From Monopoly to Clamor: The Rise and Fall of Ethereum and Future Prospects

Since Bitcoin broke its historical high in 2024, Ethereum has been drifting further away from its previous highs, and the market's doubts about it have been growing increasingly louder. By 2025, the price of Ethereum continues to decline, with market sentiment shifting from skepticism to despair and abandonment. This article will review the rise and fall of Ethereum from five aspects and look ahead to its possible future.

1. The Glorious Years of Ethereum (2017-2022)

In July 2014, Ethereum opened its ICO, but the price remained below $10 until 2016. In 2017, the ICO boom erupted, and Ethereum began to shine. On January 13, 2018, its price soared from $10 at the beginning of 2017 to $1430, setting a new historical high.

From the beginning of 2017 to 2018, over 2,500 tokens conducted ICOs on Ethereum. During this phase, the main value of Ethereum was in issuing tokens, becoming the sole currency for participating in ICOs. Although some new public chains emerged, their market share was almost negligible.

The years 2018-2019 were the era of concurrent blockchains. Although many new public chains emerged in the market, Ethereum still dominates the smart contract market. Smart contracts were pioneered by Ethereum, and its founder has significant influence in the global cryptocurrency space. The Ethereum ecosystem has gathered the largest number of smart contract developers and innovators worldwide.

In 2020, the summer of DEFI became a highlight moment for Ethereum. A number of early crypto-native applications surged in the Ethereum ecosystem, such as Compound, Uniswap, Yearn.Finance, MakerDAO, and Curve. This filled people with expectations for the future of Ethereum, believing that the decentralized world would be built on Ethereum.

In 2021-2022, the Ethereum ecosystem saw the rise of trends such as GameFi, SocialFi, and NFTs. On November 10, 2021, Ethereum reached an all-time high of $4878, marking the peak of its prosperity. However, as more funds, users, and applications are hosted on-chain, Ethereum has also become increasingly expensive and slow. The issue of performance scalability has become the biggest obstacle to its development.

2. The Expansion Path of Ethereum (POS-Layer2)

The expansion plans for Ethereum mainly have two directions: shifting to a POS mechanism and developing Layer 2.

The shift to the POS mechanism was a direction established by the founders at the inception of Ethereum, believing that POS is more resource-efficient than POW, while also enhancing network performance and scalability.

Layer 2 solutions have always been a highly regarded direction for scalability, from early explorations like state channels and subnets, to later Rollup solutions, and the concentrated emergence of OP-Rollup and ZK-Rollup in 2022-2023, all of which have brought hope for the scalability of Ethereum.

On September 15, 2022, Ethereum officially transitioned to the POS mechanism. However, can Layer2 really become the savior of Ethereum? After the development from 2022 to 2024, numerous Layer2s have gone live, but each Layer2 has not brought more benefits to Ethereum; instead, they have continuously drained and backfired on Ethereum. The Layer2s have become independent fiefdoms, not only carving up Ethereum's market but also having ambitions to replace it.

Ultimately, some native applications have begun to build their own Layer2 and even replaced ETH with their own tokens as GAS, which is a complete betrayal. The path of expansion for Layer2 has been debunked.

Looking back at Ethereum's abandonment of POW, this is almost like self-mutilation. After losing miners, the ETH token has lost its basic manufacturing cost and the most fundamental price-bearing mechanism. If Ethereum had not transitioned to POS and had continued to develop Layer2 under the POW mechanism, even if Layer2's development had not gone well, the price-bearing mechanism of ETH would still be effective due to the continuous input of computing power and electricity from miners, and today's price performance might be very different.

3. The Innovator's Dilemma of Ethereum

Before 2022, all innovations in the cryptocurrency space originated from Ethereum, while other chains merely followed and imitated. However, innovators often find themselves in the innovator's dilemma.

After 2020, Ethereum has been seeking ways to scale in order to optimize performance and meet the needs of existing users, with the core goal of making ETH faster and cheaper. However, this is precisely the inevitable predicament of innovators.

