Understand The Current Status And Future Trends Of Ethereum Development In One Article

Introduction

As the second largest cryptocurrency in the field of encryption, Ethereum is at a crucial crossroads. Since its launch in 2015, Ethereum has established its leadership position with its smart contracts and decentralized application (dApps) eco. However, its future development is facing severe tests due to current market performance, technical challenges, and regulatory environment. This report analyzes the current status, potential trends, and future prospects of Ethereum from multiple dimensions, aiming to provide investors and developers with comprehensive insights.

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Price weakness, capital outflow, is Ethereum a has-been?

As of April 23, 2025, Ethereum price Oscillating around $1500-1800, the largest drop in the past year reached 65%, far from the historical high of $4800.

According to Gate.io data, the current total market value of Ethereum is 216 billion US dollars, with a circulating supply of 121 million ETH, and market share has dropped to 7.4%, far below Bitcoin‘s market share, reflecting a decline in Ethereum’s position in the cryptocurrency market.

Observing the flow of funds is the most intuitive. The assets under management (AUM) of the Ethereum spot ETF has dropped to $45.7 billion, hitting a historical low. Data from CoinShares shows that there have been continuous net outflows of $772 million in the past eight weeks, indicating a lack of confidence among institutional investors. In addition, institutions such as Galaxy Digital and Polychain Capital have deposited a large amount of ETH into exchanges, while whales (large holders) have sold 140,000 ETH in the past week. Even some dormant addresses for 3-10 years have become active again, selling ETH.

Meanwhile, there has been a significant decline in network activity on Ethereum. Since April 10, the number of new addresses and active addresses has sharply decreased, with average transaction fees dropping from $0.86 to $0.63. This indicates a weakening demand for the Ethereum network, with market sentiment low and investor confidence shaken. Additionally, the ETH/BTC ratio hit a 5-year low of 0.02193 this week, further reflecting Ethereum’s weak performance relative to Bitcoin.

Community criticism: Community politicization, L2 solutions lead to fragmentation of traffic value

Criticism of Ethereum in the community mainly focuses on the politicization of the community, leading to a series of stagnation and value erosion.

For example, @0xJigglypuff pointed out that EIP-1559 (introduced in 2021, aimed at achieving ‘ETH deflation’ through a burn mechanism) has caused a split in the community. Although it improved the network’s economic model, it also led to dissatisfaction among long-term holders. Upgrades post-Merge (in 2022) such as Shanghai and Dencun are considered ineffective by some, with only 3/117 of the community members believing that these upgrades have brought progress.

But core developers never expected Ethereum to be so underutilized today… All metrics, transaction volume, and Gwei fees have hit new lows in recent years, and the gains from ‘deflationary assets’ have almost completely evaporated.

In addition, second-layer (L2) solutions such as Arbitrum, Optimism, and zkSync are designed to improve scalability through off-chain processing, but they face criticism. Some believe that L2 solutions are too hasty, leading to centralization and eco fragmentation, damaging composability and user experience. Ethereum’s base layer currently only uses 2% of its scalability limit, which means that performance can be significantly improved by optimizing the base layer without overly relying on L2.

Another point is that the performance of EVM is limited by the efficiency of the database. The current use of LevelDB and PebbleDB has not been optimized for the address-random number-data structure of EVM. In contrast, SonicDB, as a flat file database designed specifically for blockchain, has proven to increase throughput by 8 times and reduce storage requirements by 98%. However, Ethereum’s risk-averse culture has led to hesitation in adopting such low-risk improvements.

Pectra upgrade is imminent, can Ethereum return to its peak?

Currently, Ethereum has a market share of 7.4%, but still leads in the DeFi field, with a total locked value (TVL) of $650 billion (although down from $100 billion at the end of last year). Competitors such as Solana and BNB Chain have TVLs of $9 billion and $7.3 billion respectively, indicating that Ethereum still holds a dominant position in the DeFi field, but its advantage is being eroded.

And recently, Ethereum will welcome the following technical upgrades:

Pectra upgrade: originally scheduled for May 7, 2024, but may be delayed, aimed at improving scalability through various optimizations.

PCRAs upgrade: It is expected to introduce native operation binding and account abstraction functions, which may eliminate the need for wallets and Gas fees, significantly improving the user experience. The successful implementation of these upgrades will be crucial to the future competitiveness of Ethereum.

However, in the author’s view, the benefits brought by these upgrades may still be temporary. The key is that Ethereum needs a more inclusive governance model to rebuild trust and unify the community. The leadership and decision-making process of the foundation will play a crucial role in the coming years, especially in the formation of technical upgrades and community consensus.

Conclusion

Ethereum is currently in a challenging but potentially unlimited stage. Despite facing community consensus splits, scalability issues, intense competition, and regulatory uncertainty, Ethereum’s technical upgrades, robust eco, and active developer community provide a solid foundation. If Ethereum can successfully implement its technical roadmap and navigate regulatory challenges, it is poised to regain momentum in the coming years, even reaching or surpassing historical highs. However, the key to success lies in community unity, technological innovation, and a keen response to market dynamics.

Risk Warning: Market volatility and regulatory policy changes may affect the development of Ethereum. Investors need to carefully assess the risks.