Three years ago, you entered Ethereum at over 4000 USD.
Then uninstalled the exchange.
Diligently working, seriously living.
You firmly believe in the future of crypto.
I heard someone say that Bitcoin has already surpassed 90,000.
I also heard people say that Ethereum has surged wildly.
Uncontrollable tears flow as you finally return.
Opened the exchange under the watchful eyes of the family.
Looking at over three thousand Ethereum, I suddenly feel a bit at a loss.
Why is this the case? Why can't Ethereum become stronger?
From the perspective of coin prices, Ethereum, already priced in Bitcoin, is steadily maintaining a downward trend.
Anyway, there are various opinions; so what exactly happened to Ethereum?
Big Beauty today discusses what exactly happened to Ethereum from the perspective of the rise and fall of dynasties.
Why use the analogy of a dynasty instead of a commercial company?
The survival of commercial companies mainly relies on cash flow support, which depends either on business profits or VC investments.
Ethereum actually does not face this pressure; as the most comprehensive crypto project in the current ecosystem, it resembles a regime more.
There are many ways for a regime to survive, such as engaging in business to earn cash flow, collecting taxes like gas fees, or issuing various new assets within the ecosystem.
At the peak of the Ethereum ecosystem, it was almost a must-have for all crypto projects; saying it was the Ethereum dynasty would not be an exaggeration.
Throughout history, there are only three reasons for the demise of dynasties:
Internal changes, popular uprisings, and foreign invasions.
If we apply our Chinese history, about 40% of dynasties die due to internal changes, 40% die due to popular uprisings, and 20% die due to foreign invasions.
Internal changes: Central governance aging, lords too powerful.
Let's first take a look at internal changes.
The so-called internal change has two forms: one is the internal split within the central government, such as Wang Mang seizing power during the Han Dynasty, and Zhao Kuangyin's Chenqiao mutiny during the Song Dynasty, both considered internal changes.
The internal structure of Ethereum has actually split many times.
Several early co-founders of Ethereum publicly rebelled.
For example, Charles Hoskinson created the PoS public chain Cardano, and Gavin Wood launched Polkadot.
Moreover, these two chains both claim to be Ethereum killers.
However, when the Heavenly Son was in a prosperous period, there were many supporters, and these early rebels hardly achieved anything significant.
The most successful internal change in the crypto circle has to be Binance; initially, CZ, a central figure at OKX, left, and now Binance has become the number one in the universe.
Before analyzing the situation within the Ethereum central, let's first look at its structure, which is as follows: Ethereum's three public officials and six ministers.
Many people think Vitalik is the emperor of Ethereum, but that is not the case. Ethereum, as a decentralized organization, does not have an emperor; it can be considered as a constitutional monarchy.
Vitalik currently ranks second among the three public officials, and in daily work, he resembles a censor, capable of influencing public opinion.
Among the Six Ministers, there are also those openly opposing Vitalik:
Developer Peter directly complained on Twitter about Ethereum's unclear roadmap.
Arguing against the consensus is not a problem, but the most complaints about the foundation come from suspicions that these people are eating from both sides and pocketing private gains.
For example, two members of the Six Ministers, Justin Drake and Dankrad Feist, disclosed that they had previously become advisors for EigenLayer and would receive EIGEN tokens as compensation, which could 'possibly exceed their existing total wealth.' The community sees this 'wanting it all' behavior as quite unattractive, with some joking that EF researchers are 're-staking' themselves.
Although it was mentioned earlier that two researchers recently resigned from their advisory positions at EigenLayer, it is evident that various hunting capital has been lurking around the Ethereum Foundation, either offering advisory positions or directly sponsoring the personal research of researchers, and these foundation members do not seem to mind.
The person most frequently besieged is of course the most influential Vitalik.
In the eyes of the market, Vitalik is the orthodoxy; as long as anything is related to Vitalik, the market recognizes it, and this recognition extends throughout the ecosystem.
The most classic case is Scroll, which rose from an inconspicuous 'Chinese dog' to a mainstream L2 valued at 1 billion dollars, like Starknet and zkSync, during the peak of the L2 narrative. The reason for this rise was an email from the founder to the EF that received a reply from Vitalik.
It is precisely because the central foundation of Ethereum has been long under siege; since one can earn money by lying down, why stand?
