Regrets About Ethereum's Performance in This Market Cycle

I have expressed my regrets about Ethereum's performance in this market cycle more than once.

Of course, the regret here is not primarily about the price. Since I am optimistic about Ethereum in the long term, I actually prefer lower prices, ideally staying below my set dollar-cost averaging price for a long time.

What I mainly regret is that Ethereum's ecosystem has not produced disruptive innovations and applications like it did in the last bull market.

During the Dragon Boat Festival holiday, I carefully read several articles by Vitalik (https://bridge.zkasino.io/) from last year and this year about Layer 2 scaling.

From his articles, I seem to see signs of the future.

Regarding Ethereum's Layer 2 scaling, Vitalik clearly stated his position in the articles: he hopes that the vast majority of applications will eventually run on Layer 2 scaling.

Moreover, his view on Ethereum's Layer 2 scaling is not merely to see them as an extension of Ethereum's performance, but rather as individual "blockchain nations" with their own culture, personality, characteristics, applications, and ecosystems, all under the ultimate jurisdiction of Ethereum as the "big overseer."

Thinking from this perspective, I have changed my previous view.

Previously, I believed that there were too many Layer 2 solutions now, and that the existing Layer 2 solutions were not fully utilized, while new solutions kept emerging. What significance do these seemingly "redundant" solutions have?

But now I believe: although technically, most of these solutions are similar, in terms of culture and personality, some of the current Layer 2 solutions have clearly developed their own distinct characteristics and circles.

For example, social (MEME) applications are notably active on Base, while Arbitrum hosts applications that grow wildly but are also of guaranteed quality. Optimism has applications that are more supported by institutions, and in the future, Treasure and Redstone will likely see active gaming applications…

"Birds of a feather flock together." As these solutions gradually form their own characteristics, they will attract more similar applications into their ecosystems, thereby further strengthening their uniqueness.

Over time, it is very likely that countless communities and groups will emerge on Ethereum in the form of Layer 2 solutions. They will have their own cultures, values, and community atmospheres.

Currently, communities often issue tokens (NFTs, MEMEs), while future communities may frequently launch chains (Layer 2 solutions) — in fact, this phenomenon has already appeared in the Ethereum ecosystem: earlier Degen chains and the currently popular Ham chain are examples.

If this trend continues, what Ethereum will build in the future is not just an ecosystem, but a federation of blockchain-based network nations, with Ethereum as the ultimate authority of this federation.

This ultimate authority only technically guarantees the final confirmation and execution of transactions, while the various federated nations under it can sprout freely and grow wildly.

This freedom and wildness is the best soil for nurturing innovation and disruption.

In the last bull market, we were excited about various application scenarios in the Ethereum ecosystem, such as DeFi, NFTs, games, etc. But all these innovations were only nurtured in the soil of Ethereum.

I speculate that the next wave of innovation in the Ethereum ecosystem will be nurtured in countless sub-chains based on Layer 2 scaling — that kind of explosion will no longer be an eruption of individual application scenarios, but rather an explosion based on chain ecosystems.

The explosion of chain ecosystems will resonate around a specific theme or culture, meaning that once a chain (Layer 2 solution) ecosystem explodes due to a certain theme or culture, all applications on that chain (including DeFi, NFTs, etc.) will explode together.

As for what specific culture or theme it will be, I cannot imagine it right now.

Because this explosion is triggered by a certain theme or culture, and the formation of themes and cultures is not achieved overnight; it requires a long period of brewing and growth — perhaps this is why we have not seen new applications or scenarios emerge in the Ethereum ecosystem during this market cycle?

And now, the gradual growth of Ethereum's Layer 2 scaling culture and atmosphere is likely laying a new foundation and brewing new momentum for Ethereum's next explosion.