Three years ago, you entered Ethereum with more than 4,000 U
Then uninstalled the exchange
Work hard and live seriously
You believe in the future of crypto
I heard people say that Bitcoin has reached over 90,000 these days.
I heard that Ethereum is going crazy again
I can't stop my tears from flowing. You're finally back.
The exchange was opened under the watchful eyes of the whole family
Looking at more than 3,000 Ethereum, I suddenly feel a little overwhelmed
Why is this happening? Why can’t Ethereum be hardened?
In fact, from the perspective of currency price, Ethereum, which is already priced in Bitcoin, is steadily maintaining a downward trend:
Anyway, there are many different opinions, so what exactly happened to Ethereum?
Today, Da Piaoliang will talk to you about what happened to Ethereum from the perspective of the rise and fall of dynasties.
Why use a dynasty as a metaphor instead of a business company?
Because the survival of a commercial company mainly depends on cash flow, and this cash flow either comes from business profits or VC investment.
Ethereum actually does not have this pressure. As the crypto project with the most complete ecosystem at present, it is more like a regime.
There are many ways for a regime to survive. It can engage in business to earn cash flow, collect taxes like gas fees, and issue various new assets within the ecosystem.
When the Ethereum ecosystem was at its peak, it was almost a must-have for all crypto projects. It is no exaggeration to call it the Ethereum Dynasty.
There are only three reasons for the death of dynasties:
Official rebellion, popular uprising, and foreign invasion.
If we apply this to Chinese history, about 40% of dynasties died due to official rebellions, 40% died due to popular uprisings, and 20% died due to foreign invasions.
Official change: The central government is aging, and the princes are too powerful to be eliminated
Let’s first look at the official changes.
There are two forms of so-called official coups. One is the internal division within the central government. For example, Wang Mang's usurpation of power in the Han Dynasty and Zhao Kuangyin's Chenqiao Mutiny in the Song Dynasty were both considered official coups.
There have actually been many splits within the Ethereum Central.
Several of Ethereum’s early co-founders openly rebelled
For example, Charles Hoskinson created the Pos public chain Cardano, and Gavin Wood launched Polkadot.
Moreover, both chains are known as Ethereum killers.
It's just that the Zhou emperor was prosperous at the time and had many supporters, so these early rebels hardly achieved anything significant.
The most successful official change in our crypto circle is Binance. CZ and Yijie, who were once core members of OKX, left and now have built Binance into the number one exchange in the universe.
Before analyzing the situation of Ethereum Central, let’s take a look at the architecture of Ethereum Central. Here are the three officials and six ministers of Ethereum:
Many people think that Vitalik Buterin is the emperor of Ethereum, but in fact, he is not. As a decentralized organization, Ethereum does not have an emperor. It can be considered a dynasty with a constitutional monarch.
Vitalik Buterin currently ranks second among the three officials. Judging from his daily work, Vitalik Buterin is more like a censor who can influence public opinion in the government and the opposition.
There are also some people among the six ministers who openly disagree with Vitalik:
Peter, the developer, complained on Twitter that Ethereum’s roadmap is unclear
In fact, singing a different tune and arguing is not a big deal, but what people complain about the most about the foundation is that they suspect that these people are treacherous and are enriching themselves.
For example, two of the six leaders, Justin Drake and Dankrad Feist, disclosed that they had become EigenLayer consultants and would receive EIGEN tokens as compensation that "may exceed their current wealth". In the eyes of the community, this "want both" behavior is really ugly, and some people even joked that EF researchers are "re-staking themselves".
Although the two researchers mentioned above resigned from the consultant position of EigenLayer some time ago, it is obvious that there are already various hunting capitals lurking around the Ethereum Foundation, either appointing them as consultants or directly sponsoring the researchers' personal research, and these foundation members themselves do not seem to object to this.
The one who is hunted the most is of course Vitalik, who has the greatest personal influence.
In the eyes of the market, Vitalik is the orthodoxy. The market will recognize anything related to Vitalik, and this recognition extends to all aspects of the ecosystem.
The most classic case is Scroll. During the period when the L2 narrative was popular, it rose from an inconspicuous "Chinese local dog" to a $1 billion mainstream L2 like Starktnet and zkSync. The reason for this was that an email written by the founder to EF received a reply from Vitalik.
It is precisely because the Ethereum central foundation has been hunted for a long time that since you can make money by lying down, why stand?
What Ethereum really fears is a rebellion by the princes.
