1. Introduction: Ethereum’s sluggish performance and future concerns
Ethereum's recent market performance has been disappointing, which has caused concern among many community members. Since the beginning of this year, Ethereum's price growth has lagged far behind Bitcoin and Solana. Especially since Ethereum decided to adopt a modular architecture strategy, the value growth of its network seems to have failed to meet expectations. In this context, many people can't help but ask: Is Ethereum's strategic choice correct? Does the future direction need to be adjusted? This article will discuss the current situation, Beam Chain proposal, modular strategy, and future challenges and opportunities.
2. Current situation analysis: Ethereum’s performance in the market
2.1 Price performance comparison
If you compare the market performance of Ethereum with Bitcoin and Solana, you will find that Ethereum has lagged significantly in this cycle. According to tradingview data, the price of Ethereum has risen by 150% since the beginning of 2023. In comparison, Bitcoin has risen by 422% and Solana has risen by 1629%. It is generally believed that Ethereum's choice of modular architecture is an important reason for its poor price performance.
Data source: https://www.tradingview.com/x/zfBGgFQv/
2.2 Short-term impact of modular architecture
The modular strategy allows Ethereum to abandon some infrastructure services and hand over functions such as execution, settlement, and data availability to Layer 2 (L2) or other independent projects, which means that Ethereum's core source of income, network fees, has been reduced. The EIP-1559 mechanism introduced by Ethereum shrinks supply by destroying part of the fees, thereby supporting prices, but with the rise of Layer 2, the effectiveness of this strategy has gradually weakened. In other words, although the modular strategy has enhanced the flexibility and scalability of the Ethereum ecosystem, it has had a negative impact on ETH prices in the short term.
2.3 Overall value of the ecosystem
In terms of the market value of the entire ecosystem, Ethereum and its modular infrastructure tokens created a value comparable to Solana in 2023, totaling approximately $50 billion. However, in 2024, this performance declined, which may be partly due to the market's wavering confidence in the modular strategy, and investors gradually became confused about the decentralized infrastructure tokens and found it difficult to grasp the growth potential of the entire ecosystem.
3. Beam Chain Proposal: Opportunities and Challenges of Redesigning the Consensus Layer
3.1 Core content of Beam Chain proposal
At the Devcon conference, Ethereum Foundation researcher Justin Drake proposed a consensus layer upgrade proposal called “Beam Chain.” Known as “Ethereum 3.0,” Beam Chain aims to improve the performance and security of Ethereum through large-scale upgrades. Sexuality is significantly improved.
Beam Chain’s goals include:
Speed up block production and reduce block time from the current 12 seconds to 4 seconds
Achieve a smaller validator staking threshold from 32 ETH to 1 ETH to attract more new users to participate in staking
Using SNARK technology to achieve "chain SNARKization" to improve efficiency and security
Justin Drake sees this proposal as a sign that Ethereum has entered the "ZK era", ensuring that Ethereum remains secure in the face of quantum computing threats in the future by using post-quantum cryptographic hashing and signature schemes.
3.2 Mass Upgrading and Accelerated Fossilization
The Beam Chain proposal plans to implement multiple major changes at once, which can accelerate Ethereum into maintenance mode and reduce long-term uncertainty, but also increase systemic risks. Péter Szilágyi expressed concern about this, believing that large-scale bundled upgrades may cause some potential problems to go undetected, and the community and the system need time to gradually adapt to these changes. Iterative upgrades may be more secure.
4. Reflection on Ethereum’s modular strategy
4.1 Advantages of modular strategy
Since Ethereum decided to adopt a modular architecture in 2020, its impact has gradually become apparent. The modular strategy aims to decompose different functions and assign them to multiple projects, such as Layer 2 processing execution and Celestia processing data availability. This architecture makes Ethereum more adaptable and scalable. In this way, Ethereum can maintain the flexibility of the ecosystem and adapt to unpredictable technological changes in the future.
Flexibility: Modularity allows Ethereum to quickly adapt to new technologies, such as SNARKs and the integration of zkEVM.
Scalability: Expanding the surface area through Layer 2 reduces development and user costs.
Reference source: https://ethereum.org/zh/layer-2/
4.2 Disadvantages of Modularity
However, this strategy also has short-term economic and technical negative consequences:
Reduction in transaction fees: The rise of Layer 2 has diverted transaction fees originally belonging to the Ethereum mainnet, affecting the price of ETH.
Degraded user experience: The complexity of modularization means that ordinary users may face problems such as complex operations and limited liquidity when using Layer 2.
Centralization risk: The concentration of holdings of some infrastructure tokens may have an adverse impact on the decentralization of the network.
V. Historical Summary: From the “Merger” to the Present
5.1 Review of “Merger” in 2022
The Merge in 2022 is one of the most important upgrades in Ethereum's history. It marks Ethereum's transition from Proof of Work (PoW) to Proof of Stake (PoS), significantly reducing the network's energy consumption and laying the foundation for future scalability improvements.
The merger not only improves the network's energy efficiency, but also paves the way for future expansion solutions such as sharding. With the Beam Chain proposal, Ethereum is gradually moving towards a more efficient and sustainable blockchain ecosystem, and the merger is a key step in this journey.
