Written by: Haotian
Why are there so many voices in the market that are pessimistic about Ethereum? In short, the Ethereum ecosystem is indeed facing a tense situation of internal and external troubles. Internally, there are expansion solutions such as Layer2 that have never been able to stand up, and externally, there are killers such as Solana that have always wanted to destroy the Ethereum. Ethereum has ushered in a difficult moment under the lack of innovation and competition pressure. Next, let me briefly talk about my views:
1) The large and small ecosystems of Ethereum Rollups have taken shape. After the Cancun upgrade EIP-4844, the short-term technical benefits of Ethereum have been settled. The longer-term shard chain is no longer expected under the impact of Rollup, and the upgrades such as reducing node costs, simplifying protocols, and ZK-SNARKs of the underlying layer are just icing on the cake. The entire blockchain industry is waiting for the second dragon Ethereum to hand in a satisfactory layer2 answer sheet, but as of now, layer2 has not carried the "growth" expectations of Ethereum.
2) To be honest, Rollups can stand out from multiple expansion solutions such as Plasma, Validium and even parachains because Rollups adopts a primary-secondary chain combined interaction paradigm with layered processing such as execution, status, and settlement. Under normal logic, after layer2 establishes a secure consensus for interaction with the mainnet, it should then strengthen and amplify the performance processing advantages on the execution layer to input incremental users and ecology to the Ethereum main network.
However, the fact is that most layer2s have chosen to stack leverage at the commercial narrative level, adopt the Stack strategy to attract alliances, and involve shared components in the layer3 application chain, as well as Rollup as a Service, DA as a Service, and even AVS as a Service, etc. These strategies that can infinitely expand the imagination space of layer2 business and narrative at first glance can only add market expected leverage in the long term, and cannot immediately produce results in expanding the application ecosystem and empowering currency prices.
3) For a long time, some people have always ridiculed Ethereum's gas fee of 1Gwei, using this to ridicule the failure of Ethereum's layer2 strategic direction. But from another perspective, isn't this a phased success of Ethereum relying on layer2 to solve problems such as congestion and high gas fees? However, the bad thing is that layer2 not only did not bring the expected huge ecology and transaction volume of Ethereum, but even diverted some of the traffic away.
In fact, layer2 has been successful in solving Ethereum's insufficient performance, and the internal competition between the OP-Rollup and ZK-Rollup camps has reached a fever pitch. However, the choice of camp to engage in infra rather than pure application innovation has exposed a very embarrassing situation in the Ethereum developer community: over-reliance on VC financing to drive coin issuance rather than real value innovation.
Although this is a direct result of the influx of more developer talent into the web3 industry and the influx of more VC funds, the competition has intensified. Although the higher threshold for entrepreneurship could have been a sign of a mature market, in the early stages of Crypto, excessive internal competition has become the initiator of the high FDV of projects that stifled innovation. Imagine a project with a huge FDV, all efforts are made just to go to the market quickly, how can there be time to precipitate value innovation. The most effective way to VC is to stack the business narrative of the B-end, while the urgent but unsexy direction of C-end applications has been lukewarm. Therefore, the market has sensed the imbalance of infra> application.
4) Although the sexy narrative of Ethereum killers has been falsified in the last round of bull market, this round of high-performance public chains such as Solana, Sui, Aptos, and Sei have directly hit the "low performance" weakness of Ethereum EVM. Although they are no longer shouting to kill Ethereum, it is undeniable that their high concurrency and special Move language security mechanisms can indeed impact Ethereum, especially they may become fertile ground for the growth of a new generation of web3 application ecology, such as: DePIN, large-scale games, intent transactions, AI Agents, etc.
This is what I think is the biggest opportunity for the new generation of high-performance public chains. Instead of stacking infra expectations, they will directly declare war on Ethereum based on the rise of applications.
Or there is no need to declare war at all. Using modular thinking to place Ethereum in the thin narrative of the "settlement layer", and using new modular execution layers, DA layers, and unified liquidity layers to reconstruct the discourse power system that Ethereum has established in the past, isn't that also a kind of successful competition and cooperation? It is true for other chains, and it is also true for Ethereum. However, this is the trend I have seen in other high-performance chains or modular chains, chain abstraction chains, but it seems that Ethereum is still just "passively taking a beating". Even under the premise of advanced benefits such as ETFs, it has not been able to put down its airs to deal with it.
5) Many people are still looking forward to another DeFi Summer, but reflecting on the fact that Ethereum layer2 is not as good as expected, I have no choice but to accept the fact that DeFi Summer may never come back. @VitalikButerin himself is also very clear that the biggest dilemma of Ethereum may be its excessive financial attributes. DeFi, a perfect carrier of financial attributes, has past successful experiences and the infinite nesting doll attributes of DeFi combinations, which naturally fits people's speculative preferences. What the Ethereum ecosystem should consider at this moment is not to reshape DeFi Summer, but to get out of the haze of pure DeFi culture.
NFT, which emerged in the last bull market, and OpenSea, which went from prosperity to decline, have never been fully embedded in the DeFi framework, but this does not affect NFT leading Ethereum out of the last round of super bull market. This round of PolyMarket decentralized prediction market is valued. Although it is not a new way of playing, and it is not known whether it can bring new vitality, fortunately, it is not pure DeFi, or it has expanded and reconstructed DeFi. How to integrate Ethereum into the web2 world as much as possible and move from virtual to real is what everyone should really expect in the new summer.
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Note: As a long-term Ethereum holder, I sincerely hope that Ethereum can get out of the most difficult time of internal and external troubles. But I still want to emphasize that the Ethereum ecosystem has gathered the largest number of Geekers and is also the most sensitive to innovation. As long as the market gets out of the current predicament, I believe Ethereum will still be the most powerful player to turn the tide.