The current relationship between the Ethereum mainnet and L2 is actually very similar to the relationship between the Tang Dynasty and its various Jiedushi, rather than the Spring and Autumn Period and the Warring States Period.
Because the various princes during the Spring and Autumn Period and the Warring States Period were fighting against each other, there was no external pressure.
The military governors in the middle and late Tang Dynasty were mainly responsible for guarding against foreign enemies.
Ethereum vigorously promoted L2 in the past two years to defend against attacks from various performance chains, and it has successfully dismantled many performance chain ecosystems known as Ethereum killers.
The current situation is that the Ethereum mainnet accounts for about 55% of the assets of all public chains, which is still a majority position.
However, Tron/Solana/BSC that follow are no longer Ethereum's L2.
At this time, Ethereum Central has two options:
The first is to expand and strengthen the main chain. This was the path the Song Dynasty chose when it fought against Liao, Jin and Mongolia.
The second path is to let L2 compete with other public chains. This was the path chosen by the Tang Dynasty when it faced the Turks, and by Empress Dowager Cixi when she suppressed the Taiping Heavenly Kingdom.
Judging from the roadmap released by Ethereum, it may be impossible to improve the performance of the main chain in the face of a fierce opponent like Solana, and the only option is to let L2 continue to increase performance.
We will talk about the competition with other public chains such as Solana later. Let’s first take a look at the situation of L2 on Ethereum.
From the data point of view, there are only two chains that can truly help Ethereum resist foreign enemies: Base and Arbitrum.
This is actually very similar to the situation in the middle of the Tang Dynasty. There are only two main groups that can fight: An Lushan in the east and Geshu Han in the west.
Moreover, these two L2s each have their own plans. Arbitrum is blatantly developing Layer3 and even accepting USDC as gas fee, which shows that it wants to be the emperor itself. The strategic choice of the Base chain will definitely give priority to the interests of Coinbase.
In 2017, BNB was first issued on Ethereum, but Binance chose to rebel and built its own Binance Chain. It has to be said that Binance is really rebellious. It caused internal divisions within the central government in OKX and also caused a rebellion among the princes in Ethereum.
Most other L2 projects, let alone defending Ethereum’s central position, are almost all positioned to fleece the platform and pry it out of its position.
On the one hand, these L2s raised a lot of funds from VCs, and on the other hand, they used airdrops as bait to attract a large number of users' Ethereum tokens.
As the saying goes, "the front is tight and the back is tight", this probably refers to Layer 2.
A large amount of funds and development have been invested in a lot of ineffective and duplicate infrastructure, so much so that Vitalik Buterin also announced in the second half of this year that he would no longer support new L2 projects. After the airdrop of various Layer2s listed this year, the assets and users on the chain have basically run away.
Foreign invasion: other public chains are strong and consensus is decentralized
After talking about the various powerful lords of Ethereum, let’s take a look at the external enemies that Ethereum faces.
Solana is the biggest concern for Ethereum right now
Several major innovations of CRPIO in the past, including the ICO in 2017, Defi Summer in 2020, Gamefi and NFT in 2021-2022, all took place on Ethereum, and the Ethereum mainnet.
As for the original market narrative, whether it is meme, AI/payment, etc., many projects have chosen Solana or other high-performance chains.
Looking specifically at the track, Solana and Base are competing in the AI and meme track.
The new track of AI Meme was born directly on Solana, and it also received explicit support from A16Z.
Base previously completed the first AI-to-AI payment in history, and recently launched a new set of fully on-chain AI agents that can create an Al Agent with its own encrypted wallet within 3 minutes.
In the payment field, Ton is eyeing Telegram with nearly 1 billion users, and is definitely a small player that Ethereum cannot ignore.
Moreover, relying on the fission of telegram this year, Ton has snatched away a lot of market share from gamefi.
If three years ago, Ethereum could represent the development direction of innovation in crypto applications.
But up to now, I believe that this consensus has been basically dispersed, and no one should be sure that the large-scale implementation of crypto applications will definitely occur in the Ethereum ecosystem.
At least Solana and Ton still have great chances.
Civil unrest: The industry has entered a period of disillusionment, with limited implementation scenarios
The recent weakness in Ethereum’s price is not only due to the internal and external troubles mentioned earlier, but also because Ethereum’s supporters may change their minds.
It has been nearly ten years since the release of Ethereum's mainnet, and its total market value has reached 300 billion US dollars, which is a behemoth among all types of global assets.
