Is Ethereum becoming irrelevant?

What Is Ethereum (ETH)?

Ethereum is a cryptocurrency conceptualized by Vitalik Buterin in 2013 and launched in July 2015. It has consistently ranked second by market capitalization for years, standing out as one of the most prominent and widely adopted projects after Bitcoin.

Ethereum’s primary appeal lies in its smart contract functionality—self-executing contracts triggered automatically when predefined conditions are met. Smart contracts enable highly transparent transactions without intermediaries. This innovation has empowered developers to build a wide array of decentralized applications (dApps) on Ethereum’s blockchain.

Ethereum serves as the leading platform for DeFi (decentralized finance) and NFTs (non-fungible tokens). In DeFi, users can borrow and trade without banks or financial institutions, while in the NFT sector, ownership of unique digital assets is verifiable. Over recent years, rapid growth in these sectors has fueled substantial expansion of the Ethereum ecosystem.

Why Do Some Say "Ethereum Is Dead"?

Several factors have led to the perception of Ethereum as "dead content"—a term implying that a project has lost relevance or momentum. Below, we examine the main reasons in detail.

Stagnant Price Action and Failure to Reach New Highs

In November 2021, the crypto market saw a major bubble, with ETH reaching a record high of $4,900. After the bubble burst, ETH’s value was cut in half, and the market remained sluggish for an extended period. This stagnation prompted some investors to declare that "Ethereum is dead."

Quinn Thompson, CIO at Lekker Capital, argued, "Ethereum (ETH) is experiencing sluggish transaction activity and user growth, with declining fee revenue, making it an unsuitable investment." Supporting this viewpoint, ETH briefly fell below $2,000 and hit multi-year lows relative to Bitcoin. Since the shift to Proof of Stake (PoS), ETH’s value against BTC has dropped sharply, fueling investor concerns.

Ethereum, like other cryptocurrencies, is highly volatile. Steep price drops and loss of value are always possible, and some fear Ethereum could face this risk. Still, the long-term chart reveals that despite recurring short-term crashes, Ethereum has maintained a consistent growth trend over the long term—a critical factor for long-term investors.

Competition From So-Called "Ethereum Killers"

Many rival projects have emerged to challenge Ethereum’s market share, commonly referred to as "Ethereum killers." Leading competitors include Solana (SOL), Avalanche (AVAX), and Sui (SUI).

These projects offer lower fees and higher throughput (TPS—transactions per second). For example, Solana’s theoretical capacity is 65,000 TPS, vastly outpacing Ethereum’s roughly 15 TPS. As a result, more developers and users have migrated to these alternatives.

However, no rival has yet threatened Ethereum’s dominance by market cap. In fact, Ethereum’s transition from Proof of Work (PoW) to Proof of Stake (PoS) in September 2022 reduced energy consumption by approximately 99.95% and addressed scalability concerns. This upgrade, known as "the Merge," greatly improved Ethereum’s sustainability profile.

Ethereum’s Bear Market and the Rise of Stablecoins

Market analysis shows that in past cycles, capital typically rotated from Bitcoin to altcoins like Ethereum about 230 days after Bitcoin’s halving. In recent cycles, however, Bitcoin dominance has remained high post-halving, and capital inflows into altcoins have been limited. As a result, it’s been difficult for an "altseason" centered on Ethereum to take hold.

At the same time, the supply of stablecoins—cryptocurrencies pegged to fiat currencies—has grown significantly. Because stablecoins have low price volatility, investors increasingly shift funds into them to avoid risk, which has dampened investment demand for Ethereum.

The Utility vs. Store of Value Paradox

One of Ethereum’s core challenges is the difficulty of balancing "utility" (practical use) with "store of value." As smart contract functionality increases, demand for various tokens issued on Ethereum rises. However, this doesn’t always translate into greater demand for ETH itself. Experts note that as demand shifts to tokens built on Ethereum, ETH’s value can be cannibalized.

Thus, as the Ethereum ecosystem expands, applications and tokens on the platform grow in value, but ETH—the platform’s native currency—may see its value diluted. This contradiction is a crucial topic in Ethereum’s long-term value proposition.

Is Ethereum Really "Over"? Strengths and Future Outlook

Despite the criticism, Ethereum offers a variety of strengths, and expectations for its future remain high. Below, we explore Ethereum’s key advantages and growth prospects.

