1. The upgrade for The Dencun appears to offer only a temporary solution at best.
2. Ethereum users are increasingly turning to Layer-2 Solutions to enjoy cost-effective transactions.
3. Solana emerges as a formidable competitor and potential successor, posing a significant challenge to Ethereum's dominance.
The Ethereum blockchain has encountered persistent challenges over an extended period. Characterized by exorbitant transaction costs, sluggish network speeds, and infrequent upgrades, its last major transition occurred in 2022, transitioning from Proof of Work to Proof of Stake.
The prolonged intervals between upgrades not only compromise security but also create opportunities for alternative platforms to seize market share. Solana emerges as a formidable contender poised to potentially succeed Ethereum.
Minimal Activity on Ethereum
Throughout 2023, Ethereum experienced minimal activity, marked by minor updates to its whitepaper. The much-anticipated Dencun upgrade, aimed at reducing gas fees, faced delays, undergoing its inaugural testing only in 2024, instead of the intended launch in 2023.
Ethereum's price stagnation relative to Bitcoin can be attributed to several factors, including the ongoing challenge of obtaining ETF approval in 2024. Additionally, Bitcoin's integration of NFT-like capabilities and the launch of the first blockchain-based SNES game further diversified its appeal.
Challenges Stemming from Delayed Action
Compared to other blockchains, Ethereum suffers from high gas fees due to its limited transaction throughput of 10-15 TPS. Intense competition for transaction processing exacerbates costs.
Efforts to alleviate high fees, such as the Surge upgrade, have been hindered by prolonged execution timelines. Even interim measures, like "Proto-Dank Sharding," aimed at temporary relief, face implementation delays. The ultimate solution, chain Sharding, remains distant.
Unconventional Measures by Vitalik Buterin
Vitalik Buterin's proposal to increase Ethereum's gas limit by 33% in January 2024 risks exacerbating already high fees, as evidenced by the prevailing average gas fees for various blockchain actions.
Beneficiaries: Solana and L2 Solutions
Amid Ethereum's sluggishness, layer-2 scaling solutions emerge as beneficiaries. However, concerns persist regarding their security, exemplified by incidents such as Optimism's $20 million token loss in June 2022.
Should Ethereum's shortcomings persist, Solana stands to gain significantly. Boasting superior transaction speeds and recent successes in NFT sales and stablecoin volumes, Solana presents a compelling alternative to Ethereum.
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