The largest asset in the world is gold, worth $18 trillion
Bitcoin has now surpassed silver in ranking, with a value of 1.8 trillion, ranking seventh, which is still ten times away from gold.
Ethereum's market value ranks 29th in the world, which is not a low ranking. It is ahead of Procter & Gamble and Costco Bank, and behind it are Netflix and Bank of America.
There is a saying in the financial industry that once an asset reaches a market value of 300 billion US dollars, it will be difficult for its valuation to increase further. To go further, it must rely on performance, and it will be difficult for the original supporters to continue to maintain it.
Bitcoin is still advancing rapidly, but Ethereum lacks stamina. If this continues, by this time next year, the price of Ethereum denominated in Bitcoin may reach 0.02.
Why is this?
There are probably three categories of Ethereum supporters.
The first category is miners. Back when Ethereum was still in POW mode, there were many miner groups supporting Ethereum. Later, when Ethereum changed from POW to POS, the miner groups were completely offended.
The second category is various on-chain users, who contribute most of the gas fees for the Ethereum ecosystem and can be said to be the real breadwinners. However, in the absence of on-chain application scenarios, there are only two things that can be done on the chain: hype memes and make money.
In this round of meme wars, many users switched to Solana; and the fur-collecting party was even more heartbroken. From zksync to scroll, the key projects in the Ethereum ecosystem acted like a dead pig that is not afraid of boiling water, forcing users to go to the TON chain to collect fur from the game.
The third category is Ethereum investors, among whom there are some very stubborn people who support Ethereum for a long time.
But what’s interesting is that the Ethereum Foundation always sells coins precisely when the price trend is good:
In particular, there were two sales in 2021. One was the sale of 35,000 Ethereum at $3,533.3 two days before May 19.
Another time was when 20,000 Ethereum was sold at $4,677.6, the historical high of Ethereum.
These two precise escapes established the Ethereum Foundation’s reputation as a signal for market crashes.
In the past year, the Ethereum Foundation has been active, with operations occurring almost every month.
After such a series of operations, it can almost be said that many investors have been disappointed.
At the same time, if you look at Bitcoin, not only do miners continue to support it, but many large miners are able to go public on the Nasdaq and raise funds to increase computing power.
With the development of the Bitcoin ecosystem this year, there are also meme players and freeloaders on the Bitcoin chain, and they have even contributed about 10% of the miners' income.
On the investor side, not only is there no so-called foundation selling coins, but the narrative of value storage continues to gain recognition from the mainstream market. Who knows if the United States will list Bitcoin as a federal reserve asset someday.
It can be said that the number of Bitcoin supporters is increasing, while the number of Ethereum supporters is decreasing.
Summary of the problem
Having said that, let me summarize:
First of all, there are internal troubles. The Ethereum Foundation is actually in a strange state now. It is almost being hunted by capital. The members of the foundation are making a lot of money, but the foundation still has to sell coins from time to time to maintain operations.
Another thing is the development strategy of layer 2. Judging from the current situation, the only layer 2 that Ethereum can compete with are Arbitrum and Base chain, and most of the other layer 2s are lagging behind.
If this situation continues for a long time, if either Arbitrum or Base rebels, the Ethereum ecosystem will be dead in name only.
In this context, Ethereum’s external concerns are also very serious.
Historically, every crypto bull market has been triggered in the Ethereum ecosystem, and more than 90% of VC investments are invested in Ethereum ecosystem projects.
But it is very likely to happen on Solana and Ton this year, and a lot of VC investments have been dispersed to the Solana and Ton ecosystems.
Since 2022, Ethereum first offended the miners, and this year it offended the profiteers. Even though the price of the currency is sluggish, the Ethereum Foundation continues to sell the currency, and it is about to offend all the investors.
I have to say, this situation is really difficult to deal with.
It is generally difficult to reverse the situation at the end of a dynasty.
What can we do?
I'll just give you some advice here~
For example, should the members of the Ethereum Foundation give part of the money they earn as consultants to the foundation? Because people originally came to you for your identity.
Maybe in this way, the Ethereum Foundation not only doesn’t have to sell coins, but also has extra profits to buy back Ethereum, right?
In the crypto world, there are no contradictions that cannot be solved by pumping the market. If there is, it is because the pumping is not enough. If the pumping is good, maybe Ethereum will usher in a revival like the Tongzhi period of the Qing Dynasty~