Spot Ethereum ETF Approvals and Growing Institutional Participation

In recent years, the US Securities and Exchange Commission (SEC) approved several spot Ethereum ETFs filed by asset management giants like BlackRock and Fidelity. Following the approval of spot Bitcoin ETFs, this marks a major milestone for the crypto market. Institutional investors now find it much easier to access the market, fueling significant capital inflows into Ethereum ETFs.

Since trading began, Ethereum ETFs have seen cumulative inflows in the billions of dollars. During periods of major political events or improving market conditions, single-day inflows have reached hundreds of millions, setting new records. This surge aligns with rising optimism about crypto assets.

Additionally, the SEC approved options trading for BlackRock’s iShares Ethereum Trust (ETHA). Investors can now use options on ETHA for hedging or leverage strategies. This move is expected to accelerate institutional participation further, improve liquidity, and support the market’s maturation.

Adoption by Major Enterprises

Ethereum is supported by the Enterprise Ethereum Alliance (EEA), a nonprofit with over 500 member companies. Notable participants include Mitsubishi UFJ Financial Group, Sumitomo Mitsui Banking Corporation, Toyota Motor Corporation, Microsoft, JPMorgan, and Intel.

Visa, a global payments leader, has launched the VTAP platform for issuing fiat-collateralized tokens on Ethereum for financial institutions. Visa has conducted pilot projects on Ethereum for 24/7 fund transfers and cross-border payments. These efforts position Ethereum as practical financial infrastructure, not just a speculative asset.

As more enterprise adoption takes place, the Ethereum ecosystem will likely keep expanding, and its use cases will broaden. Greater institutional use is expected to further boost Ethereum’s reliability and utility.

Staking Yields May Surpass US Interest Rates

Ethereum’s staking yield (CESR—combined block rewards and transaction fees) could outpace US interest rates (EFFR—Effective Federal Funds Rate) in the future. While the spread has occasionally been negative, projections suggest a turn to positive territory soon.

The main drivers are:

Declining US interest rates: According to data from the Chicago Mercantile Exchange (CME), US interest rates are likely to decline in stages over the coming years, with rising odds of falling below 3.75% or even 3.5%. This would narrow the gap with staking yields.

Rising staking yields: Ethereum’s staking yield has hovered around 3% in recent years but could rise as network transaction fees increase. Higher network activity means more rewards for validators, making staking more attractive.

Should the spread turn positive, staking may offer higher returns than traditional risk-free assets like government bonds, making it appealing for investors. However, experts caution that rising staking yields alone may not be the main driver for ETH price appreciation; instead, DeFi’s growth as a foundational sector is expected to have greater impact.

Dominance in the RWA (Real World Assets) Tokenization Market

RWA (Real World Assets) tokenization digitizes physical assets—real estate, equities, bonds—on the blockchain. In this area, Ethereum and its layer-2 solution zkSync account for about 80% of market share. Including other layer-2 solutions, Ethereum-based networks control more than 80% of the RWA sector.

Stablecoins are a type of RWA, and major stablecoins like USDT and USDC—issued on Ethereum—play key roles in the crypto market. The tokenization of stocks and bonds is also accelerating, pushing the integration of traditional finance and blockchain technology.

Ethereum’s dominance in the RWA market is crucial for its long-term growth strategy. As the tokenization market is expected to grow rapidly in the coming years, maintaining this leadership position will enhance the overall value of the Ethereum ecosystem.

Scaling Improvements

According to core Ethereum developers, Ethereum’s Layer 1 (L1) EVM could scale from around 10 TPS to 10,000 TPS—a 1,000-fold increase—using zkVM (zero-knowledge virtual machines). Instead of re-executing every block, SNARK (zero-knowledge proofs) are used for fast and secure verification.

Zero-knowledge proofs allow validation of information without revealing the data itself—a cryptographic breakthrough that streamlines transaction verification and dramatically increases network throughput. Multiple zkVM projects are underway, making this one of the most dynamic areas of Ethereum development.

Nonetheless, most users are expected to remain on layer-2 (L2) solutions. L2s—using rollups, danksharding, and faster network speeds—could deliver up to 10 million TPS, while L1 will process only about 0.1% of all transactions. This isn’t a problem; the critical factor is preserving Ethereum’s network effect. Shared security (native rollups), interoperability (base rollups), and ETH’s intrinsic value are key.

Next Major Upgrade: "Pectra"

Ethereum continues to enhance its network through ongoing upgrades. The next planned upgrade, "Pectra," will be implemented in two phases.

