The Dilemma of Ethereum and the Rise of Solana: The Clash of Old and New Narratives in the Bull Market

The 2024 Ethereum Devcon conference in Bangkok is considered the largest in history, yet its market enthusiasm appears rather lackluster. The content shared at the venue lacks highlights, reflecting the sluggish performance of the secondary market. As the "engine" of previous bull markets, ETH seems particularly sluggish this year, with the ETH/BTC exchange rate hitting new lows, while BTC breaks through $93,000, ETH still hovers around $3,000.

Lack of Innovation and Shrinking Ecosystem in Ethereum

In this bull market, it is not hard to see that Ethereum is facing the dilemma of lack of innovation and a shrinking ecosystem. The ICO boom of 2017 and the DeFi Summer of 2020 injected strong momentum into the Ethereum ecosystem, but this time, Ethereum has not led the wave of technological innovation, lacking phenomenal application narratives to drive new funds and users, resulting in gwei remaining in single digits even in a bull market.

During the PoW era, Ethereum's value support came from mining power and energy consumption, while the transition to PoS has deeply bound it to its ecosystem. A prosperous ecosystem can attract attention, leading to capital inflow, driving up prices, and ultimately promoting staking to maintain blockchain stability. Conversely, without an ecosystem, demand decreases, prices fall, and the destruction rate fails to meet expectations, leading to inflation and directly weakening its value storage potential, which poses a fatal challenge for Ethereum under the PoS mechanism.

A fast and low-cost blockchain experience is the pursuit of all public chains. One key strategy for Ethereum in the past two years regarding scalability has been the vigorous development of L2, but L2 functions highly overlap with the main chain. In a situation where the ETH ecosystem cake has not been further expanded and even shrinks, hundreds of L2s have become "parasites, sucking blood" from Ethereum. Internally, L2 warlords are fighting for dominance, while externally, both new and old public chains are devouring Ethereum, leading to a gradual weakening of ETH's voice and competitiveness.

Over 90% of transactions are now conducted on L2

85% of active users are now using L2

There exists an "impossible triangle" in blockchain; Ethereum places too much emphasis on technical narratives and idealistic governance structures, sacrificing performance, which is significantly at odds with current market expectations. Nowadays, even Bitcoin, regarded as the spiritual belief of the industry, is gradually being tamed by regulators, settling in the hands of more and more Wall Street institutions. This raises the question of whether the concept of decentralization still holds importance in the face of price.

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

Meme Economy and the Rise of Solana

In stark contrast to Ethereum's sluggishness, Solana has returned to the center stage with the rise of meme culture.

In a situation of ample liquidity and a lack of application narratives, memes, which break free from the internal narrative constraints of the crypto circle, have become the best carriers of liquidity. Most of the meme community is on Solana, and the phenomenal meme culture has attracted a large number of gold diggers, significantly increasing on-chain trading activity. Data shows that since late October, Solana's on-chain daily fees have consistently exceeded those of Ethereum, and the popularity of the meme sector has led to continuous capital inflow into the Solana ecosystem, making it the hottest ecosystem in the circle.

This bull market is seen as a BTC and meme bull market, with Solana becoming the center of new meme coins through low fees and high throughput, reminiscent of the glory days of the 2017 Ethereum ICO era. SOL benefits from the value accumulation of meme coins, analogous to the Ethereum ICO and ETH in 2017.

Solana has risen from the ashes after the collapse of FTX, with low fees, low latency, and high throughput naturally favoring various applications. When the overall market heats up, its ecosystem has not fallen behind and has performed well, and the current meme craze has further fueled the entire Solana ecosystem, creating a "when my flowers bloom, all flowers die" situation. Previously, being an "ETH killer" was the pursuit of many public chains; now the goal has shifted, and the market is debating whether Sui can become a Solana killer.

Conclusion

The decline of Ethereum and the rise of Solana are a notable contrast in this bull market. On one side is the struggle and self-adjustment of the old aristocracy, while on the other side is the rapid rise of new forces and market enthusiasm. This clash of new and old forces reflects the shift of the crypto market from technological idealism to pragmatism.

Although Ethereum's performance in this bull market has been disappointing, its strong developer community, continuous technological iteration capabilities, and adaptability to emerging market demands still provide hope for its future development. Ethereum needs to balance long-term technological innovation with practical application to drive ecosystem development. Only by finding a balance between technology and market demand can an ecosystem avoid falling behind in competition.

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