## Ethereum Falls into a Growth Paradox

By 2025, Ethereum faces a perplexing phenomenon: frequent technological breakthroughs and a proliferation of ecological applications, yet the token price continues to be under pressure. Even with spot ETF approvals and BlackRock investing $2 billion to support it, ETH has retreated from the high of $4900, and holder confidence is gradually waning.

Behind this lies a deeper crisis concerning revenue models and the redistribution of ecological value.

## The Breakdown of Deflationary Logic

After Ethereum's Layer2 upgrades, the congestion on the mainnet has eased, but an awkward situation has emerged—transaction fees have plummeted by 90%, leading to a significant decrease in ETH burning. The once "deflationary gold bar" halo has faded, replaced by the shadow of "issuance pressure." This fundamental change has caused many investors who entered based on deflationary logic to reassess their holdings.

## Wealth Shifting to Layer2

A more painful data point is: the annual revenue of Layer2 chains like Base has surpassed $75 million, while the growth rate of the Ethereum mainnet's revenue is significantly lagging. This "weak parent, strong child" awkward situation makes one can't help but feel—Layer2 is leeching from the mainnet rather than achieving symbiosis.

Although the ecosystem is thriving, the profits are flowing outward.

## Facing Both Internal and External Challenges

**The impact from Solana should not be underestimated.** In high-performance sectors like payments and DePIN, Solana's speed advantage has created a crushing momentum. Leading projects like Render are collectively migrating to other blockchains, and the implications of this application layer loss are well understood.

**Wall Street's attitude is even more pragmatic.** Institutional holdings of ETH spot ETFs lack staking yields, and with a benchmark of 5% US Treasury yields, their attractiveness is clearly insufficient. Continuous capital outflows reflect rational choices by institutional investors.

In this scenario, Ethereum finds itself in an awkward position: less stable than Bitcoin, less explosive than Solana.

## Potential Reversal Signals

But the story is not over. If breakthroughs occur in the following areas, the situation could change dramatically:

**1. Launch of Interest-Bearing ETFs** — Once approved, ETH will gain the attribute of a "yield-generating asset," which will be highly attractive to institutional funds.

**2. Building RWA Settlement Layers** — Leading institutions like BlackRock and Visa have already chosen Ethereum as the infrastructure for on-chain real-world assets. As trillions of assets start flowing onto the chain, Ethereum's value proposition will be redefined.

**3. Blob Ecosystem Explosion** — If a phenomenal application emerges, mainnet congestion will reoccur, and the ETH burning mechanism will be reactivated.

**4. Interconnected Layer2 Networks** — When seamless cross-chain switching becomes a reality, the fragmented liquidity problem will be solved.

**5. Node Democratization** — By 2026, if mobile phones can run nodes, the space for decentralization will be fully unlocked.

## From Casino to Bank

Ethereum's transformation, to some extent, resembles a company's shift from high growth to stable cash flow. Its short-term explosive potential may not be as dazzling as Solana's, but the long-term moat it builds is hard to shake.

The prosperity of Layer2, the influx of RWA, and the increasing number of applications launching are all adding weight to Ethereum's infrastructure position. Even if current market movements are uneventful, underlying changes are accumulating.

What 2026 will look like remains uncertain, and perhaps we all should exercise a bit of patience.