reason is that the cryptocurrency industry has yet to find a truly healthy development model. Aside from asset issuance and speculation, what other application value is there?

Currently, besides BTC, only Meme has a wealth effect, and many VC-supported projects are being ignored. Because everyone knows these projects are just telling stories and have no real value.

Before truly valuable applications emerge in the crypto industry, it is likely that the current cycle will continue. If one day even Memes lose their wealth effect, then there may only be an endless bear market left.

Rather than lamenting the decline of Ethereum, it is better to worry about the future of the crypto industry.

5. The Future of Ethereum May No Longer Dominate Alone

Ethereum has lost its competitive barrier in terms of technology and model, and other chains can basically replicate it.

The only advantage of Ethereum at present is the funds accumulated on the mainnet and the mature DEFI ecosystem. These DEFI protocols form an organically combined ecosystem, which is an important part of the on-chain asset liquidity.

Therefore, RWA may be an opportunity for Ethereum. However, the road for RWA is long and difficult; whether Ethereum can continue to create new on-chain gameplay is still key.

Regardless, Ethereum has lost its monopoly status. Competitors have each formed their own barriers. The performance issues of Ethereum remain unresolved, and high-performance applications may choose other public chains.

If Ethereum loses its DEFI advantage, fails to improve performance, lacks innovation, and developers gradually leave, then under the watchful eyes of the wolves, its future is concerning.

As a former Ethereum supporter, I still hope it can maintain innovation and launch more valuable applications and development models. Continuous innovation is Ethereum's only moat.

Summary

Looking back at the eight-year journey of Ethereum, it represents the second innovation of blockchain. From ICO to DeFi, Ethereum has brought smart contract applications to new heights.

But after 2022, Ethereum focused on underlying research and development, lacking application innovation, and was surpassed by competitors. This reflects the overall predicament of the crypto market.

The future of Ethereum depends on the development of the cryptocurrency application market. Even if it no longer monopolizes the smart contract market, the technological and model innovations of the Ethereum ecosystem are still worth looking forward to.