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The Rise and Fall of Ethereum: From Dominance in Public Chains to Challenges and Prospects Surrounded by Multiple Powers
The Rise and Fall of Ethereum: From Dominance to Competing Rivals
Since Bitcoin broke its all-time high in 2024 while Ethereum continued to decline, doubts about Ethereum in the market have grown stronger. By April 2025, the price of Ethereum even fell below $1500, and market sentiment shifted from skepticism to despair. Many early investors began to sell off their Ethereum, and former supporters also started to waver.
This article will review the rise and fall of Ethereum and look ahead to its possible future.
1. The Glorious Period of Ethereum ( 2017-2022)
In 2017, the ICO boom propelled Ethereum from $10 to $1430. As the preferred platform for issuing tokens, Ethereum monopolized the smart contract market and enjoyed huge dividends from innovators.
In 2018-2019, although many competitive public chains emerged, Ethereum still dominated the field of smart contracts. Vitalik Buterin's influence in the global cryptocurrency sphere is second only to Satoshi Nakamoto.
The summer of DeFi in 2020 marked the peak period for Ethereum. The explosion of projects like Compound, Uniswap, and Yearn.Finance made Ethereum the core platform for decentralized applications. The subsequent waves of GameFi, SocialFi, and NFTs further propelled the prosperity of the Ethereum ecosystem.
In November 2021, Ethereum reached an all-time high of $4878. However, as network load increased, high Gas fees and slow transaction speeds became major obstacles to development.
2. The Scalability Road of Ethereum ( PoS and Layer 2 )
To solve the scalability problem, Ethereum has adopted two major strategies: transitioning to a PoS mechanism and developing Layer 2.
In September 2022, Ethereum officially transitioned to a PoS consensus mechanism. Although this change has sparked dissatisfaction among miners, it is considered a necessary step to improve network performance.
At the same time, Ethereum is vigorously promoting Layer 2 solutions, including Arbitrum, Optimism, zkSync, and others. However, these Layer 2 projects have not only failed to effectively enhance Ethereum's performance but have also become competitors that divert resources within the decentralized ecosystem.
Worse still, some native Ethereum applications like Uniswap have started to build their own Layer 2 solutions, even using their own tokens instead of ETH for gas fees, which is undoubtedly a departure from Ethereum.
Giving up the PoW mechanism has also proven to be a controversial decision. With the loss of miner support, ETH has lost its fundamental manufacturing cost and price support mechanism.
3. The Innovator's Dilemma of Ethereum
For a long time, Ethereum has been a leader in innovation in the cryptocurrency space. However, this leading position has also brought about the "innovator's dilemma."
In order to optimize existing technology and meet current user demands, Ethereum has focused on improving network performance. However, this has given other public chains the opportunity to overtake.
TRON has seized the stablecoin market, BSC and BASE have formed a closed loop around the exchange ecosystem, while Solana has attracted a lot of attention through meme marketing and a continuous wealth effect.
The open-source nature of Ethereum means that its innovations can be easily imitated. While Ethereum focuses on underlying research and development, other public chains can quickly replicate its application innovations and build upon them.
IV. A Microcosm of the Challenges in Industry Development
The dilemma of Ethereum reflects, to some extent, the developmental challenges faced by the entire cryptocurrency industry. Aside from Bitcoin, the industry seems yet to find truly valuable application scenarios.
In the current cycle, apart from Bitcoin, only Meme tokens can generate significant wealth effects. Many projects that were once favored by capital find it difficult to gain market recognition, as they mostly remain in the storytelling stage and lack substantial value.
Before finding truly valuable applications in the industry, the market may continue to cycle in the existing model. If even Meme tokens lose their appeal, then the entire industry may face a long-term slump.
5. Future Outlook of Ethereum
Looking to the future, it will be difficult for Ethereum to dominate again. Its technology and model have been replicated by other public chains, losing their competitive barrier.
Ethereum's current advantage primarily lies in its mature DeFi ecosystem. RWA( tokenizing real-world assets) on-chain may be an opportunity, but this path is not smooth. Continuous innovation remains key for Ethereum to maintain its competitiveness.
However, the challenges facing Ethereum cannot be ignored:
In that case, Ethereum may further lose its position in the fierce competition.
As former supporters of Ethereum, we still hope that it can maintain innovation and continue to launch valuable applications and development models. Only through constant innovation can Ethereum maintain its competitiveness.
Summary
Looking back at the eight-year development history of Ethereum, we see it evolve from a protagonist during the ICO era to the core of the DeFi wave, and now facing current challenges. Ethereum represents another significant innovation in blockchain technology following Bitcoin.
However, in recent years, Ethereum has been too focused on underlying technology research and development, lagging behind in application innovation, which has given competitors the opportunity to catch up. This also reflects that the entire cryptocurrency industry is still searching for truly valuable application scenarios.
In the future, whether Ethereum can regain its former glory hinges on its ability to continuously launch applications and business models that meet market demands while maintaining technological innovation. Despite facing challenges, the development of the Ethereum ecosystem remains promising.