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Since its launch in 2015, Ethereum has grown from a bold experiment into the world’s leading smart contract platform. It introduced a revolutionary idea, programmable money, that allowed developers to build dApps and launch tokens on-chain. This laid the foundation for massive crypto movements like DeFi, NFTs, DAOs, and the metaverse.
Ethereum’s early dominance was largely uncontested. It hosted most of the activity and value in the blockchain ecosystem. By 2021, Ethereum was processing billions in daily transaction volume, and major projects like Uniswap, Aave, OpenSea, and MakerDAO ran entirely on its network. Its native token, ETH, became the second-largest cryptocurrency by market cap, often viewed as Bitcoin’s more versatile sibling.
However, with success came challenges. As usage surged, Ethereum’s network became congested, and transaction fees skyrocketed, sparking concerns about scalability and user accessibility. This opened the door for a wave of so-called “Ethereum killers” like Solana, Avalanche, and Binance Smart Chain, each offering faster speeds and lower costs.
Despite the competition, Ethereum has maintained a strong grip on the market, thanks to its developer ecosystem and ongoing upgrades. But as the blockchain space matures, the question remains: is Ethereum still leading the charge, or is its golden era fading?
Key factors behind Ethereum’s current criticisms
While Ethereum remains a foundational layer of the Web3 ecosystem, it’s far from immune to criticism. Over the past few years, several issues have fueled concerns that the network may be losing momentum, particularly among newer users, developers, and investors.
High Transaction Fees (Gas Costs)
Scalability Constraints
Complex Layer 2 (L2) Migration
Uncertainty Around Long-Term Roadmap
1. High Transaction Fees (Gas Costs)
Perhaps the most widely criticized aspect of Ethereum is its expensive transaction fees. During periods of network congestion, users can pay tens or even hundreds of dollars just to move funds or interact with smart contracts. These high gas fees have priced out casual users and small-scale transactions, pushing many toward cheaper alternatives.
2. Scalability Constraints
Ethereum currently handles only about 15–30 transactions per second (TPS) on the base layer, which is far too low to support global-scale applications or compete with payment systems like Visa. This limited throughput creates network bottlenecks and slows adoption, particularly for real-time use cases like gaming or micro-transactions.
3. Complex Layer 2 (L2) Migration
To solve scalability problems, Ethereum’s roadmap heavily relies on Layer 2 solutions like Optimism, Arbitrum, Base, and zkSync. These L2s significantly lower costs and boost speed, but they introduce a fragmented user experience. Newcomers often find it confusing to bridge assets between layers, deal with different wallets, or figure out which L2 is best for specific dApps. For many, the user experience feels more complicated than on competing chains with built-in scalability.
4. Uncertainty Around Long-Term Roadmap
Despite major upgrades like The Merge (which shifted Ethereum from proof-of-work to proof-of-stake), Ethereum’s scalability roadmap, centered around sharding and full L2 reliance, is still years from completion. Critics worry that the complexity and long timelines could lead to developer fatigue or open the door for faster-moving competitors.
The shift to rollups and modular chains: Is it growth or fragmentation?
Ethereum’s evolution is increasingly defined by its pivot to rollups and modular architecture, a strategy designed to overcome its core limitations. However, while this approach has unlocked scalability and innovation, it raises concerns about network cohesion and user experience.
Rollups: The Scaling Backbone
Rollups are Layer 2 solutions that process transactions off the Ethereum mainnet and then post the data back on-chain. This allows for cheaper and faster transactions while still inheriting Ethereum’s security. Optimistic rollups (like Optimism and Arbitrum) and zk-rollups (like zkSync and Scroll) are leading the charge. They enable Ethereum to scale horizontally, supporting thousands of transactions per second when combined with the base layer.
Modular Chains: Specialized Components
Ethereum’s roadmap embraces a modular blockchain vision where different layers handle different functions: consensus, execution, data availability, and settlement. Rollups execute transactions; Ethereum provides the settlement and security; and emerging solutions like Celestia or EigenDA address data availability. This decoupling allows each layer to optimize for its specific task, making the entire ecosystem more flexible and performant.
Growth Through Specialization
This shift has spurred a wave of innovation. Teams can launch their own rollups tailored to specific use cases (e.g., gaming, DeFi, NFTs), bringing diversity and experimentation to Ethereum’s broader ecosystem. It also enables local economies to thrive without clogging the base layer, reducing congestion and fees for everyone.
But at What Cost?
Critics argue that Ethereum’s modular turn may lead to fragmentation. Each rollup is effectively its own chain, with its own tokens, bridges, gas dynamics, and quirks. This creates a fractured experience where users must hop between networks, manage multiple wallets, and deal with inconsistent tooling. It also adds complexity for developers, who now have to choose among dozens of Layer 2 environments with different trade-offs.
Interoperability: The Missing Piece?
Efforts are underway to improve composability and interoperability between rollups, such as the OP Stack’s “Superchain” vision or zk-rollup bridges, but a seamless user experience is still a work in progress. Without tight integration, Ethereum risks becoming a loose federation of rollups rather than a unified platform.
