Why do some people always bearish on Ethereum?
TechFlow Selected TechFlow Selected
Why do some people always bearish on Ethereum?
Ethereum's ecosystem now needs to consider moving beyond the shadow of pure DeFi culture.
Navigating Web3 tides with focused insightsBy Haotian
Why are criticisms against Ethereum constantly surfacing? Simply put: the Ethereum ecosystem is indeed caught in a turbulent situation—internally, layer2 scaling solutions have yet to stand strong; externally, competitors like Solana remain relentless in challenging Ethereum’s dominance. Amid innovation fatigue and mounting competitive pressure, Ethereum has entered one of its most difficult phases. Here's my take:
1) Ethereum’s Rollup-centric ecosystem has largely taken shape. With the recent Dencun upgrade and EIP-4844 implemented, near-term technical catalysts for Ethereum are now priced in. Long-term sharding has lost relevance amid the rise of Rollups, while upgrades aimed at reducing node costs, protocol simplification, or integrating ZK-SNARKs at the base layer offer only marginal improvements. The entire blockchain industry is waiting for Ethereum—the so-called “number two” chain—to deliver a compelling layer2 solution. Yet so far, layer2s have failed to meet Ethereum’s “growth” expectations.
2) Frankly speaking, Rollups stood out among various scaling approaches—including Plasma, Validium, and even sidechains—because they embraced a layered interaction paradigm that separates execution, state, and settlement between mainchain and subordinate chains. Logically, once a secure consensus model for interacting with the mainnet is established, layer2 should focus on enhancing and amplifying performance advantages at the execution layer, feeding back new users and expanded ecosystems to Ethereum.
Yet in reality, most layer2 projects have opted instead for leveraged, narrative-driven stacking—adopting “Stack” strategies to form alliances, sharing components and pulling in layer3 appchains, along with offerings like Rollup-as-a-Service, DA-as-a-Service, and even AVS-as-a-Service. While these strategies may extend market expectations over the long term, they fail to deliver immediate impact in terms of expanding application ecosystems or boosting token valuations.
3) For a long time, people mocked Ethereum’s 1 Gwei gas fees as evidence of layer2 strategy failure. But from another angle, isn’t this actually a sign of short-term success—using layer2 to alleviate congestion and high gas fees on Ethereum? The problem, however, is that layer2 hasn’t brought the anticipated surge in ecosystem activity and transaction volume; instead, it has diverted some traffic away from Ethereum.
In fact, layer2 has been relatively successful in addressing Ethereum’s performance limitations. Competition between OP-Rollups and ZK-Rollups has reached fever pitch. Yet the focus on building infrastructure rather than pure application innovation reveals an awkward truth about Ethereum’s developer community: excessive reliance on VC funding and token launches, rather than genuine value creation.
This is a direct consequence of increasing developer talent and VC capital flowing into web3, intensifying competition and internal burnout. While rising entry barriers can signal market maturation, during crypto’s early stages, such hyper-competition often becomes the root cause of innovation suppression driven by inflated FDVs. Imagine a project burdened by a sky-high FDV—its sole goal becomes rapidly going to market. Where’s the room left for cultivating real innovation? Appealing to VCs means stacking B2B narratives, while urgent but less glamorous consumer-facing applications remain stagnant. This is why the market perceives such a clear infra > application imbalance.
4) Although the “Ethereum killer” narrative was debunked in the last bull cycle, this round sees high-performance blockchains like Solana, Sui, Aptos, and Sei directly targeting Ethereum’s EVM performance bottleneck. They no longer explicitly claim to “kill Ethereum,” but undeniably, their high throughput capabilities and unique security mechanisms (like Move language safety) do pose real challenges to Ethereum—especially as fertile ground for next-gen web3 applications such as DePIN, large-scale games, intent-based transactions, and AI agents.
I believe this represents the greatest opportunity for new high-performance chains—not to pile on infrastructural promises, but to challenge Ethereum through actual application breakthroughs.
Or perhaps no declaration of war is needed at all. By applying modular thinking to reframe Ethereum merely as a “settlement layer,” and introducing new modular execution layers, data availability layers, and unified liquidity layers, these chains are effectively reconstructing the discourse power Ethereum once held. This kind of competitive-cooperative dynamic benefits both other chains and Ethereum itself. Yet while I observe this trend across other high-performance, modular, or abstracted chains, Ethereum appears to remain in a passive defensive stance—even despite forward-looking tailwinds like potential ETF approval, it hasn’t adjusted its posture accordingly.
5) Many still hope for another DeFi Summer, but reflecting on layer2’s underperformance, I reluctantly accept the possibility that DeFi Summer may never return. @VitalikButerin himself clearly understands that Ethereum’s biggest dilemma might be its excessive financialization. DeFi, being the perfect vehicle for financial abstraction, thrives on past success patterns and infinite composability—traits that naturally align with speculative behavior. What Ethereum’s ecosystem needs now isn’t a revival of DeFi Summer, but precisely to move beyond the shadow of pure DeFi culture.
NFTs emerged out of nowhere during the last cycle. Despite OpenSea’s rise and fall and NFTs never being fully integrated into DeFi frameworks, they still propelled Ethereum into a powerful bull run. This cycle, decentralized prediction markets like Polymarket are gaining attention—not a novel concept, and uncertain whether it will spark renewed momentum—but importantly, it’s not purely DeFi, or rather, it has already begun redefining and extending DeFi. The real expectation should be how Ethereum can best integrate with the web2 world, shifting from speculation toward real-world utility. That’s where the next true “Summer” lies.
That’s all.
Note: As a long-term Ethereum holder, I sincerely hope Ethereum can overcome its current internal and external challenges. Still, I want to emphasize—Ethereum’s ecosystem brings together the largest concentration of geeks, the most innovation-sensitive territory in crypto. Once the market navigates through this difficult phase, I believe Ethereum will once again emerge as the standout force capable of turning the tide.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
Haotian | CryptoInsight
