Ethereum's Middle-Age Struggles
Ethereum, the leading cryptocurrency among developers, is currently experiencing a shift in the market as competitors like Solana and Binance Coin (BNB) gain traction. Despite Ethereum's multi-layer scaling, which has resulted in users needing less Ether (ETH) as it scales better, the cryptocurrency's price against Bitcoin has reached its lowest point since 2019, currently at 0.019 BTC. This is far from its peak of $4,666, a stark reminder of the nearly 90% of its peak value from 2017 that Ethereum has given up. On the other hand, BNB is at an all-time high of 0.36 ETH, having increased tenfold since the beginning of 2021. Solana, too, has seen a tenfold increase since the beginning of 2023, reaching an all-time high of 0.08 ETH. The rise of Solana and BNB can be attributed to factors such as Binance Smart Chain's strong growth with Binance's exchange success and lower fees benefiting BNB, as well as Solana's high throughput and scalability attracting more users and projects. Ethereum, however, has faced challenges such as higher fees and slower transaction speeds before its upgrades. However, Ethereum's average transaction fees and gas prices have fallen to a multi-year low, a welcome development for users. Moreover, over $130 billion in stablecoins are on Ethereum, more than half of the total $239 billion in stablecoins, demonstrating its continued popularity. DeFi, or the mapping of traditional financial operations through smart contracts, has been a spectacular trend on Ethereum since 2021. Notably, "World Liberty Financial" (WLF), Donald Trump's DeFi initiative, is on Ethereum, with the majority of the tokens in WLF's treasury running on Ethereum. The volume of decentralized exchanges is higher than ever before, and over 50% of Total Value Locked (TVL) is on Ethereum. However, the part of DeFi that Ethereum continues to dominate, namely "serious applications" like decentralized exchange, lending, and borrowing, seems to be stagnating. Development in DeFi on Ethereum seems to be stagnating as well, with no new, sustainably popular innovations emerging in recent years. Cracks are beginning to show in Ethereum's facade, with development stagnating at a high level, while younger, bolder, hungrier competitors are chipping away at its throne. Despite these challenges, Ethereum has successfully executed its roadmap, including the switch to Proof of Stake and the development of Account Abstraction and Verkle Trees. It remains to be seen how Ethereum will navigate these challenges and maintain its position as the leading cryptocurrency among developers. One thing is certain: the cryptocurrency market is dynamic, and competition is fierce.
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