The Evolution of the Smart Contracts Field: From Ethereum's Dominance to Multi-Chain Coexistence

Since Bitcoin broke its all-time high in 2024, the price of Ethereum has continued to decline, and the market has been filled with doubts about it. By April 2025, Ethereum fell below $1500, and investor sentiment shifted from questioning to despair. Early investors began to sell off, and some institutional investors also wavered.

This article will review the rise and fall of Ethereum from five aspects and look forward to its possible future.

1. The Glorious Period of Ethereum (2017-2022)

In July 2014, Ethereum launched its first token issuance ( ICO ). However, until 2016, its price hovered below $10. In 2017, the ICO boom erupted, and Ethereum began to shine. Many projects chose to issue tokens on Ethereum, driving its price to an all-time high of $1430 on January 13, 2018.

Between 2017 and 2018, approximately 2,500 token projects conducted ICOs on Ethereum. Ethereum became the preferred platform for issuing tokens, and its token ETH was not only the main tool for paying gas fees but also a key chip for participating in ICOs. Although some competing public chains emerged at that time, Ethereum still dominated the smart contracts and ICO market.

From 2018 to 2019, a large number of new public chains emerged, such as TON, ADA, Cosmos, and Avalanche. Among them, Solana, although not prominent at the time, later became a major challenger to Ethereum. Nevertheless, Ethereum still dominates the smart contracts market. Vitalik Buterin's influence in the global cryptocurrency field is second only to Satoshi Nakamoto, and the Ethereum ecosystem has gathered the most smart contract developers in the world.

In 2020, the summer of decentralized finance (DeFi) ignited the market. Projects such as Compound, Uniswap, Yearn.Finance, MakerDAO, and Curve successively launched innovative applications on Ethereum, promoting the vigorous development of the DeFi ecosystem. Market expectations for Ethereum reached their peak, believing that the future decentralized world would be built on Ethereum.

In 2021-2022, the Ethereum ecosystem experienced trends such as GameFi, SocialFi, and NFTs. On November 10, 2021, the price of Ethereum reached an all-time high of $4878. However, with the increase in network load, performance scaling issues became the biggest obstacle to the development of Ethereum.

2. The Expansion Road of Ethereum (POS-Layer2)

The Ethereum scaling solutions mainly include transitioning to a Proof of Stake (POS) mechanism and developing Layer 2 networks.

The transition from the Proof of Work (POW) mechanism to the Proof of Stake (POS) mechanism was a direction determined by Vitalik early on, aimed at improving network performance and scalability. Layer 2 solutions have also been a direction of expansion that Vitalik has consistently promoted, from the initial state channels and subnets to later Rollup solutions, as well as the OP-Rollup and ZK-Rollup that emerged in 2022-2023.

Despite the dissatisfaction of miners caused by the transition to POS, Ethereum officially switched to a POS mechanism on September 15, 2022. However, whether Layer2 can become the savior of Ethereum remains in question. Between 2022 and 2024, several Layer2 projects have been launched one after another, such as Arbitrum, Optimism, and zkSync. However, these Layer2 solutions have not brought significant benefits to Ethereum; instead, they continue to disperse Ethereum's resources.

In the end, Ethereum has become a nominal "Zhou Tianzi", while Layer 2 has turned into independent "feudal states". Some native Ethereum applications like Uniswap have started to build their own Layer 2, even using their own tokens to replace ETH as gas fees, which is undoubtedly a betrayal of Ethereum.

Abandoning POW has also proven to be a self-destructive decision. After losing miner support, ETH lost its basic production costs and price support mechanism. If Ethereum had continued to maintain the POW mechanism and developed Layer2, even if Layer2 faced difficulties, the price of ETH might not have been as bleak as it is now.

3. The Innovator's Dilemma of Ethereum

Before 2022, most innovations in the cryptocurrency space originated from Ethereum, while other public chains mostly imitated. However, innovators often find themselves in trouble.

Ethereum focused on network performance optimization after 2020, with core developers betting on the transition to POS and Layer 2 development. While this is necessary, it also puts Ethereum in the predicament of an innovator.

When users need a faster and cheaper blockchain, competitors like BSC, Tron, and Solana seize the opportunity. TRON gained an advantage in the stablecoin market, BSC and BASE formed barriers around the exchange ecosystem, while Solana attracted a lot of attention through the Meme craze.

Ethereum, as an innovator and leader in underlying public chain technology, has all its technology open source. While Ethereum focuses on underlying research and development, new public chains without performance concerns can concentrate on model innovation, thus achieving a leapfrog development.

4. Ethereum's Weakness Reflects Insufficient Industry Development

The decline of Ethereum reflects the overall underdevelopment issues in the cryptocurrency industry. Aside from Bitcoin, the industry still seems to have not found a truly healthy development model.

In the current cycle, apart from Bitcoin, only Meme tokens can generate a wealth effect. Many venture-backed projects are going unnoticed because everyone realizes that these projects are mostly just talk and lack practical value.

Before truly valuable applications emerge in the cryptocurrency industry, the market may continue to cycle through the current patterns. If one day even Memes lose their wealth effect, then it may only be an endless bear market left.

5. The Future of Ethereum: Difficult to Dominate the World Again

Ethereum has lost its competitive barriers in terms of technology and model, and other public chains can basically replicate Ethereum's functions. Currently, Ethereum's only advantage lies in the funds accumulated on its mainnet and its mature DeFi ecosystem.

Real-world assets on the blockchain (RWA) may be an opportunity for Ethereum, but the road ahead is still long. Whether Ethereum can continue to create new on-chain applications remains one of the most effective breakthroughs.

However, Ethereum has lost its dominant position. Competitors have emerged and formed their own barriers. Ethereum's years of scaling efforts have not significantly improved its performance, and applications with high-performance demands may choose new public chains such as Solana, TON, BSC, Tron, or SUI in the future.

If Ethereum's DeFi advantages are taken away by other public chains, performance issues are not improved, ecological innovation fails to keep up with market pace, and developers gradually drift away, then in the face of rising competition, Ethereum's future will face severe challenges.

As a former Ethereum maximalist, I still look forward to Ethereum maintaining its innovation, hoping that Vitalik can continue to lead the developer community in launching applications and development models with more innovative value. Because continuous innovation is Ethereum's only moat.

Summary

This article reviews the development of Ethereum since 2017. Ethereum represents a significant innovation in blockchain technology, emerging from the ICO wave and subsequently experiencing multiple booms in DeFi, GameFi, SocialFi, and NFTs. However, during 2022-2023, Ethereum shifted its focus to underlying technology research and development, lacking market-oriented innovative applications, which led to a weak performance in this market cycle.

The future of Ethereum is closely related to the development of the entire cryptocurrency application market. Even if Ethereum no longer dominates the smart contracts market, its ecosystem's technological and model innovations are still worth looking forward to.