Ethereum still has an important first-mover advantage in the field of decentralization. However, whether it can maintain its core value still requires finding a new balance between L2 development and other narrative waves.
Ethereum was once considered a "blue chip asset" in the crypto market, and it was widely believed that its price would reach new highs in the future, even breaking through $10,000.
However, ETH’s performance has been sluggish since 2022. Does this indicate challenges for Vitalik and Ethereum’s future? Let’s take a deeper look at the reasons behind this.
1. The gap between expectations and reality
Over the past two years, Ethereum's significant upgrades have filled people with anticipation for its future, especially regarding the 'deflationary' effect of ETH supply. However, the actual market performance has been surprising. Despite a series of expansions and upgrades, ETH's market performance has been relatively poor, being significantly surpassed by BTC and other tokens (like Solana).
2. The failure of ETH ETF
Many people hoped that the launch of the ETH ETF would drive up the price of ETH, but the result was a great disappointment. Unlike the rising trend when the Bitcoin ETF was launched, the ETH ETF saw capital outflows after its listing, partly due to the selling pressure from Grayscale's leftover products.
3. The 'unexpected' impacts of the upgrade
The Ethereum Merge and EIP-1559 have indeed successfully reduced the issuance of ETH, but the latest Dencun upgrade, while lowering the cost of writing data to the main chain, has inadvertently reduced ETH's revenue sources, unexpectedly lowering the token's appreciation potential.
4. Vitalik's ETH sale raises doubts
Ethereum founder Vitalik recently sold a portion of ETH to support development. Although the amount sold was relatively small, the market reacted negatively. Some investors believe this may imply a lack of confidence in ETH from Vitalik, even though he has repeatedly stated that the price of ETH is not a priority for him.
5. Absence in emerging trends
Currently, many emerging trends in the market—such as AI, RWA (real-world assets), and memecoin—have largely not chosen Ethereum as their primary platform. Many emerging AI projects (like Fetch, TAO) and RWA projects have opted for more suitable independent networks and underlying architectures, while in the memecoin space, Solana's performance is evidently more impressive. This indicates that while Ethereum opened the door to decentralization, other networks are becoming the dominant players in the latest narratives.
6. The future value fate of ETH
ETH remains a cornerstone of the decentralized finance (DeFi) ecosystem, accounting for over 55% of total locked value. However, with the popularity of L2 scaling solutions, the future of Ethereum may face the dilemma of 'ecological prosperity but token value not realized,' similar to the $ATOM coin in the Cosmos ecosystem.
Personal outlook
Although I once firmly believed that the price of ETH would reach $10,000, I have become more cautious about this goal now. ETH still accounts for 30% of my portfolio, but in the next bull market, I may gradually sell off some assets and hold the remaining portion to observe its future performance long-term.
Conclusion:
The network utility and ecological status of ETH remain solid, but recent performance has raised concerns in the market. Although ETH is still the leader in the industry, it may gradually lose some of its dominant position if it fails to adapt to emerging trends. Ethereum still holds significant first-mover advantages in the decentralized space, but whether it can maintain its core value will depend on finding a new balance between L2 development and other narrative waves.
