Original author: Lao Bai, ABCDE investment research partner
Let’s talk about ETH’s current “difficulty” from the perspective of the primary market
Since @jason_chen998’s “angry at not arguing” ETH article fermented, there have been a lot of articles on the Internet talking about the dispute between ETH and Solana in the past few days, and there is no intention to repeat or elaborate. Let me add a perspective (not Fud), that is from the perspective of primary market innovation and financing. After all, many of these projects have not yet entered the public eye and are still being intensively launched.
I have talked about more than 1,000 projects in ABCDE in two years. Although it certainly cannot cover the overall current situation of the primary market, the sample size should not be small. The feeling in 2023 is that ETH and Solana will develop separately in the primary market. Even because of the expectations of Eigenlayer and the entire Restaking+LRT ecosystem, ETH will have even more momentum in the primary market.
In 2024, there was a relatively big turn. The entire market no longer paid for the completely surplus Infra projects. The phenomenon of “empty city and ghost chain” aroused everyone’s disgust. Buterin himself also changed his tone significantly in August’s “The Next Decade of Ethereum”, saying, “Basically, I think the tools we already have or will have are enough to build the best in every field suitable for using Ethereum. “Best application”
In the beginning of the second half of 2024, the trend of V Shenguo changed, an AI Infra project raised nearly 100 million U.S. dollars in seed round financing, Matr1x with 2.5 million downloads and the opening of just over 100 million FDV – the superposition of three independent but similar events in my personal eyes Here is an inflection point moment – the peak of Infra and the bottom of applications. After that, Infra began to turn around and the application began to slowly improve. Of course, this is a timeline that stretches to the next few years and will not happen overnight.
Crpyo’s several major innovations in the past, including ICO in 2017, Defi Summer in 2020, Play2Earn in 21-22, NFT, etc., without exception, all occurred on ETH, and more importantly – on ETH L1. This has also caused the price of ETH to soar. But the current market sentiment, from the perspective of currency prices, everyone is full of confidence in Solana breaking the previous high, and there is endless worry about ETH returning to 4,000, not to mention the previously mentioned ETH breaking 10,000. Solana PumpFun is making a splash in the secondary market. Although TVL is still far ahead of ETH, the applications are still the same old faces from 20-21, and more and more users are going to L2, and L1 Gas has been maintained all year round. low position.
The primary market actually faces the same problem. In the past six months, my obvious personal feeling is that there have been more application-oriented projects, including various prediction/betting markets, AI applications, Depin, micro-innovative Defi, Payfi, 3A game masterpieces, etc., emerging one after another. I’m not sure which track will be the breakthrough point for the next big innovation. I just make an ecological distribution map of the project based on the impression in my mind. This is generally the situation.
-Forecast/Betting Market- Ton/Solana/Monad-AI – Solana/Base/Monad-Depin – Solana/MegaETH/Monad-Defi – Arbitrum/Berachain/MegaETH/Monad-Payfi – Ton/Solana/Monad/MegaETH-Game – Sui/Ronin/Immutable X-RWA – ETH/Solana
It can be seen that no matter where the next big application-level innovation is, the one with the greatest opportunity currently is Solana, followed by Monad and MegaETH that perform well. Except for some RWA-related projects, it is rare to see full operation. New project on ETH L1. Arb and Base are the most powerful in L2 (referring to the application level alone, the OP basically took the path of launching the Infra chain). Unfortunately, even if there are popular or even phenomenal applications on it, ETH L1 can be used under the existing architecture. The value captured is probably very little.
I personally think the most promising new track is AI and PayFiAI is currently far ahead of Solana and Base. Base has completed the first AI-to-AI payment in history, and recently launched a new set of fully on-chain AI agents that can create a self-contained encrypted wallet in 3 minutes. and Twitter account (optional) for Al Agent. Not to mention Solana, the new track of AI Meme was born directly on it. Of course, if you really study Goat and ACT carefully, you will know that they are by no means as simple as memes, but things that have the potential to create a new track and paradigm.
Payfi is a competition between the two veterans Ton+Solana VS the two rookies Monad+MegaETH. This is a track that can hardly be falsified. Basically everyone knows that Crpyto is actually the most suitable for payment. This is also the original intention of Satoshi Nakamoto when he first invented Bitcoin. It just depends on which chain/project can finally realize his long-cherished wish at which point in time. (Finally, several Payfi projects based on the Lightning Network have also appeared recently. Let’s see if Lightning can rise in this round).
Having said all this, I am not trying to succeed Fud ETH. I personally don’t think Solana can really flip ETH by taking advantage of this round of momentum. ETH’s current community + technology accumulation alone is enough to secure its second position. My only worry is whether ETH is willing to accept the status quo. Innovation and value capture all occur in L2. L1 itself can do DA and settlement with peace of mind (it also faces competition from projects such as Celestia), and the currency price has remained so calm. But I really don’t have the answer myself. It is an established fact that ETH L1’s current value compensation for L2 is weak, and L1’s GAS and TPS are indeed not enough to carry Mass Adoption type applications. The old Defi+ or the new RWA track alone does not seem to be enough for everyone to see ETH reach the peak of 10,000 US dollars. If in the next few years, BTC is worth 150,000-200,000, Solana is 500-1,000, and ETH is still hovering around the price of 3,000 to 4,000, the confidence and status accumulated in the previous 10 years will surely be slowly worn away.
How to break the situation? This is probably not the responsibility of VCs. We look forward to ETH developers and entrepreneurs to tell us the answer.
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<p>The post Discussing the current “dilemma” of Ethereum from the perspective of the primary market: How can more innovation and value capture occur? first appeared on CoinBuzzFeed.</p>