Whether this shift represents growth or fragmentation depends on execution. If Ethereum succeeds in creating a cohesive, intuitive rollup ecosystem, it could achieve internet-scale throughput while remaining decentralized and secure. But if complexity and user friction persist, rival chains with unified architectures could win mindshare.
The impact of new competitors
While Ethereum continues to lead in total value locked (TVL) and developer activity, new generations of high-performance blockchains like Solana and Avalanche are challenging its dominance. These Layer 1 networks offer faster transactions, lower fees, and smoother user experiences, making them attractive alternatives for developers, users, and investors alike.
Solana: Speed and User Simplicity
Solana has emerged as one of Ethereum’s most prominent challengers due to its high throughput and low-cost transactions. Capable of handling over 2,000 transactions per second (with much higher theoretical limits), Solana offers a seamless user experience that is especially appealing for NFT trading, gaming, and mobile-first applications.
It’s all-in-one architecture avoids the fragmentation issues Ethereum faces with rollups and Layer 2s. With the rise of projects like Helium Mobile, Solana Pay, and Firedancer (an independent validator client for increased performance), Solana is positioning itself as a scalable and resilient alternative.
Avalanche: Customization and Subnets
Avalanche takes a different approach by enabling developers to launch custom blockchains, called subnets, that are tailored to specific applications. This flexibility has attracted a diverse range of DeFi and institutional use cases. Its consensus mechanism allows for sub-second finality and high throughput without compromising decentralization.
While not as fast-growing as Solana in recent months, Avalanche continues to build strong infrastructure for enterprises and regulatory-compliant use cases.
Other Chains Gaining Momentum
Competitors like Aptos, Sui, and Near are also in the race, offering improvements in scalability, developer experience, and parallel processing. These platforms are especially focused on onboarding the next billion users by simplifying smart contract development and optimizing for mobile and Web2 integrations.
Developer and Capital Migration
One of the most noticeable impacts of these emerging chains is the migration of talent and capital. Developers are increasingly exploring new chains due to lower deployment costs and more generous ecosystem grants. Venture capital is also diversifying, backing teams building on newer, more nimble ecosystems that don’t rely on Ethereum’s slower consensus on major upgrades.
Bridging the Ecosystem
While Ethereum retains a strong foundation, it no longer holds a monopoly on innovation. With cross-chain bridges, wallets like MetaMask integrating other networks, and multi-chain protocols like Wormhole and LayerZero enabling interconnectivity, the Web3 world is becoming increasingly chain-agnostic.
Are developers and users actually leaving Ethereum Mainnet?
Recent data indicates a significant decline in user activity on the Ethereum network, resulting in a lower ETH burn rate. Over the past month, 72,927 ETH (approximately $134 million) have been added to the circulating supply, bringing the total to 120,730,199 ETH. This increase is directly linked to reduced transaction volume, which decreases the amount of ETH burned via transaction fees.
This drop in activity is also reflected in Ethereum’s gas fees, which have fallen to their lowest levels in years, averaging below 2 gwei. The decline is largely due to users shifting away from the mainnet in favour of faster, cheaper alternatives.
That shift is evident in the explosive growth of Ethereum’s Layer-2 networks. The total value secured (TVS) in these solutions has surged past $30 billion, an 80.72% increase from $16.6 billion in November 2023. This migration highlights how users are favouring Layer-2s for more efficient and cost-effective transactions.
Among these Layer-2s, Base leads with $11.76 billion in TVL, followed by Arbitrum One with $11.13 billion and OP Mainnet with $2.81 billion. The growing dominance of these networks underscores their role as the new hubs for Ethereum-based activity.
Despite this shift, Ethereum remains the core of the developer community. According to Electric Capital’s 2024 Developer Report, Ethereum still commands the largest developer base in the blockchain space, with 2,200 full-time and 6,200 monthly active developers contributing to its ecosystem.
However, developer behaviour is evolving. The same report notes that 34% of monthly active developers now work across multiple chains, up from under 10% in 2015. This rise in multi-chain development suggests a strategic expansion rather than an exodus, as developers look to leverage the strengths of various platforms while still engaging Ethereum.
In short, users are not abandoning Ethereum mainnet, they’re moving to Layer-2s for scalability. Likewise, developers aren’t leaving; they’re becoming more ecosystem-agnostic, building across chains to embrace broader opportunities.
What the future holds: decline, evolution, or reinvention?
Ethereum is not in decline, it’s in transition. The challenges it faces are real, but they don’t signal the end. Instead, they reflect growing pains as the network adapts to new demands and technological shifts.
Layer-2 solutions are all part of Ethereum’s reinvention strategy. While these changes may seem like fragmentation, they’re actually laying the groundwork for scalability and mass adoption. Ethereum is evolving into a hub for a broader ecosystem rather than remaining a monolithic chain.
The path forward may be complex, but Ethereum still commands the largest developer base, strong institutional support, and the trust of the Web3 community. Its future will likely be shaped not by decline, but by how well it balances decentralization, innovation, and user experience in this new multichain era.
Disclaimer: This article is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence.
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The post Is Ethereum Facing Permanent Decline, or Is the Network Still Evolving? appeared first on DeFi Planet.
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