Since users need a faster and cheaper blockchain, why can't it be other public chains? Thus, TRON seized the stablecoin market, and certain trading platforms created a closed loop around their own ecological barriers for project issuance and trading. Most notably, a certain public chain, with the foundation personally involved, continues to create wealth myths through Meme strategies.

Ethereum is being surpassed by competitors. Everything about public chains is open source; if you innovate a technology today, I can use it tomorrow. After 2022, Ethereum's core developers will focus on underlying research and development such as scalability, while innovation in applications and gameplay begins to slow down. Those new chains without performance issues can concentrate their efforts on model innovation, thereby achieving rapid overtaking.

4. The Weakness of Ethereum Reflects Poor Industry Development

Apart from Bitcoin, Ethereum can be said to be the biggest innovation in the cryptocurrency space. But why has it suddenly faltered? In addition to being overtaken by more agile competitors while focusing solely on underlying research, there are deeper reasons: the cryptocurrency industry still hasn't found a truly healthy development paradigm.

In this cycle, apart from Bitcoin, only Memes still have a wealth effect, and many projects are being ignored. Why? Because everyone knows that these projects are just telling stories and have no real value. If that's the case, it's better to buy the safest Bitcoin and then play with the simplest and most straightforward Memes.

Therefore, before the cryptocurrency industry develops truly valuable applications, it is likely to continue cycling through the current model. If one day even Memes lose their wealth effect, then there will really only be an endless bear market left.

5. The Future of Ethereum

The only remaining barrier for Ethereum is the capital accumulated on the mainnet and the already closed-loop DEFI ecosystem that has formed. These DEFI protocols create a tightly integrated and organically combined ecosystem. All assets entering the chain cannot bypass Ethereum's DEFI when seeking liquidity.

Many people believe that RWA may be an opportunity for Ethereum. However, the path for RWA is long and difficult. Whether Ethereum can continue to create more innovative on-chain gameplay remains one of the most effective breakthroughs.

However, Ethereum has indeed lost its monopoly position. Its competitors have also really developed, and each has formed its own barriers. Ethereum's years of expansion have not significantly improved performance; it remains slow and expensive, and applications with high-performance demands will still not choose Ethereum in the future.

So, will Ethereum lose its position as the second largest cryptocurrency? Will the title of the king of public chains be replaced by other chains? This requires considering the following factors:

1. If the remaining DEFI advantages of Ethereum are taken away by other new public chains.
2. If Ethereum is unable to improve its performance for a long time.
3. If Ethereum's ecological innovation still lags behind the market.
4. If Ethereum developers gradually leave.

Under the pattern of wolves surrounding, the expensive, slow, and lacking innovation Ethereum will face severe challenges.

As a former supporter of Ethereum, I still hope it can continue to innovate and that its founders can continue to lead the developer community, constantly launching applications and development paradigms with greater innovative value. Because only continuous innovation is Ethereum's only barrier.

Summary

This article reviews the eight-year journey of Ethereum from 2017 to the present. Ethereum represents a second possibility for blockchain technology and is the largest innovation following Bitcoin. Its rise originated from ICOs, and the DEFI, GameFi, SocialFi, and NFT boom from 2020 to 2021 has pushed the application scenarios of smart contracts to new heights.

However, from 2022 to 2023, Ethereum's focus shifted towards underlying research and development, and the ecosystem lacked market-oriented and community-centered application or model innovations, with no paradigm innovations emerging that could surpass DEFI. This is the core reason for the poor performance of Ethereum and its ecosystem-related tokens in this cycle.

When we discuss the future of Ethereum, we are actually discussing the future of the cryptocurrency application market. The prosperity of Ethereum reflects, to some extent, the development of the entire industry. After all, this industry cannot be just Bitcoin and Memes.

Even if one day Ethereum is no longer the sole leader in the smart contract market, the technological and paradigm innovations of its ecosystem are still worth looking forward to.