The ratio of Ethereum to Bitcoin (ETH/BTC) hit a five-year low of 0.02193, causing low morale among Ethereum supporters and investors. The recent actions of Ethereum's founder "soul figure" Vitalik and the foundation have also sparked community dissatisfaction, with institutions increasingly pessimistic about Ethereum's potential for breakthrough in the near term.
This great public chain that coined the term "smart contract" and opened up possibilities from zero to one in blockchain technology, and from one to many, connecting with real-world finance, is now a key discussion point in the Ethereum community about its current decline. In some early Ethereum technical discussion groups, BlockTrend contacted an old OG (pseudonym "Dragon Against the Scales") who claimed to have joined the Ethereum development community in 2016 and left in 2021, discussing major decisions and impacts in private groups.
Ethereum's Golden Age: Early 2021
Discussing Ethereum's most glorious era, nothing compares to early 2021 after DeFi Summer, when "on-chain detectives" began appearing, flash loans were being solved, and numerous token innovations emerged, such as Non-Fungible Tokens, liquidity fragmentation, and even discussions about "farming" with many tools, marking an era of genius and continuous on-chain innovation.
In my professional career, the highest-yielding investment targets, apart from Bitcoin and Ethereum themselves, were concentrated in 2020-2021 projects, especially in 2021, which was probably the year most projects survived. Projects like Ethereum, BNB, and SOL's infrastructure cash valuations broke hundreds of millions of dollars, many of which were pioneered during that time.
Compared to the "chicken-like" and "crazy" atmosphere of many projects in 2020, in the first half of 2021, many founders were not just geniuses but also understood market needs and how to survive. By the end of 2021 and early 2022, many projects were clearly just trying to harvest investors. Personally, I believe mid-2021 was a watershed between different eras. Those who entered the circle after 2021 or 2022 were already in a different atmosphere.
EIP-1559 and the "ETH Deflation Theory"
When did Ethereum's glorious era begin to decline? In our discussion with the group admin, a vote was initiated in the old OG group with 117 participants, of whom 59 votes believed the most significant decision and moment affecting Ethereum was around the EIP-1559 proposal in mid-2021.
The Ethereum community began to split and struggle, causing a small-scale exodus of Ethereum talent. However, the community discussion believed the most important impact was not the proposal's content itself, but the "deflationary asset" narrative that continues to severely impact Ethereum's overall development.
At the time, many Ethereum developers could barely make money until DeFi Summer, when transaction fees rose and PoW miners started earning. This might have created some imbalance in the developers' mindset. Some colleagues discovered that certain traders seemed to use additional mining pool fees for trading, further inflating Gas Fees. This spread in core developer circles as an "eternal transaction congestion machine" concept, leading to the suggestion of burning these fees with EIP-1559.
The EIP-1559's impact was profound and still has lingering effects. Many core developers believed "PoS" merger could be completed in 2021. To push EIP-1559 and future PoS progress, they suddenly proposed a "deflationary asset" narrative. At the time, many people and articles were promoting PoS benefits, including media communities close to Ethereum like Bankless.
Developers believed that by holding and maintaining Ethereum, they could earn interest and see price growth, thinking their career prospects were bright. Looking back now, they painted this picture a bit too optimistically.
Community Politicization and Seeking Ethereum's Value Legitimacy
The "deflationary asset" idea brought by EIP-1559 was actually fatal. It contradicted the original Ethereum Classic split ideology and revealed core developers' political attempt to compete with Bitcoin's "digital gold" narrative.
More importantly, EIP-1559's controversy cultivated a community atmosphere of finding "Ethereum's value" and excluding those unlike them, pushing Ethereum into a politically charged environment.
Core developers never imagined Ethereum would become so rarely used today... All indicators, transaction volumes, and Gwei fees are at recent lows, and the price increases from "deflationary assets" have almost completely reversed.
Perfectly Missing the AI Era Dividend
After Ethereum's PoS merger and several major upgrades, including Shanghai and Dencun upgrades, how meaningful were these to users? In our discussion group, out of 117 people, only 3 believed Ethereum had progressed, 102 saw no progress, and 12 were unsure.
If Ethereum had maintained its global computational power into the AI era, its PoW layer could have transferred computing power for effective calculations, potentially becoming the world's most important platform.
However, the reality is that Ethereum has dramatically reversed course. In contrast, Bitcoin mining companies have become the most preferred computing power configuration for AI services, with mining stocks and returns surging with AI, despite limited mining profits.
Conclusion: Ethereum's Future Prediction
In the future, the value gap between Ethereum and Bitcoin may continue to widen, with Ethereum potentially experiencing a severe pullback. Ethereum's brand influence is no longer what it was, and even if enterprises use Ethereum, the created value won't be reflected in ETH itself but in the enterprise's tokens or stocks.
ETH/BTC might continue to explore lower levels for a long time, and even with numerous enterprises joining the Ethereum protocol, it won't be a positive signal because the "deflationary asset" narrative has already collapsed...
