3 months ago
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ETH, the second-largest cryptocurrency by market capitalization, is currently trading around $2,635, marking a 25% decline over the past month.
Ethereum founder Vitalik Buterin recently addressed concerns among investors regarding Ethereum’s perceived loss of dominance in the current market cycle. Responding to a question posed by a trader on X, Buterin firmly asserted that the fundamentals of Ethereum are “crazy strong,” despite the challenges faced by projects within the ecosystem.
Buterin highlighted several key areas where Ethereum has seen major improvements. He pointed out that transaction fees on Layer 2 (L2) solutions have dropped to under $0.01, a critical milestone in making Ethereum more accessible and cost-effective for users. Moreover, two Ethereum Virtual Machine (EVM) compatible L2s, Optimism and Arbitrum, have reached an important stage of development.
Another area of progress Buterin mentioned is the user experience with cross-L2 wallets. Previously, users had to manually switch networks, a cumbersome process that has now been significantly streamlined, though there is still room for improvement.
The Ethereum founder also noted that the development of Zero-Knowledge (ZK) tooling has also advanced, making it easier for developers to build applications on Ethereum with enhanced privacy and security features.
Notably, Ethereum has also experienced a growing demand for second-generation privacy tools, such as those offered by 0xbow. Moreover, the identity, reputation, and credentials ecosystem within the ecosystem has also grown more powerful, according to Buterin.
Buterin also highlighted the progress on STARKs (Scalable Transparent Argument of Knowledge), which offers a clearer path toward long-term security and decentralization for the Ethereum network. Additionally, the roadmap for account abstraction and the endgame for block construction have become more defined.
Last month, Ethereum received a significant regulatory boost when the US Securities and Exchange Commission (SEC) approved nine spot Ether exchange-traded funds (ETFs). These funds have recorded $458 million in net outflows since their launch. However, experts believe that they have the potential to attract over $20 billion in net inflows by mid-2025.
A Struggling Picture
While these expert opinions and Buterin’s post on Ethereum’s strong fundamentals are compelling, they do not reflect Ethereum’s market performance. The layer 1 and layer 2 projects in the ecosystem are facing significant financial struggles, with some projects on the verge of bankruptcy.
ETH, the second-largest cryptocurrency by market capitalization, is currently trading around $2,635, marking a 25% decline over the past month. This is a significant drop from its all-time high of $4,891 in 2021, with ETH now down by 46% from that peak.
Meanwhile, Ethereum’s rival, Solana, often dubbed the “Ethereum Killer”, has seen notable growth with its network’s coins, such as MAGA and WIF, showing impressive surges in their value.
Solana’s total value locked (TVL) has surged by around 250% year-to-date in 2024, reaching $4.92 billion. While Ethereum’s TVL remains significantly higher at $49.4 billion, its growth rate has been a more modest 57% this year so far.
