Is Ethereum beginning to enter a slow decline?

In the past year, the hype surrounding the Ethereum technology upgrade in the crypto market has gradually cooled down. There is only one "Cancun Upgrade" left, but the market does not seem to be buying it, and the Ethereum tokens are all somewhat weak.

​Recently, some people in the market believe that ETH will become the next EOS. Houshanke believes that this is not the case, but ETH does have some problems.

​Hou Shan Ke had a point of view before: In this bear market, if you only choose one to invest heavily, BTC is the safest, and ETH has greater uncertainty. Both are large market capitalizations, and the future growth of ETH may not be as large as BTC, but the uncertainty is higher. From the perspective of risk-return, it needs to be viewed with caution.

This uncertainty does not mean that Ethereum will collapse immediately. After all, it is the "king of ecology" and its consensus is second only to BTC. Even if it weakens in the future, it will be a slow process. Just like EOS in the past, it was not until DeFi emerged on Ethereum in 2020 that believers gradually lost their patience with it. The Ethereum ecosystem is so prosperous that even if it "weakens" in the future, it will be stronger than other POS-type public chains.

​​The recent problems of Ethereum’s centralization and weakening ecology seem to have made institutions somewhat cautious. Judging from market information, the demand for institutions to increase their investment exposure in Ethereum has become very low, and the attraction is concentrated on BTC.

Due to the continued weakening of ecological activities or migration to the L2 public chain, the fee income of the Ethereum network has dropped to the lowest level in April 2020, and there is no sign of improvement in the desertedness of this ecosystem for the time being.

The biggest contributions to the Ethereum ecosystem include stablecoins, defi, NFT, and speculative activities. If we look at them separately, we are not optimistic. Stablecoins are the most important. In the early days, the Bitcoin network was the largest issuer of stablecoins. Later, it moved to Ethereum. Due to its lower cost, the TRON chain became the most active public chain for stablecoins. Now many public chains have native stablecoins. Defi is also the most important ecosystem, but with the departure of the top projects MKR and DYDX from Ethereum, it seems to indicate that Ethereum is not the only choice for top defi projects. This is especially true for NFTs and some speculative projects, and the hype on other chains is no less than that of Ethereum.

What worries the market the most is the "centralization" issue. The Lido protocol is about to reach the 1/3 limit, and theoretically has the ability to attack the Ethereum network. Although it is not in their own interests to do evil or damage the network, in the world of code, they still need "objective protocols" to constrain it rather than "subjectively believing that it will not do evil."

Vitalik Buterin and the Ethereum Foundation have also proposed some solutions to solve the problem, but none of them seem "perfect". Another point is that since Ethereum is an underlying protocol, it should be as simple as possible. If it is constantly patched, the protocol will become more and more bloated and eventually have more vulnerabilities.

In the crypto world, so far, except for BTC, other projects cannot be said to be absolutely safe. In every market cycle, except for Bitcoin, the "mainstream coins" after the second place have undergone tremendous changes.

Ethereum is still the "king of ecology" and other public chains have no possibility of surpassing it in the current ecological environment. However, if a commercial-grade alternative ecology emerges in the next market cycle, it is possible to overtake it, such as at the web3 level, which is biased towards data business ecology.

Technology is always changing, nothing is absolute. Vitalik also recently responded: the risk of cryptocurrency stagnation, privacy and open Internet infrastructure may all be reasons for ETH's failure.