The future of Ethereum: Is it still worth investing in?

In the comments at the end of the articles in the past few days, many readers have talked about their disappointment with Ethereum’s performance in this round.

In fact, not only these readers, but I myself have expressed my disappointment in my articles many times.

But despite the disappointment, we still need to rationally analyze the reasons behind this:

Is it a problem with Ethereum itself or the entire ecosystem?

If it is a problem with Ethereum itself, have these problems been solved in other blockchain projects?

Let me first state my conclusion:

I still hold my Ethereum position, which has not changed at all, and I have not exchanged Ethereum for other smart contract blockchain tokens; and I am still optimistic about Ethereum in the long term.

I remember that in previous articles, I have mentioned more than once the three criteria I use to evaluate layer 1 blockchain projects:

How decentralized is its operation?

What is its community like?

How is its team?

Today, my evaluation criteria remain the same.

Based on these three criteria, the answer I came to couldn’t be simpler.

Among all layer 1 blockchains that support Turing-complete smart contracts:

Ethereum is the most decentralized in terms of operation, and Vitalik is still doing his best to push for further decentralization.

Its community remains the strongest and most cohesive.

Its team is still committed to inheriting Satoshi Nakamoto's ideas and is still advancing the project in an orderly manner, although the difficulty is increasing and the pace is becoming increasingly slow.

Ethereum is not perfect at all, and has many problems (such as being criticized for its opaque foundation, increasing bureaucracy, etc.). If you study it carefully, you may find 100 or even 1,000 shortcomings. But I still have to say that looking around the entire crypto ecosystem, I really can't find another smart contract public chain that surpasses Ethereum in these three aspects.

In my opinion, some of the “problems” of Ethereum criticized in many articles are not Ethereum’s problems at all. For example, some people criticize the Ethereum team for not focusing on application construction.

The construction of applications should not be the focus of Ethereum. The focus of the Ethereum team should be to build the most decentralized, neutral, and censorship-resistant infrastructure, to build a "good nest" so that any phoenix (application) can live and work in peace and contentment.

As for what phoenix (application) this "nest" can attract, that is up to the creative hackers and geeks around the world.

For example, some articles criticize Ethereum's value capture for being taken away by the second-layer expansion.

There is even less need to worry about this.

The second-layer expansion is still the Ethereum ecosystem, and its security ultimately depends on Ethereum, which means that the value of the entire ecosystem will eventually return to Ethereum. It’s just that the value will first go to the second-layer expansion, and then spill over to Ethereum. This will only make the entire Ethereum ecosystem stronger and the threshold higher.

Many readers have mentioned that Ethereum’s price performance is not as good as some other blockchains, and they think those blockchains may have the long-term potential to surpass Ethereum.

I would never use short-term price performance to measure the long-term potential of a project.

If we look back at the growth of Ethereum, we can appreciate the hardships and tribulations it has gone through to become known as the “King of Smart Contract Public Chains” today.

How many accidents, conflicts, and attacks have we experienced?

It is always in the spotlight and no issue of it escapes scrutiny.

Without this kind of trials and tribulations, it would not have achieved its current status.

This purgatory-like ordeal is not only a challenge to the project itself, but also a challenge to the project team, project community, and especially spiritual leaders.

When we think about whether a project has the potential to overthrow Ethereum, we might as well think about this:

When that project sits on the "throne", can it withstand the tests that Ethereum has endured? Can its team, community, and spiritual leaders withstand the torment that Ethereum has experienced?

It is not easy to sit on the "throne".

If you must ask why the price of Ethereum cannot compare with some other blockchain tokens in this cycle?

I thought about it carefully. If we only look at applications, it seems that apart from the active performance of MEME coin in some other blockchains, I can’t think of any other new applications.

But can MEME be considered an innovation in application? Even if it is, can it last long?

If the increase in the price of a project's token does not come from an application innovation that can be sustained for a long time, then I will regard this price increase as a short-term market fluctuation rather than as a fundamental factor that changes the long-term potential of the project.

So I would ignore this short-term price comparison.

In fact, in this cycle, what amazed me most was the innovation of Bitcoin, especially the innovation of a group of protocols led by Inscription. But it is a pity that after the innovation of the protocol, the Bitcoin ecosystem almost stopped in terms of application innovation.

Looking at the entire crypto ecosystem, there has been little to show for application innovation in this cycle.

Let’s go back to the questions I raised at the beginning of the article:

Is it a problem with Ethereum itself or the entire ecosystem?

My answer is: The fundamental reason for the sluggish Ethereum price in this cycle is the lack of application innovation, but this problem is not only a problem for the Ethereum ecosystem, but also a problem faced by the entire crypto ecosystem.

If it is a problem with Ethereum itself, have these problems been solved in other blockchain projects?

My answer is: This problem has not been solved in other blockchain ecosystems either.

In fact, when it comes to comparing price performance, I think more about why the price of Ethereum has been falling relative to Bitcoin in this bear market - from 1 Bitcoin for about 15 Ethereum in the last bull market to 1 Bitcoin for more than 20 Ethereum now.

I think the reason here is probably the lack of application innovation.

After the US government loosened restrictions on institutional investors in this cycle, institutional investors began to eye this ecosystem with eager eyes.

But when they find that the entire ecosystem is poor in applications, users are scarce, and they can hardly find the "application value" that they can understand, how much can they invest?

You can’t let institutions like BlackRock buy MEME coins, right? They probably won’t be interested in DeFi tokens that have no value.

In this case, the only thing they can buy with controllable risks, good liquidity and high consensus is Bitcoin.

According to this logic, it is much easier to understand why the price of Bitcoin is so high compared to other tokens.

But I think this is definitely not the norm, because the crypto ecosystem cannot always rely on Bitcoin. In the future, if the crypto ecosystem is to substantially change our lives, there must be real application innovation and new business models. And I still think these innovations are most likely to happen in the Ethereum ecosystem.