Below is a guest post and analysis by Shane Neagle, Editor-in-Chief of Tokenist.
Ethereum (ETH) remains second to Bitcoin since 2017’s fertile but somewhat illicit initial coin offering (ICO) Frenzy, and now has nine times the market capitalization. Over the past five years, Ethereum has had an average annual return rate for almost all 60%Bitcoin, neck and neck.
However, last year there has been a significant change in Ethereum’s reputation, particularly against rival blockchains like Solana (SOL). Compared to Bitcoin, which returned 33.73% over the course of a year, Ethereum caused nearly 50% losses. At current prices, ETH has returned to its October 2023 price level.
What’s immediately noticeable is that Ethereum tends to descend without such gatherings, whereas alternative proof Solana erupts frequently with a large influx. Ethereum, representing Decentralized Finance (DEFI), has held a market share of at least 52% since May 2022.
In the meantime, Solana has more than doubled its market share from 3% to nearly 8% since May 2022. Given that there is no shortage of Layer 1 blockchains similar to Solana, this is a sign of that
Will Ethereum continue to slide and be cannibalized by pure L1 chains that do not rely on L2 solutions?
In other words, how should we look at the basics of Ethereum? Is Ethereum actually poised to maintain or increase control of the debt market?
To answer that, first revisit a large code photo.
What is the vision of Ethereum?
Since the Internet was commercialized, one obvious component: native value transfer has been missing. After all, if e-books can replace books and emails can replace emails, why are there no emoney replacements for Fiat currency? More importantly, why can’t we automate contracts within the scope of exchanging bank services such as loans?
This was the fundamental driving force behind blockchain technology, starting with Bitcoin. However, adopting native internet remittances at scale requires three important components:
- It should not be trusted and eliminate the vulnerability of arbitrary human intervention. For something to be fully trusted, the confidence spectrum must be kept to a minimum near zero.
- It should implement user-friendly, intuitive design, seamless interoperability and frictionless user experience.
- It must be scalable to handle the transition from legacy finance to blockchain finance.
Within this framework, Ethereum is strongly positioned as a theoretical building. Recently, one of the top Ethereum developers, Justin Drakefiltered out what Ethereum means in various places in legacy human behavior.
But what is the real possibility that this could happen?
Is cryptography actually executable?
At face value, Ethereum aims to uproot its established power network. Expecting to go without any major friction would be a movement of stupidity. This is why we saw a sustained effort It prevents Defi Services from expanding Biden administrator.
When President Trump took office and Elon Musk launched Government Efficiency (DOGE), it became even more clear that medieval and political space were running. Social Engineering and Institutional Deception. And the underlying force of such a system is the lack of transparency in the flow of money.
In particular, these have been established:
- If power is threatened, conditions are constructed that include alternative forces.
- In the cryptography context, the foundation of entrenched power is the need for fiat transformation.
- The defi app may be useful, but it’s pointless if you can’t spend money in the real world.
- Therefore, for the Fiat Crypto Transformation to be feasible, all participants in the (block) chain must comply with the established force conditions.
What happens when it’s appropriate, if someone believes Climate change Aiming to curb the distribution of wealth via in order to become a systematic hoax Net Zero Policy? Such policies are funded and enforced through taxation. An exit from funding for recognized enforcement policies would require that the law be broken.
This applies to public policies that are perceived as unfair or deceptive.
However, if mass adoption of defi blockchains is successful, For credit cards To get the right rivalry, you need consistent compliance with the law no matter what happens at a particular moment. That’s why The utility of DAPP equals regulatory compliance. In other words, even unreliable systems need to connect themselves to an arbitrary, voluntary trust framework that is said to be aiming to leave.
But if that’s the case, why is a steady power network not being implemented? Its own layer of money on the internet? After all, it enjoys full reliability for mass adoption, but is more convenient.
Ultimately, Ethereum’s vision could be staring at a wall that is too high to scale. But, since we’ve put together a full picture of crypto containment, is Ethereum expanding its competitiveness in the first place?
Ethereum Revitalization Initiative
Transition from proof of work at Ethereum to proof of stakes I’ve raised some hackles99% energy reduction can be argued that it is worth it for scaling. Thus, Ethereum could become a launch pad for global smart contracts.
On that road, the approach adopted is to rely on layer 2 solutions such as Optimism, Polygon, Arbitrum, Base, Starknet, Zksync, and more to offload traffic and reduce transaction fees. And the lower the transaction fee, the lower the end-user friction.
The problem is that this approach introduces a whole new layer of friction, such as multiple chains, bridges, and wallet juggling. This not only raises the barrier to entry, as the average user is always looking for simplicity, but also fragments the capital that otherwise jumps into Ethereum itself.
But on the front of scaling, Vitalik Buterin pointed out that the L2 approach could have increased the transaction processing power of the blockchain by 17 times. The overall goal is to make Ethereum a kind of operating system (OS) of DEFI.
- Create a “under the hood” L2S interaction by creating a general standard for chain-specific addresses, cross-chain bridges and reducing the finality of transactions from week Until a few minutes.
- Double blobs (temporary data) per block from 3 to 6 Pectra Upgrade. Increased blob throughput should further expand the L2 layer while maintaining low prices.
- To make ETH a valued asset, Buterin hopes to entrench it as the main collateral for the entire Defi app.
- In addition to the combustion mechanism for sharing ETH transaction fees, this can cause ETH to become a deflare set. At the moment, ETH is Inflation rate 0.754%, slightly lower than Bitcoin’s 0.829%.
However, Buterin also considers privacy concerns to Paramount, so the Ethereum Ecosystem must move to one default address per app. According to him My wordsthis “has a serious convenience sacrifice, but IMO this is a bullet we should bite.”
It remains to be seen whether “bullets” will backfire when the convenience level of the Ethereum ecosystem is questionable for pure L1s like Solana. I will judge from Deloitte Survey In the second half of 2024, 85% of consumers are “taking at least one step to address privacy and security concerns,” but this sentiment usually suffers from erosion when conflicts with convenience.
Ultimately, Ethereum needs to reach the stage where users are involved in Dapps without knowing that they are using cryptography. In such a scenario, adoption rates should offset potential crypto containment.
The problem is Solana is already number one Regarding real-time transactions per second (TPS) at 1,049, Ethereum ranks 17th at 14.07 TPS (a week or more). Differences measured with a single tick It can have a large meaning on a large scale. For Solana’s theoretical 60,000 TPS, the Ethereum roadmap is set to 100,000 TP, as the blockchain is sharded.surge“Development stage.
With all roadmap phases in mind, users should not expect the possibility of mass adoption of Ethereum until 2030. jpmorgan.
Conclusion
Blockchain apps are in the clumsy era of flip phones with physical keyboards. To get closer to ubiquiri, Dapps must evolve into the age of smartphones. This is intuitive, seamless and invisible to the user.
However, such ubiquity could paradoxically depend on the very institutional support the blockchain ecosystem is about to replace. In addition to technical hurdles, Memecoin Mania It clearly demonstrates that much of the public’s entry into Crypto remains knowledgeable and speculative.
As more people bring negative experiences through token-based gambling, this misallocation of capital risks alienating wider adoption. It also creates dynamics that provide legitimacy for recognized and qualified institutions as the blockchain ecosystem ripens for centralisation.
This is a lens that requires watching Ethereum and its rival chains. As an exciting and innovative platform for decentralized finance, it still navigates the unstable path between idealism and reality.
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