Ethereum has reached the best buying point

In fact, the development direction of blockchain has always been to continuously reduce costs and increase efficiency while achieving decentralization as much as possible. The prosperity of the Layer 2 ecosystem has enabled Ethereum to significantly improve processing capabilities and efficiency while maintaining security and decentralization, promote the diversification of applications, and meet the needs of more users. This is completely in line with the core values ​​of blockchain and is also an inevitable trend for continuous optimization and development.

First of all, although some Ethereum businesses have been transferred to Layer2, the vast majority Layer2 still needs to rely on Layer1 as the data availability layer. As the activity of Layer 2 transactions continues to increase, the frequency and scale of data returned to Layer 1 also increase, resulting in an increase in the consumption of Ethereum GAS.

Second, the growth of Layer 2 networks has significantly increased the demand for Layer 1 bridging and staking. For example, in the cross-chain process, asset locking (smart contracts) requires the consumption of Ethereum GAS. At the same time, ETH, as the most important value medium in the network, is also widely used as an economic guarantee for cross-chain mainnet verification. In addition, some bridge protocols will also record transaction data on Ethereum to ensure that the quantity and status of asset transfers are as expected, which will also consume Ethereum GAS.

Even if some Layer 2 uses third parties such as Celestia to reduce costs The data availability layer, or in order to increase the demand for use of governance tokens, changes the GAS of the Layer 2 network from ETH to governance tokens, but all transactions still need to be settled on the Ethereum main network. As long as it involves issues of asset and transaction security, Ethereum cannot be avoided in the end.

In the Layer2 era, Ethereum plays more of a The role of a centralized "central clearing bank" is responsible for the security and effectiveness of all transactions in the ecosystem. As the scale of the Layer 2 ecosystem continues to grow, the network effect of Ethereum will be improved unprecedentedly, and the demand for Ethereum collateral and Ethereum GAS will explode. The current downturn in currency prices is still a downturn in overall network demand. As long as new application breakthroughs are found, all difficulties will be solved.

Although the rise of high-performance public chains such as Solana and SUI has indeed It has eroded part of ETH's market share, but in the POS field, Ethereum is still the unshakable overlord. This is mainly reflected in two aspects: 1. Thanks to the developed Layer 2 ecology, Ethereum still maintains a high degree of decentralization while achieving expansion. Centralization. In contrast, other public chains basically improve their expansion capabilities by sacrificing decentralization, which also results in the security of their networks being far from the level of Ethereum; 2. In terms of ecological development, Ethereum’s The advantage is still far ahead. , the latest data from Defillama shows that the current TVL of the Ethereum ecosystem (including Layer 2) is 72 billion, and the scale of stable coins is US$83.6 billion. The total TVL of Solana ecosystem, which is regarded as the "Ethereum killer", is only US$7 billion (MEME coins account for more than 40%), and the scale of stable coins is only 3.7 billion. It's almost a discontinuous lead.

For assets with obvious cyclical demand, countercyclical trading Law is often the best operating strategy. The specific method is to buy when Ethereum's price-to-earnings ratio (total market capitalization/GAS revenue) and price-to-sales ratio (total market capitalization/total transaction volume on the chain) reach their highest point, and sell when these ratios are at their lowest. Therefore, Ethereum’s current long-term sluggish network activity also means that a periodic buying point has emerged.