What Ethereum truly fears is rebellion from the lords.
The current relationship between the Ethereum mainnet and L2 is very similar to that between the Tang Dynasty and its regional governors, rather than the Spring and Autumn Period.
Because the various lords of the Spring and Autumn Period fought one another, there was no external pressure.
In the late Tang Dynasty, the regional governors mainly aimed to prevent foreign enemies.
In the past two years, Ethereum's strong push for L2 was also to defend against attacks from various performance chains, and it successfully dismantled many performance chain ecosystems claiming to be Ethereum killers.
The current situation is that the Ethereum mainnet accounts for about 55% of all public chain assets, still holding a majority position.
However, those behind Tron/Solana/BSC are no longer Ethereum's L2.
At this point, the Ethereum central has two paths to choose from:
One path is to strengthen the main chain; at the time, the Song Dynasty chose this path to resist the Liao, Jin, and Mongols.
The second path is to let L2 compete with other public chains freely. In the past, the Tang Dynasty faced the Turks, and later, Empress Dowager Cixi suppressed the Taiping Heavenly Kingdom, choosing this path.
Currently, from the roadmap released by Ethereum, in the face of a formidable opponent like Solana, enhancing the main chain's performance seems impossible; the only way is to let L2 continue to push for performance.
We'll discuss competition with other public chains like Solana later; first, let's look at the situation of L2s on the Ethereum side.
From the data, the only two chains that can really help Ethereum resist external enemies are Base and Arbitrum.
This situation is very similar to the mid-Tang Dynasty, where the main combatants were just two groups: An Lushan in the east and Ge Shuhan in the west.
Moreover, these two L2s each have their own calculations; Arbitrum blatantly develops Layer 3 and even accepts USDC as gas fees, wanting to follow the emperor's rhythm; while Base's strategic choice is certainly to prioritize Coinbase's interests.
In 2017, BNB was initially issued on Ethereum, yet Binance chose to rebel and create its own Binance Chain. It must be said that Binance is indeed full of rebellious spirit, having caused a central internal split at OKX and now having lords rebelling at Ethereum.
Most other L2 projects are not even close to guarding Ethereum's central position, and are almost entirely positioned to take advantage of it.
These L2s have raised a large amount of capital from VCs while also attracting a large number of Ethereum token users with airdrops.
As the saying goes, 'the front is tight while the back is also tight,' which is probably referring to these Layer 2s.
A large amount of funds and development have been invested in many ineffective redundant infrastructures, to the extent that Vitalik announced in the second half of this year that he would no longer support new L2 projects. After the airdrops ended, the assets and users on various Layer 2s have largely disappeared.
Foreign invasion: other public chains are strong, and consensus is dispersed.
Having discussed the situation of the various lords of Ethereum, let's take a look at the external enemies Ethereum faces.
Currently, Ethereum's biggest headache is Solana.
In the past, major innovations in Crypto, such as the ICO in 2017, DeFi Summer in 2020, and Gamefi and NFTs in 2021-2022, all occurred on Ethereum, specifically on the Ethereum mainnet.
Initially, the narrative of the market, whether it was meme, AI, or payments, many projects chose Solana or other high-performance chains.
Specifically in the competitive landscape, the AI and meme sectors are where Solana and Base are competing.
AI Meme has directly emerged on Solana, receiving clear support from A16Z.
Base recently completed the first AI-to-AI payment in history, and has launched a new completely on-chain AI agent that can create an AI agent with its own crypto wallet in 3 minutes.
In the payment sector, Ton, with Telegram close to 1 billion users, is also eyeing Ethereum closely, definitely a small player that cannot be ignored.
Moreover, this year, relying on Telegram's virality, Ton has snatched a considerable market share in GameFi.
Three years ago, Ethereum could represent the development direction of crypto application innovation.
However, by now, I believe this consensus has been largely dispersed; it is unlikely that anyone firmly believes that the large-scale landing of crypto applications will definitely occur within the Ethereum ecosystem.
At least Solana and Ton still have great opportunities.
Popular uprisings: Three types of supporters have been offended.
Ethereum's recent price weakness, besides the internal troubles and external threats mentioned earlier, could also indicate that Ethereum supporters might be changing their minds.