Pectra 1 will improve network efficiency, security, and transaction usability. The "Prague" upgrade will enhance the execution layer, while "Electra" will improve the consensus layer and introduce features like "PeerDAS" for better data consistency and availability.

The implementation of EIP-3074 will further strengthen wallet functionality and transaction efficiency. This includes batch transactions—combining multiple actions into a single transaction—and sponsored transactions, where a third party covers the gas fee. Sponsored transactions let users send transactions without paying gas directly, streamlining interactions with wallets and dApps and greatly improving user experience.

Additionally, the maximum stake per validator is set to increase from 32 ETH to 2,048 ETH. This enables large staking entities to participate more efficiently, boosting scalability and stability. The change is particularly attractive to institutional investors and large holders, further strengthening network security.

Ethereum’s Challenges and Future Outlook

While the Ethereum ecosystem continues to evolve, network transaction activity remains concentrated in certain areas. In the past, activity focused on NFT trading and minor crypto asset swaps, with Uniswap—the leading DEX—capturing the largest share of transaction fees.

Going forward, Ethereum must increase the utility of diverse use cases and deliver long-term value to users. Expansion into new areas beyond DeFi and NFTs—such as supply chain management, digital identity, and decentralized social media—is expected.

Staking Demand

Staking demand is currently impacted by the SEC’s approval of spot Ethereum ETFs. While spot ETFs have been approved, issuers have refrained from mentioning staking options for clients due to regulatory uncertainty.

As a result, institutional staking demand is temporarily subdued, but future market conditions and regulatory developments could change this. Market analysts suggest that, given the current lack of clarity, large-scale institutional staking may be delayed.

However, if regulatory guidelines become clear, institutional participation in staking could accelerate. In that scenario, demand for Ethereum staking would rise sharply, further enhancing network security and decentralization.

Conclusion: Ethereum Is Not "Dead"

As discussed, Ethereum faces challenges and competition but continues to demonstrate network strength and significant growth potential.

Concerns persist around price stagnation, high volatility, the rise of "Ethereum killers" with low fees and high throughput, the end of the NFT boom, and waning enthusiasm for the broader crypto market.

Nevertheless, many factors underpin Ethereum’s optimistic outlook: US spot ETF approvals, growing institutional participation, expanding enterprise adoption, rising staking yields, and ongoing network upgrades (such as Dencun and Pectra) that drive layer-2 solutions.

Moreover, Ethereum’s commanding market share in RWA tokenization, substantial scalability gains from zkVM, and strengthened partnerships with major companies are reinforcing its foundation.

It is, therefore, premature to claim "Ethereum is dead." With continuous upgrades supporting sustainable growth, Ethereum will remain a core pillar of the crypto market. Over the long term, it stands as one of the most promising blockchain platforms, and its prospects remain strong.

FAQ

What is Ethereum’s current technical status? How does it compare to Bitcoin?

Ethereum leads in smart contracts and dApps, while Bitcoin is focused on simple value transfers. Scalability improvements with Ethereum 2.0 are expected to significantly boost transaction capacity.

What main issues have been resolved following the Ethereum 2.0 upgrade?

Ethereum 2.0 addressed scalability and energy consumption. The transition to Proof of Stake boosted transaction throughput and improved energy efficiency by more than 99%.

What is Ethereum’s competitive advantage in DeFi and NFT sectors?

Ethereum’s key advantages are its established smart contract platform, a vast developer community, and improved scalability from the transition to PoS. Years of trust and broad adoption keep Ethereum in a leadership position in DeFi and NFT markets.

What threats do new public chains like Solana and Polygon pose for Ethereum?

Solana and Polygon compete with Ethereum in micropayments and high-frequency trading, but Ethereum’s dominance in institutional capital, large transaction volume, and DeFi integration remains robust.

Has Ethereum’s gas fee issue improved?

Yes, Ethereum’s gas fees have dropped dramatically. As of January 2026, the average gas fee is about 0.04 Gwei—a historic low compared to previous spikes. Network scaling and efficiency improvements have reduced user costs.

What is Ethereum’s long-term outlook and growth potential from an investment perspective?

Ethereum’s long-term outlook is highly positive. Large-scale institutional inflows are expected to drive performance that could surpass Bitcoin. The expanding smart contract, DeFi, and NFT ecosystem points to substantial value appreciation in the years ahead.