5.2 Post-merger development
Improved energy efficiency: The introduction of PoS reduces network energy consumption by 99.5%.
The rise of staking: Validators replace miners, making the network more decentralized and efficient.
Foundation for future expansion: The merger lays the technical foundation for expansion solutions such as sharding and Beam Chain.
VI. Future plans and challenges
6.1 Implementation Roadmap
The implementation of Beam Chain is divided into multiple phases:
2025: Standardization stage
2026: Formal development phase
2027 and beyond: A testing phase of at least two years to ensure the safety of new technologies before mainnet deployment
6.2 Technical and governance challenges
This long timeline also reflects the complexity of technical implementation and the difficulty of governance coordination. In addition, how modularization and Beam Chain work together is also a major challenge in the future. Modularization expands the "surface area" of Ethereum through Layer 2, while Beam Chain aims to enhance the core performance of the consensus layer. The combination of the two will determine the balance point between Ethereum's future expansion and security.
6.3 Key issues to be addressed
Technical complexity: The integration of technologies such as real-time SNARKing and post-quantum encryption is extremely difficult.
Governance coordination: requires broad community support and close collaboration among multiple development teams.
System security: When introducing new technologies, new vulnerabilities must be avoided to ensure the long-term security of the network.
7. Refutation and Critical Thinking
7.1 Advantages of Phased Upgrade
Péter Szilágyi made some critical points about the Beam Chain proposal. He believes that Beam Chain attempts to completely revolutionize the consensus layer by introducing multiple changes at once, which may increase systemic risks, especially without sufficient time for testing and evaluation. In contrast, it may be safer and more in line with Ethereum's concept of gradual evolution to gradually implement low-difficulty improvements and then consider a comprehensive reconstruction when necessary.
7.2 Centralization Issues in Modular Ecosystems
The complexity of modularization and the risk of centralization also need to be taken seriously. Although modularization enhances the flexibility of the Ethereum network, it also increases the complexity of user operations, especially when transferring between multiple Layer 2s, the user experience may be greatly reduced. In addition, the centralization of the development team and infrastructure tokens of some Layer 2s may have an adverse effect on the decentralization of the network.
8. Competitive Comparison: Analysis of Solana and Other L1 Blockchains
8.1 Solana’s “Monolithic” Structure
Compared with Ethereum's modular strategy, Solana has chosen the development path of a "monolithic" blockchain, attracting a large number of users and developers by directly achieving high throughput and low latency at Layer 1. This gives Solana certain advantages in user experience, especially since users do not need to worry about the complexity of cross-layers.
High throughput: Solana achieves significant performance advantages through parallel processing and an efficient consensus mechanism.
User-friendliness: Since no cross-chain operations are required, the user experience is relatively simple and intuitive.
8.2 Scalability and Future Challenges
However, this "monolithic" structure also has inherent scalability bottlenecks. Once the system demand exceeds its design capacity, Solana may need to rely on external expansion solutions, which is contrary to its current design philosophy. In contrast, Ethereum's scalability achieved through modularity and Layer 2 solutions enables it to respond more flexibly to future technical challenges and market demands.
Scalability limitations: The scalability of a monolithic structure is limited, and it may be necessary to break through the existing architectural limitations in the future.
Lack of flexibility: Solana is not as flexible as Ethereum in technological innovation and cannot quickly integrate new technologies through modularization like Ethereum.
9. Summary: How will Ethereum evolve in the future?
9.1 Combination of modularity and Beam Chain
The combination of Beam Chain and modular architecture represents an important attempt by Ethereum in terms of expansion and technological innovation. In the next few years, the success of Beam Chain will determine whether Ethereum can continue to maintain its leading position as a smart contract platform. At the same time, while enhancing the adaptability of the network, Ethereum's modular strategy also needs to solve the problems of centralization and user experience.
9.2 Activeness and Innovation of Ecosystem
In general, the future of Ethereum depends on the activity and innovation of its ecosystem, as well as the community's support and consensus on the technical route. In the ever-changing technology and market environment, Ethereum can only truly realize its vision of "world computer" and stay ahead in the next wave of blockchain technology through continuous innovation and iteration.
about Us
Hotcoin Research, as the core investment research department of Hotcoin, is committed to providing detailed and professional analysis of the cryptocurrency market. Our goal is to provide clear market insights and practical operation guides for investors of different levels. Our professional content includes the "Play and Earn Web3" series of tutorials, in-depth analysis of cryptocurrency industry trends, detailed analysis of potential projects, and real-time observation of the market. Whether you are a novice exploring the crypto field for the first time or an experienced investor seeking in-depth insights, Hotcoin will be your reliable partner to understand and seize market opportunities.
Risk Warning
The cryptocurrency market is highly volatile and investment carries risks. We strongly recommend that investors fully understand these risks and invest within a strict risk management framework to ensure the safety of their funds.
Website：https://www.hotcoin.com/
X： x.com/Hotcoin_Academy
Mail：labs@hotcoin.com
Medium：medium.com/@hotcoinglobalofficial
