Key Points
Solana (SOL) is currently processing an average of 60 million daily transactions, dwarfing Ethereum’s (ETH) 1 million. This demonstrates that scalability is a crucial factor in the ongoing blockchain competition, overshadowing reputation.
Ethereum’s Struggles
Ethereum, once hailed as a pioneer in smart contracts, is now grappling with fierce competition and internal strife. Its journey has become less of a steady ascent and more of a rocky descent.
In November 2021, Ethereum’s total value locked (TVL) reached a record high of $107 billion, buoyed by a surge in ETH’s price to an all-time high of $4,890. However, by the end of 2023, the TVL had plummeted to a mere $30 billion. Although there was a slight recovery in 2024, with the TVL rising to $66 billion by mid-year, as of January 2025, it remains stuck at $64.5 billion.
In contrast, Solana, Ethereum’s closest competitor, has scripted a more impressive recovery narrative. After falling from a TVL of $10 billion in late 2021 to just $210 million in early 2023, Solana rebounded, reaching a new high of over $12 billion this month. This recovery outpaced Ethereum’s in both speed and scale.
Apart from TVL, Ethereum seems to be losing ground on critical measures such as transaction volume and user fees. Despite Ethereum charging higher fees per transaction, Solana’s daily fee volume consistently surpasses it, averaging $5-6 million this month and peaking at $35 million during the inauguration of Donald Trump as the 47th U.S. president. In contrast, Ethereum’s fee volume hovered around $3-4 million on average, with a modest spike to $15 million on the day Trump was inaugurated.
Ethereum’s challenges are not confined to technological hurdles. The Ethereum Foundation (EF), a nonprofit organization long viewed as the backbone of Ethereum’s development, is itself in turmoil. Internal discontent, growing competition, and questions about the foundation’s vision have left the EF grappling with its identity at a time when Ethereum’s future has never been more uncertain.
The pressure has led Ethereum’s co-founder, Vitalik Buterin, to step in with comprehensive plans to revamp the EF’s leadership structure. For over a year, Buterin has been quietly working on a restructuring initiative aimed at addressing inefficiencies and improving communication between the EF and Ethereum’s developers.
However, this effort has been met with controversy. Critics argue that Buterin’s central role in the process undermines Ethereum’s ethos of decentralization. Others see it as a necessary intervention to salvage the EF’s declining reputation.
One of the EF’s most controversial strategies is its reliance on a “rollup-centric” roadmap, which prioritizes scaling Ethereum through layer-2 solutions. While these rollups have improved transaction speeds and reduced costs, they’ve also introduced new risks, such as diminished security guarantees and declining base fee revenues for Ethereum’s core network.
Critics argue that these trade-offs highlight the EF’s inability to deliver a long-term scaling solution that rivals like Solana have already achieved. Solana’s ability to handle millions of transactions per day with near-zero fees has become a glaring benchmark, leaving Ethereum struggling to keep pace.
Adding to the turbulence is the controversy surrounding Aya Miyaguchi, the EF’s executive director since 2018. Accusations of inefficiency and conflict-of-interest scandals have dogged her leadership, leading to a wave of online criticism and even a social media campaign calling for her resignation.
While Miyaguchi remains in her role, the backlash has grown toxic, with some critics resorting to personal attacks and threats. Buterin, visibly frustrated, took to social media to condemn these actions as “pure evil,” warning that they are driving top developers away from Ethereum.
In December 2024, Konstantin Lomashuk, the founder of Lido — a protocol managing over 28% of Ethereum’s staked ETH — hinted at plans to reshape Ethereum’s ecosystem. The idea, which he called the “Second Foundation,” was initially teased as a way to introduce competition to Ethereum’s leadership and decision-making processes.
On Jan. 22, Lomashuk doubled down on this vision, sharing an official page for the Second Foundation, signaling that this wasn’t just an idea. The Second Foundation is designed to decentralize power within Ethereum by creating a parallel entity that challenges the Ethereum Foundation. Lomashuk has been critical of the EF’s insular structure, describing it as “super deep” and inaccessible to outsiders without years of research expertise.
Lomashuk has highlighted plans to implement dual governance within Lido, starting in Q1 2025, as an example of the kind of innovation the Second Foundation would champion. The Second Foundation’s vision also includes addressing Ethereum’s staking mechanism, a critical component of its proof-of-stake security model.
Lomashuk has proposed that Ethereum aim for at least 66% of its total supply to be staked, arguing that this threshold is vital to prevent validators from being concentrated in centralized custodians.
While the EF works to reform its leadership and scale its ecosystem, critics argue that the platform lacks urgency, vision, and a coherent strategy to maintain its dominance. Two key figures in the crypto world — Kyle Samani, Managing Partner at Multicoin Capital, and Justin Sun, founder of Tron — have taken to social media to highlight Ethereum’s shortcomings and suggest bold, if polarizing, strategies for its revival.
Despite its early promise, Samani’s optimism has soured. The breaking point, he revealed, was Devcon 3, Ethereum’s annual developer conference held in November 2017. Despite obvious scaling challenges — skyrocketing gas fees and increasing network congestion — Samani was stunned that scaling wasn’t even a focus of Buterin’s keynote.
Seven years later, Samani believes little has changed. He points to what he calls Ethereum’s “total lack of urgency” and its failure to align leadership with the needs of its core constituents. Without a clear “North Star,” as he puts it, Ethereum risks being overtaken by competitors that prioritize speed, scalability, and user experience.
Meanwhile, Sun, known for his provocative style, went a step further by offering a radical five-point plan for Ethereum’s revival, claiming his leadership could push ETH to $10,000. The plan includes halting all ETH sales for three years, taxing Layer-2 solutions to generate $5 billion annually, and drastically downsizing the EF staff to create a merit-based, high-performance organization.
Sun’s plan also emphasizes increasing fee burns and reducing node rewards to strengthen Ethereum’s deflationary tokenomics while abandoning layer-2 rollups to focus exclusively on layer-1 scalability. Yet, the feasibility of Sun’s vision is questionable. Taxing layer-2 solutions risks undermining Ethereum’s rollup-centric roadmap, a key scaling strategy, while downsizing the EF could strip it of the resources needed to maintain its innovation pipeline.
Ethereum’s challenges are no longer confined to leadership controversies or competitor attacks — its very community is fracturing. Beanie, a well-known crypto venture capitalist, recently critiqued, “Ethereum Foundation is run by a high school teacher from Japan that hates competition, believes in equality of outcome over opportunity, and doesn’t recognize blockchain consensus as a means of governance.”
His critique of EF’s leadership culture as “woke” and overly ideological has resonated with those who feel the foundation is prioritizing philosophical ideals over practical innovation. The calls for leadership reforms have also reached a boiling point.
At a time when trust and unity are critical, the Ethereum leadership must act decisively. Whether through reforms, better communication, or a stronger focus on its decentralized principles, the network needs to bridge the widening gap between its ideals and the community’s expectations. If it fails to adapt, Ethereum risks ceding its leadership position to competitors better equipped to meet the moment.
