Ethereum Analysis: Value Reconstruction Under Technical Bottlenecks And Ecological Rifts

Introduction

As the pioneer of the global second largest cryptocurrency and blockchain technology, Ethereum (ETH) has an undisputed leadership position in decentralized finance (DeFi), non-fungible tokens (NFT), and smart contracts. However, as of the end of April 2025, Ethereum price Just maintaining around $1,800, this round of bull market performance is far inferior to BTC and SOL. Behind this weak trend, structural contradictions such as lagging technical upgrades, fragmented ecology, and continuous net outflow of institutional funds are accelerating exposure.

This article will cover market performance, technical development, DeFi ecosystem, market sentiment, and Price prediction In five aspects, analyze the current status and future trends of Ethereum comprehensively, providing professional insights and investment advice for investors.

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Ethereum market performance and the core contradiction: the underlying logic of valuation pressure

Despite a slight rebound in the price of ETH recently, a consensus among many investors is that ETH has significantly lagged behind in this bull market. On the 14th of this month, the ETH/BTC exchange rate dropped to 0.01924, hitting a new low since January 2020. As a mainstream asset in the previous bull market, Ethereum’s performance in this cycle has led to many investors expressing dissatisfaction. Faced with Bitcoin‘s strong performance in this cycle, Ethereum seems to be experiencing a divergence between market sentiment and technical expectations.

According to Gate.io data, the ETH/USDT trading pair has been fluctuating below $2000 recently. Although there has been a slight increase recently, the overall trend is still constrained by the pressure of the 60-day and 200-day moving averages. Behind this sustained weakness in token price is a capital outflow triggered by the structural contradiction between technical upgrades and ecosystem fragmentation.

Ethereum technology upgrade lags behind: empirical evidence of innovator dilemma

Ethereum’s primary challenge at the moment is the significant gap between its technological iteration speed and market expectations. Despite Vitalik’s team proposing the EIP-4488 proposal to lower transaction costs by optimizing on-chain storage fees, the progress of this proposal at the community governance level remains slow. In contrast, competitive public chains like Solana have achieved the capability of processing tens of thousands of transactions per second, while the Ethereum mainnet still faces the dilemma of Gas fees skyrocketing to hundreds of dollars during peak hours. This technological gap directly leads to high-frequency applications such as DeFi and NFT migrating to low-cost chains.

The root cause of technological stagnation can be traced back to the rigidity of the governance structure. Although the Ethereum Foundation has initiated a reorganization, there is a fundamental disagreement within the community on the technological roadmap: the conservatives emphasize stability first, while the radicals advocate accelerating iteration through hard forks. This internal friction was fully exposed in the delayed Cancun upgrade event - the shard scheme originally scheduled to be implemented in 2024 was postponed to mid-2025 due to consensus rupture, further weakening market confidence. The technological bottleneck is directly reflected in the coin price: the ETH/BTC exchange rate continues to be under pressure, dropping more than 60% from its historical high.

Ethereum ecosystem fragmentation: structural decay of value capture capability

The Ethereum ecosystem is facing an unprecedented fragmentation crisis. The prosperity of Layer2 scaling solutions has failed to solidify the mainnet position as expected, but instead has given rise to independent economies such as Arbitrum and Optimism. These L2 networks construct independent economic models by issuing native tokens, leading to the value that should have flowed back to ETH being intercepted. Data shows that the proportion of L2 transactions has exceeded 75% of the total Ethereum ecosystem, but ETH’s value capture in it is less than 30%.

More importantly, the dilution of ecological control is undermining Ethereum’s settlement layer status. The rise of cross-chain protocols such as LayerZero allows assets to move between different chains without relying on Ethereum’s mainnet verification. If this trend continues, the narrative of ETH as a “global settlement layer” will face the risk of collapse. Price performance confirms this concern: Ethereum’s daily on-chain transaction volume is less than $3 billion, mainnet Gas has been maintained at the level of 2 Gwei for a long time, and the number of active addresses in March is less than 15 million. The reduction in on-chain activity, combined with the impact on prices, has led to the monthly income of mainnet validators dropping below $200 million in March. In terms of investor sentiment, the relatively low on-chain opportunities have led some investors to adopt a wait-and-see attitude toward the short-term growth potential of Ethereum.

Ethereum key game nodes: the triple catalysis of policy, technology, and capital

Policy: ETF Approval and Regulatory Sandbox
As staking will help enhance the security of the Ethereum network and bring additional returns to shareholders, Grayscale, Fidelity, and others have submitted proposals to the U.S. SEC multiple times for rule changes regarding Ethereum ETF staking and in-kind purchases and redemptions. However, the SEC has postponed the application to seek more time for evaluation. Several decisions originally scheduled for mid-April have been delayed until early June this year. It is worth mentioning that in mid-April, the Hong Kong SFC approved the ChinaAMC Ethereum staking ETF, which is scheduled to launch on May 15th.

Technical Analysis: EIP-4488 breakthrough with Zero-Knowledge Proof
If the EIP-4488 proposal, which will be voted on in May, is approved, it will reconstruct the on-chain data storage economic model. Testnet data shows that this upgrade can reduce Rollup transaction costs by 58%, directly benefiting derivative protocols (such as GMX) and gaming chains (such as Immutable X). Of particular note is the breakthrough in ‘recursive proof composition’ technology announced by the zkSync team, which is expected to shorten ZK-Rollup transaction confirmation time to within 3 seconds. If this has a synergistic effect with EIP-4488, it may trigger a reconstruction of the Layer2 landscape.

Capital: Vampire attacks on the re-collateralization track
The ‘re-staking revolution’ triggered by EigenLayer has locked up over 4.6 million ETH, but this model implies ‘double-staking risk.’ In the event of a black swan incident (such as questioning the security of the mainnet), it may trigger a chain reaction of unwinding. It is recommended to closely monitor the correlation between the ETH staking rate (currently 32.7%) and the Liquidation Health Ratio.

Conclusion

Overall, although the Ethereum ETF pledge can to some extent affect the supply of ETH and the income of holders, it cannot directly solve core challenges such as ecosystem competition, L2 diversion, or market sentiment downturn, while the uncertainty of the Pectra upgrade has also added some pressure to the coin price.

Historical experience shows that the average cycle for blockchain projects to go from technological leadership to ecosystem monopoly is 4.7 years, and Ethereum has entered its 8th year of development. If key technological breakthroughs are not achieved by the end of 2025, its market share (currently 7.4%) may face continued erosion risks. Investors need to establish a “technology realization rate” tracking model and dynamically adjust position exposure.