Ethereum Midlife Crisis: Why Has ETH Fallen to Such a Point Where Everyone Is Scorned?

Recently, Vitalik was once again pushed to the center of the criticism stage by the community. This is not the first time that Ethereum has encountered such a crisis.

Recently, Trump's choice to issue his own meme coin TRUMP on the Solana chain has caused exaggerated increases in meme coins, once again making many people who firmly grasped the opportunity become famous in one battle and retire after success. The exaggerated wealth effect has caused many investors who missed out to sigh, and Solana and meme coins have once again become the focus of public opinion. FOMO sentiment even caused SOL to be in short supply, causing Binance to suspend withdrawals. While TRUMP is advancing rapidly, the price of SOL has soared to $295, setting a record high. The market is turbulent, Bitcoin and SOL are advancing rapidly, but Ethereum, which ranks second in market value, has "never risen for ten thousand years". What happened to ETH? Why has it fallen to such a point where everyone is scorned?

Once upon a time, Ethereum's grand vision of a global computing layer attracted the favor of countless tech upstarts, financial giants, and industry leaders, but now it seems to have lost its glory. Bitcoin's digital gold status is as solid as a mountain, with spot ETFs approved, MicroStrategy's crazy purchases, and increasing acceptance by government agencies. Even though its market value has been increasing, its increase from the bottom of $15,000 has already achieved a return of more than 6 times. BTC is still the favorite of old money such as family wealth.

On the other hand, although Ethereum competes with Bitcoin in a different way, it has remained around US$3,000 since March last year. Its performance is really disappointing in the much-anticipated altcoin season. As of January 16, the total net inflow of Ethereum spot ETF reached 2.66 billion US dollars, but this net inflow seems to have little effect on supporting and rising the price of the currency. The price of the currency is the result of the consensus in the financial market. The long-term fluctuations have consumed a lot of faith emotions and market confidence.

On the other hand, Solana has attracted many new users with its low gas fees and the wave of meme-driven wealth creation. According to the latest data on Circle’s official website, the issuance of USDC on its Ethereum mainnet has reached 31.53 billion US dollars, while the issuance of public chain upstart Solana has soared to 7.72 billion US dollars.

As early as the last cycle, the debate over L2 and L1 had already begun. In this cycle, as the "Four Heavenly Kings" L2 have been launched one after another, the debate over which one is better has been endless. However, at present, the voices leaning towards L1 have been generally recognized by the market.

As the L2 chain that focuses on capacity expansion, the cross-chain bridging of funds not only faces considerable problems in terms of security and timeliness, but also greatly reduces the user experience. Although each chain has its own advantages in technology, they all have the same goal, and users do not have a very obvious perception of the difference. Even some project parties have repeatedly migrated between L2 chains, further splitting liquidity and user experience. In addition, each L2 has launched its own token system, which has not really fed back to Ethereum, which has also weakened the appeal of ETH. Taking Base as an example, most of the network fees last year became Coinbase's profits, of which very little was given to the Ethereum mainnet, and most of it was kept by Coinbase for its own use. If calculated on an annualized basis, Coinbase's revenue from Base is close to $100 million.

Kain, the founder of Synthetix and Infinex, said that if I were to run EF (Ethereum Foundation), I would definitely put pressure on L2 to use the sorter income to destroy ETH.

Since the launch of each L2, its token has performed mediocrely. Although its total TVL has exceeded US$54 billion, there has been no particularly significant growth since March last year. Today, L2 technology is also beginning to encounter bottlenecks. The L2 chain continues to grow, and multiple L2s compete for limited Blob storage, causing fees to soar and user costs to increase. Even if the number of blobs is increased to 6 through Pectra upgrades, the problem can only be temporarily alleviated and cannot be fundamentally solved. Solutions include short-term Pectra upgrades, mid-term PeerDAS implementations, and long-term DA expansions.

In this regard, Cruve founder Michael Egorov said that it is time to abandon the L2-centric roadmap and focus on expanding L1. In addition, he bluntly stated that L2 is not a moat, but a band-aid.

The Ethereum mainnet TPS can now reach up to about 90 transactions per second, but this is far from enough. As a financial settlement layer, Ethereum now urgently needs to expand its capacity to meet the needs of