This old institution has completely given up on Ethereum

Author: BitpushNews Mary Liu

A piece of news caused quite a stir in the community: the veteran crypto trading company Two Prime announced that it would completely abandon Ethereum (ETH) and focus only on Bitcoin (BTC) in the future.

Reason? Ethereum no longer has institutional-level predictability and investment value, and has even been directly labeled a "meme coin".

This is a big deal. Especially coming from an institution that once issued over $1.5 billion in loans through ETH/BTC mortgages, it is obviously not just a "cutting ties", but more like a complete "breaking up".

And also in the past few days, Dankrad Feist, a core researcher of the Ethereum Foundation, posted a message on the forum, rarely proposing that if there is no drastic reform, the Ethereum main chain may be marginalized within 5 to 10 years.

You will find that the two seemingly independent events actually reveal the same signal: Ethereum, it is time to seriously examine its future.

Why did Two Prime "give up" Ethereum?

The reason given by Two Prime is actually quite realistic.

First, judging from the transaction data, since the 2024 US election, Bitcoin has shown typical "mean reversion" characteristics - if it falls, someone will buy the bottom, and market confidence remains.

And what about Ethereum? It continues to fall, with almost no decent rebound.

Two Prime believes that what's worse is that Ethereum's price behavior is increasingly like meme coins such as "Dogecoin".

After comparing the price fluctuations of Bitcoin (BTC), Ethereum (ETH) and Dogecoin (DOGE) in the past 30 days, the company found that Ethereum (ETH) has deviated from its historically relatively mild volatility characteristics and has experienced multiple violent fluctuations beyond the standard deviation, which is inconsistent with the performance of institutional-level assets. This is almost a red line for institutions that pay attention to risk control.

The gap in capital flows is also very obvious. The global BTC ETF now manages more than $113 billion in assets, accounting for 5.76% of the total Bitcoin circulation. And what about the ETH ETF? Only 4.7 billion, and a lot of it is used for arbitrage - to put it bluntly, they are not really buying, but "taking advantage of the volatility".

What's more terrible is that market sentiment is changing. In this era of "traffic is king", narrative and user experience are the moats, and Ethereum has lost the initiative in these two aspects.

In addition, Two Prime also questioned Ethereum's technology and ecology:

• Although Layer 2 is very active, it actually has limited contribution in "feeding back" to the main chain.

• Emerging public chains, such as Solana, Sui, etc., are increasingly advantageous in user experience, transaction speed, and cost.

• However, the pace of Ethereum's technological iteration is getting slower and slower, and its internal governance has been criticized as "severely idealistic and lacking in execution."

Their final conclusion is: if even Ethereum's own people are not aware of the problem, it would be even more dangerous.

Inside the Ethereum Foundation: It’s time to “roll up”

Ethereum Foundation researcher Feist is even more radical than Two Prime. In a proposal on April 30, he said that historically, Ethereum governance has tended to be more inclined to incremental reform, but now this lukewarm approach will only backfire:

“If we continue on our current slow, small-step path, the Ethereum main chain may be marginalized in ten years.”

Feist’s core point is that Ethereum’s main chain (Layer 1) is the core of the Ethereum blockchain. 1) It must maintain its position as the "economic center", otherwise the entire ecosystem will loosen. L2 is good, but if the main chain is not attractive, why should L2 be bound to it?

Technically, he believes that now is the best time for Ethereum to expand:

• Zero-knowledge proofs (zk proofs) are already very mature, and the proof cost for each block is only a few cents.

• Data Availability Sampling (DAS) will also be launched this year.

• These technologies allow Ethereum to achieve 100 to 1,000 times the expansion potential in the next few years.

He also proposed a reconstruction of the node structure: make the nodes more "clearly divided" - some are light, some are heavy, but still ensure security and decentralization.

We cannot deny that Ethereum still has huge ecological assets: more than 50 billion US dollars in total chain lock volume (TVL); the world's largest developer community; institutions still recognize it to a certain extent.

But the time left for Ethereum seems to be really short.

Two Prime wrote in its report: "Bitcoin is unique in its use cases. In the field of digital assets, it has no competitors. Institutional investors tend to flock to stable and predictable economies and assets. Ethereum and its competitors are essentially speculative technology startups that are competing for market share. The problem for Ethereum and its leadership is that everyone seems to understand this except themselves."

As of this writing, ETH is trading at $1,839, down 38% year-over-year.