Jessy,
Golden Finance
The sentiment towards Ethereum has changed after the approval of Ethereum spot ETF. Within a day, Ethereum surged by 20% after news broke that the probability of the approval of Ethereum spot ETF this month is high. After the approval, its price briefly reached $3,800.
In this bull market, Ethereum’s performance is not as strong as Bitcoin’s, and the rise of some public chains such as Solana poses a certain threat to Ethereum. Therefore, it is reasonable to be bearish on Ethereum. However, beneath these appearances, it is worth noting that Ethereum still holds 60% of the TVL in the public chain market, while the second and third places only have single-digit percentages. Furthermore, Ethereum has never stopped its technological innovation to improve the criticized issues.
Is Ethereum really running out of ideas, or is it just in a dormant state?
The exchange rate of Ethereum to Bitcoin has been continuously declining in the past year. The fundamental reason behind this is the strength of Bitcoin. When Bitcoin enters a correction cycle, most altcoins have low gains, and some even have lower prices than during the bear market. Even the Godfish has commented that there might not be an altcoin season in this bull market.
In the previous bull markets, the pattern was usually that Bitcoin rose first, followed by Ethereum, and Ethereum’s rise led to the explosion of altcoins. In the last bull market, most altcoins also had a tenfold increase. When there is sufficient capital in the market, it will overflow from mainstream coins to altcoins.
The logic behind the rise of altcoins due to Ethereum’s rise is that most projects were built on Ethereum before. The skyrocketing price of Ethereum indeed brought prosperity to the entire on-chain ecosystem.
However, this bull market is different from the past as it started half a year earlier than usual. The reason is simple: this bull market is driven by the approval of spot ETF, followed by the Bitcoin halving.
However, due to the influence of the economic cycle, there is still a lack of liquidity in the market, and there is not much growth in Ethereum’s price. The reason is the insufficient liquidity in the market and the lack of funds.
Moreover, Ethereum’s narrative this year is not new or strong enough. In terms of the public chain sector, Solana undoubtedly performs the best in this bull market. Its price keeps rising, and the on-chain ecosystem is also thriving. The main reason is the support from Wall Street capital. TON, which also ranks in the top ten by market capitalization, tells a story of converting traffic from 900 million Web2 users, attracting a group of venture capitalists to support it.
Ethereum also has an attractive narrative in the industry—Layer2. During the bear market, many people focused on this track. However, the increase in the price of Layer2 tokens has not been satisfactory, and they have been criticized for the high market value due to the large amount of unlocking. Moreover, the emergence of various Layer2 solutions has indeed diverted attention from Ethereum and attracted funds that were supposed to be invested in Ethereum.
From a technical point of view, Ethereum is indeed constantly innovating, but the concept of Layer2, which is the most attractive, cannot bring a large influx of funds to Ethereum.
Of course, in this bull market, Ethereum has another exciting narrative—the approval of Ethereum spot ETF in the United States. The recent price surge is also due to the news that the probability of the approval of Ethereum spot ETF on May 23rd in the United States is high.
On the surface, the biggest driving force behind Ethereum’s rise is the approval of spot ETF. However, we cannot ignore the fact that the development of Ethereum’s ecosystem itself is the cornerstone of its value.
Ethereum is still the dominant public chain in terms of TVL.
According to DefiLlama data, Ethereum currently accounts for 59.93% of the TVL, with TRON in second place at only 8.61%. TRON became the second because Tether issued USDT on it, while BSC ranks third with a share of 5.31%. Solana, which has made significant strides in this bull market, ranks fourth with a share of 4.69%. It can be seen that Ethereum is still the dominant player, and it is difficult for other public chains to surpass it.
Why can Ethereum remain dominant?
Ethereum was established in 2013 and officially launched in 2015. It can be said that Ethereum was born for smart contracts and was the first blockchain to achieve Turing completeness. It was created to support various applications. Ethereum’s emergence brought more possibilities to the blockchain.
However, in the previous bull market, Ethereum’s DeFi ecosystem flourished, and the number of users skyrocketed. As a result, the Ethereum network became congested, leading to longer block times, slower transaction speeds, and higher transaction fees.
For retail investors, Ethereum has become a public chain with low cost-effectiveness.
In this context, many new public chains emerged to address the issues of Ethereum or even replace Ethereum. Some public chains claimed to be “Ethereum killers” and started to grab market share.
The “Ethereum killers” that emerged in the previous bull market include Cardano (ADA), Avalanche (AVAX), BNB Chain (BNB), Solana (SOL), and Polkadot (DOT).
