Analyst Duo Nine believes Ethereum's approach to scalability could reduce the value and demand for its tokens.
Of the top 10 cryptocurrencies by market capitalization, #MarketDownturn [ETH] was the worst performer at the time of publication: over the past week, the asset has lost about 24% of its value compared to its peers.
This decline extended to the last day's figures, which showed a 3.9% drop.
Cryptocurrency analysis firm Duo Nine has sounded the alarm over Ethereum's current trajectory, suggesting that the platform may be "slowly dying.
Duo Nine believes that Ethereum's poor performance raises serious questions about its future viability, especially when compared to #MarketDownturn and #Solana .
When both Bitcoin and Solana outperform Ethereum, serious questions arise, Duo Nine said, pointing to a discouraging trend among Ethereum maximalists and developers who seem to have lost faith in the asset's potential.
The analyst believes that part of Ethereum's problems lie in what he calls the "XLM curse" - a situation where the efficiency and profitability of the network does not translate into an increase in the value of tokens.
He explains that if the network is fast and cheap, there's no reason to pump tokens. The introduction of layer 2 solutions such as Arbitrum has significantly lowered transaction costs, which is technically beneficial, but may not be good for the market price of #MarketDownturn .
In addition, Duo Nine criticizes Ethereum's economic model, which, in their opinion, inflates the supply of tokens, ostensibly to cover transaction costs that cannot be covered by transaction fees alone.
Demand for ETH is so low that they literally have to print tokens out of thin air again, he argued, pointing to positive inflation numbers as a bearish signal for the asset. He added: "Why is this happening? Because Vitalik decided to scale ETH via L2 and made the commission very cheap.
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