Ethereum: From Dominance to a Rise of Many

Since Bitcoin broke its historical high in 2024, Ethereum has drifted further away from its previous highs, and doubts about it in the market are growing increasingly louder. At the beginning of 2025, the price of Ethereum plummeted, and the market sentiment shifted from skepticism to despair. Many early investors began to sell off their Ethereum, and former supporters also wavered.

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

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

In 2017, the ICO craze drove Ether from $10 to a historic high of $1430. At that time, over 2500 token projects conducted ICOs on Ethereum, making Ethereum the main platform for issuing tokens and participating in fundraising.

In 2018-2019, although many new public chains emerged, Ethereum still dominated the smart contract market. Vitalik's influence in the global cryptocurrency space is second only to Satoshi Nakamoto, and the Ethereum ecosystem has gathered a large number of developers and innovators.

In the summer of 2020, the DeFi boom erupted in the Ethereum ecosystem. Projects like Compound, Uniswap, and Yearn.Finance emerged rapidly on Ethereum, ushering in a new era of decentralized finance. This raised the market's expectations for Ethereum to a peak.

In 2021-2022, the trends of GameFi, SocialFi, NFTs, etc., surged on Ethereum. In November 2021, Ethereum reached its historical high of 4878 dollars.

However, with the increasing prosperity of on-chain activities, the Ethereum network has become more and more congested and expensive. Performance scalability issues have become the biggest obstacle to development.

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

The scaling solutions for Ethereum mainly have two directions: shifting to a POS mechanism and developing Layer2.

Switching to POS was the route that Vitalik initially envisioned, aimed at improving network performance and scalability. Layer 2 explores expansion through solutions such as state channels and sidechains, which later evolved into the Rollup solution.

In September 2022, Ethereum officially transitioned to the POS mechanism. This triggered dissatisfaction among miners, but developers and Layer 2 became the main reliance for Ethereum's future.

However, the development of Layer 2 has not improved the Ethereum ecosystem as expected. On the contrary, many Layer 2 projects have started to compete with the Ethereum mainnet for resources and developers. Some native applications have even begun to build their own Layer 2, using their own tokens instead of ETH as fuel.

The expansion route of Layer 2 has been refuted, and abandoning POW has caused ETH to lose its most fundamental price support mechanism. Now, the price of Ethereum is still hovering around $1500, the level it was at when it transitioned to POS.

3. The Innovator's Dilemma of Ethereum

Before 2022, Ethereum had been the leader in innovation in the cryptocurrency space. Other public chains mostly followed and imitated Ethereum's innovations.

However, as an industry leader, Ethereum has fallen into the classic "innovator's dilemma." In order to optimize existing technology and meet user demands, Ethereum has focused its efforts on scaling performance while neglecting emerging disruptive trends.

Meanwhile, competitors such as BSC, Tron, and Solana seized the opportunity to offer a faster and cheaper on-chain experience. Solana, in particular, successfully created a series of wealth myths thanks to the Meme craze.

Although Ethereum maintains a leading position in underlying technology, it has begun to lag in application innovation. Due to the open-source nature of public chain technology, competitors can quickly imitate Ethereum's innovations and improve upon them.

This is not Ethereum's fault, but rather a predicament that innovators inevitably face. However, it also highlights the issue of the overall immaturity of the cryptocurrency industry.

4. Ethereum's Weakness Reflects Poor Industry Development

The decline of Ethereum is not just a problem of its own, but also reflects the underdevelopment of the entire cryptocurrency industry.

Apart from asset issuance and speculation, the crypto industry still seems to have not found real application value and a healthy development paradigm. This has led to the fact that, in this bull market, only Meme coins have shown significant wealth effects, aside from Bitcoin.

Many VC-backed projects go unnoticed because the market realizes that these projects are mostly empty talk and lack substantial value. Before finding truly valuable applications, the industry is likely to continue repeating the current model.

Therefore, rather than lamenting the decline of Ethereum, it is more worthwhile to consider the future development direction of the cryptocurrency industry.

5. Ethereum may no longer dominate the future

Ethereum has lost its competitive barrier in terms of technology and model, and other public chains can basically replicate Ethereum's functions.

Ethereum's current advantages mainly lie in the accumulated funds and mature DeFi ecosystem. Many believe that RWA( real-world assets on-chain) could be an opportunity for Ethereum, but this path is still long.

Ethereum has lost its dominant position. Other public chains have formed their own barriers, and Ethereum's scalability efforts have not significantly improved performance. For applications with high-performance requirements, developers may prefer to choose new public chains such as Solana, TON, and BSC.

If Ethereum cannot maintain its innovative advantage, improve performance, and developers gradually leave, then its position may further decline.

As a former supporter of Ethereum, I still look forward to Ethereum continuing to innovate and launch more valuable applications and development models. After all, continuous innovation is the only way for Ethereum to maintain its competitiveness.