Ethereum’s plight and Solana’s rise: New and old narratives clash in the bull market

Although the 2024 Ethereum Bangkok Devcon Conference is regarded as the largest in history, its market enthusiasm seems dull. The sharing content at the venue lacks highlights, which contrasts with the sluggish performance of the secondary market. ETH, the "engine" of the bull market in previous years, seems particularly sluggish this year. The ETH/BTC exchange rate has repeatedly hit new lows. When BTC broke through $93,000, ETH still hovered around $3,000.

Ethereum's lack of innovation and shrinking ecology

In this round of bull market, it is not difficult to find that Ethereum is facing the dilemma of lack of innovation and shrinking ecology. The ICO boom in 2017 and the DeFi Summer in 2020 have injected strong momentum into the Ethereum ecosystem. However, in this round of bull market, Ethereum has not led the trend of technological innovation. There is no phenomenal application narrative to drive new funds and new users, resulting in gwei remaining in single digits for a long time even in the bull market.

In PoW, the value support of Ethereum comes from the computing power of mining machines and energy consumption. After the PoS transformation, it is deeply bound to the ecosystem. The prosperity of the ecosystem can attract popularity, which in turn drives capital inflows, drives up prices, and ultimately promotes pledges and maintains the stability of the blockchain. On the contrary, without an ecosystem, demand decreases, prices fall, and the destruction speed is slower than expected, which starts inflation and directly weakens its value storage potential. This is a fatal challenge for Ethereum with a PoS mechanism.

High-speed and low-cost blockchain experience is the pursuit of all public chains. A key strategy of Ethereum in terms of scalability in the past two years is to vigorously develop L2, but L2 has a high degree of overlap with the main chain function. In the case that the ETH ecological cake has not been further expanded or even the ecology is lost, hundreds of L2s have become "parasitic and blood-sucking" on Ethereum. There is a chaotic fight among L2 warlords internally and a host of new and old public chains swallowing up and encroaching on ETH externally, which has led to the gradual weakening of ETH's voice and competitiveness.

Over 90% of transactions are now conducted on L2

14px;">85% of active users now use L2

There is an "impossible triangle" in blockchain. Ethereum focuses too much on technical narratives and idealistic governance structures, sacrificing performance, which is far from the current market expectations. Nowadays, even Bitcoin, which is regarded as the spiritual belief of the industry, has gradually been tamed by regulators and settled in the hands of more and more Wall Street institutions. This makes people wonder whether the concept of decentralization is still important in the face of price?

When the spirit of encryption cannot be converted into income, the power of the market will weaken all beliefs, and investors will choose to vote with their feet.

Meme economy and Solana's counterattack

In sharp contrast to the downturn of Ethereum, Solana has returned to the center of the stage with the rise of Meme culture.

In the case of abundant liquidity and lack of application narrative, meme, which has broken away from the inherent narrative restrictions of the currency circle, has become the best carrier of liquidity. Most of the Meme community is on Solana. The phenomenal meme culture has attracted a large number of gold diggers, driving a significant increase in the activity of on-chain transactions. Data shows that since late October, Solana's daily on-chain fees have exceeded Ethereum for many consecutive days. The popularity of the Meme track has allowed various funds to continue to enter the Solana ecosystem, making it the hottest ecosystem in the circle.

This round of bull market is regarded as a BTC and meme bull market. Solana has become the center of new meme coins through its low fees and high throughput, which is very similar to the grand occasion of the Ethereum ICO era in 2017. SOL benefits from the accumulation of Meme coin value, analogous to Ethereum ICO and ETH in 2017.

Solana has come back to life after the collapse of FTX. Low fees, low latency and high throughput are naturally beneficial to various applications. When the overall market heats up, none of its ecosystems are left behind, and they all have good performance. The current Meme craze has driven the popularity of the entire Solana ecosystem, with a trend of "my flowers bloom and all other flowers die". Previously, "ETH killer" was the pursuit of many public chains, but now the goal has changed. The market is now playing a game on whether Sui can become the Solana killer.

Conclusion

The decline of Ethereum and the rise of Solana are a contrast that cannot be ignored in this round of bull market. On one side are the struggles and self-adjustments of the old aristocracy, and on the other side are the rapid rise and market pursuit of emerging forces. This clash between the old and new forces reflects the transformation of the crypto market from technological idealism to pragmatism.

Although Ethereum's performance in this round of bull market is disappointing, its strong developer community, continuous technological iteration capabilities, and adaptability to emerging market needs still provide hope for its future development. Ethereum needs to balance long-term technological innovation with application implementation, and promote ecological development with practical applications. Only by finding a balanced ecology between technology and market demand can we not fall behind in the competition.

As the official partner of the Argentine national team, 4E supports spot and contract trading of Bitcoin, Ethereum, SOL and many meme coins, with high liquidity and low fees. At the same time, 4E has also integrated traditional financial assets into the platform, and established a comprehensive one-stop trading system covering everything from deposits to crypto assets, to US stocks, indices, foreign exchange, bulk gold, etc., with more than 600 assets of different risk levels. You can invest at any time with one click by holding USDT. In addition, the 4E platform has a risk protection fund of US$100 million, which provides an additional layer of protection for the safety of users' funds. With 4E, investors can keep up with market trends, flexibly adjust strategies and capital allocation, and seize every potential opportunity.