These “killers” have a common point—they all claim to have high throughput and low transaction fees. Of course, they each have their own advantages. BNB Chain is backed by Binance and has high liquidity, with many use cases for its token BNB. Avalanche has optimized transaction speed through its groundbreaking protocol consensus mechanism and three subnets, making it a favorite public chain for GameFi. Polkadot’s biggest advantage is its multi-chain structure and active developers on the chain.
Public chains hope to enhance their technical level from the perspective of development language, code complexity, and operating mechanism, in order to compensate for Ethereum’s shortcomings. Although they all have their strengths, it is impossible for them to surpass Ethereum, and their TVL is less than one-tenth of Ethereum’s.
Not to mention public chains like Aptos, which emerged during the bear market. Although it received strong support from venture capital, its performance is unsatisfactory.
Although many public chains have emerged, there has been no public chain that can truly challenge Ethereum’s position. Even if these public chains unite, they still cannot shake Ethereum’s dominance. The reasons are twofold: Ethereum has deep experience and has accumulated a large number of users and projects. Secondly, the problems such as scaling, congestion, high gas fees, and restrictions similar to EOA addresses have all been solved.
For example, the scaling problem has evolved into multiple solutions such as Rollup, Plasma, and Validium. The restriction of EOA addresses has been solved through the upgrade of the ERC4337 Account Abstraction, which has evolved into an account abstraction trajectory. Even with the potential limit of block capacity, heavyweight solutions like Eigenlayer have been introduced to expand the capabilities of DA, and optimization can be achieved through modular combinations of third-party DA solutions such as Celestia and optional alternatives for VM execution layers.
Layer2 is now an important narrative for Ethereum and has become an independent track in the industry. It is designed to solve Ethereum’s scalability issues by building an additional network layer on top of the Ethereum main chain, allowing for more transactions while maintaining the security and decentralization of the main chain.
Furthermore, Ethereum’s mainnet has a clear development path. For example, Vitalik has planned five stages for Ethereum to improve performance: Merge, Surge, Verge, Purge, and Splurge.
From all this, it is evident that Ethereum has never stagnated and has been driving technological progress in the industry in most cases.
What changes does Ethereum need to make in the future?
Ethereum also faces challenges. Privacy, consensus, smart contract security, and scalability have been challenges for Ethereum since its inception. Moreover, in different stages of development, these challenges have different specific problems.
For example, in terms of protecting user asset security, the Ethereum Account Abstraction or ERC-4337 protocol was proposed. It has long been studied by the Ethereum community, and the best solution to address this issue has been determined. This protocol achieves account abstraction in Ethereum standards without changing any consensus layers.
However, Vitalik has mentioned in a speech that while promoting broader account abstraction, how to deal with MEV issues also needs to be considered to ensure the fairness, security, and healthy development of the system. It requires the joint efforts of all roles in the ecosystem, and the overall goal is to make the on-chain experience consistent with centralized service experience.
This shows that even a technological innovation and promotion involve very specific and coordinated work.
Similarly, Vitalik also pointed out that in terms of Layer2 scalability, ensuring the security and decentralization of the proof system when L2 packs and submits transactions to L1 is also a very important issue. Most transaction orderers in L2’s technical components are centralized and may have potential risks. L2 has different technical choices and development directions, and how to build wallets and addresses that span multiple L2 and provide a better user experience is also important. The storage and preservation of transaction-related data require space, and how to solve the data availability problem are practical technical issues that need to be solved step by step for the future development of the Ethereum ecosystem.
A more straightforward question is what happens to Ethereum’s centralization in staking after the transition to PoS. Ethereum’s current centralization in staking has been criticized, and some even question that such Ethereum can be easily controlled by governments. How can this be resolved?
However, the problems Ethereum currently faces are actually challenges that the entire industry needs to overcome in terms of technological progress.
For users and the industry, the fact that these issues are proposed, widely discussed, and practiced is a key point that makes Ethereum trustworthy. It can be seen that Ethereum does not shy away from problems and has been actively solving them.
In conclusion, Ethereum is indeed a highly dynamic and innovative public chain in the industry, and it is currently difficult to be surpassed.
Tags:
ETF
Ethereum
Golden Finance
Source link:
https://www.jinse.cn/blockchain/3685917.html
Note: The translation only represents the author’s point of view and does not constitute investment advice.
Original article link:
https://www.bitpush.news/articles/6784124
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