Since the launch of the Ethereum mainnet, it has been nearly ten years, and its total market value has reached 300 billion USD, making it a giant among global assets.
The largest asset in the world is gold, valued at 18 trillion USD.
Bitcoin has now surpassed silver, with a market cap of 1.8 trillion, ranking seventh, still ten times away from gold.
Ethereum's market value ranks 29th globally, which isn't low; ahead are Procter & Gamble and Cosco Bank, while behind are Netflix and Bank of America.
There is a saying in the financial industry that once an asset reaches a market value of 300 billion USD, its valuation becomes difficult to increase; beyond that, it must rely on performance, and it is hard for original supporters to maintain.
Bitcoin is still surging, but Ethereum seems to be losing momentum; if this continues, by this time next year, Ethereum priced in Bitcoin might drop to 0.02.
Why is this?
Ethereum supporters can be divided into three categories.
The first category is miners, who, when Ethereum was still in the POW model, had a lot of miner groups supporting Ethereum; later, as Ethereum transitioned from POW to POS, the miner groups were completely offended.
The second category is various on-chain users, who contribute the majority of gas fees to the Ethereum ecosystem and can be considered the true breadwinners. However, lacking real application scenarios on-chain, there are almost only two things to do: speculate on memes and yield farm.
In this round of meme battles, many users switched to Solana; while yield farmers were disheartened, from zkSync to Scroll, each key project in the Ethereum ecosystem adopted a 'not afraid of boiling water' posture, forcing users to go to the Ton chain to play games.
The third category consists of Ethereum investors, some of whom are very stubborn and have supported Ethereum for a long time.
Interestingly, the Ethereum Foundation always seems to sell coins accurately when the price trend is good.
Especially the two interventions in 2021; one was selling 35,000 Ethereum at 3533.3 USD two days before May 19.
Another time was when 20,000 Ethereum were sold at a historical high price of 4677.6 USD.
These two precise exits established the Ethereum Foundation's reputation for crashing the market.
In the past year, the Ethereum Foundation has been very active, with almost monthly operations.
After this wave of operations, it can almost be said that many investors are disheartened.
At the same time, look at Bitcoin; miners not only continue to support it but also many large miners can go public on NASDAQ to raise funds for computing power.
With the development of the Bitcoin ecosystem this year, there are also meme players and yield farmers on the Bitcoin chain, contributing about 10% of miner profits.
On the investor side, there is not a so-called foundation selling coins, and due to the narrative of value storage continuously gaining mainstream market recognition, who knows when the US might list Bitcoin as a federal reserve asset.
It can be said that the number of Bitcoin supporters is increasing, while Ethereum supporters are decreasing.
Summary of issues.
With that said, Big Beauty summarizes:
Firstly, there are internal troubles; the Ethereum Foundation now appears quite strange, almost besieged by capital, with foundation members earning a lot, yet the foundation still occasionally needs to sell coins to maintain operations.
Another aspect is the development strategy of Layer 2; from the current situation, the only Layer 2s Ethereum can effectively compete with are Arbitrum and Base, while most other Layer 2s are dragging behind.
If this situation continues to evolve, as long as one of Arbitrum or Base revolts, the Ethereum ecosystem will be virtually non-existent.
In this context, Ethereum's external worries are also quite serious.
Historically, every crypto bull market ignited scenes within the Ethereum ecosystem, with VC investments being almost 90% in projects within the Ethereum ecosystem.
However, it is very likely that this year will happen on Solana and Ton, and many VC investments have already been spread to the Solana and Ton ecosystems.
Since 2022, Ethereum has offended miners and this year has also offended yield farmers; with stagnant coin prices, the Ethereum Foundation continues to sell coins, seemingly offending investors.
It must be said that this situation is indeed difficult to remedy.
Generally, it is difficult to reverse the situation when a dynasty reaches its end.
What can be done?
Big Beauty randomly makes a move here~
For example, should members of the Ethereum Foundation share part of their consulting fees with the foundation? Because they were originally approached for their identity.
Perhaps with this, the Ethereum Foundation wouldn't need to sell coins, and could even have extra profits to buy back Ethereum?
In the outside crypto circle, there is no contradiction that cannot be resolved by pumping; if there is, it's just that the pump wasn't enough; if it goes well, Ethereum might even welcome a revival like the Qing Dynasty's Tongzhi.
