The cryptocurrency market has not performed well this year, and Ethereum has experienced one of the more significant declines. It has decreased by 45% so far this year.
Despite this decline, Ethereum remains the second-largest cryptocurrency by market capitalization. While some view this as an opportunity to invest, Ethereum is currently facing significant challenges as it attempts to recover.
### Ethereum’s Competitive Challenges
Ethereum was the first blockchain to offer smart contract functionality, making it the preferred platform for blockchain projects. Five years ago, those looking to create their own crypto tokens or mint non-fungible tokens (NFTs) often used Ethereum, and it hosted nearly all major decentralized finance (DeFi) applications. At the end of 2020, Ethereum accounted for 96% of the total value locked (TVL) in DeFi protocols, as reported by DeFiLlama.
However, Ethereum’s blockchain performance has faced criticism. It processes only 15 to 20 transactions per second (tps), and average gas fees (transaction fees) currently stand at $0.39, with higher fees during periods of network congestion. In contrast, competitor blockchains, such as Solana, have capitalized on these performance issues and costs. Solana, for instance, processes over 4,000 tps and charges an average transaction fee of just $0.00025.
As a result, Ethereum’s dominance in DeFi TVL has decreased from 96% to 53%. From 2016 through 2023, Ethereum was the most popular blockchain network among new developers, but in 2024, Solana took that position.
### Recent Changes at the Ethereum Foundation
The Ethereum community has expressed dissatisfaction with its leadership, particularly the Ethereum Foundation, which is responsible for guiding the platform’s growth. The foundation has faced criticism for its slow response to issues, including the network’s transaction speeds and declining popularity among developers.
In response to these concerns, co-founder Vitalik Buterin announced in January that significant changes to the Ethereum Foundation’s leadership structure were underway. These changes aim to bring in new talent, enhance the foundation’s technical expertise, and establish a proper board of directors. Buterin emphasized that he would solely choose the new leadership team.
While a leadership change may benefit Ethereum, it’s uncertain whether these developments will be positive. Given the ongoing challenges, investing in Ethereum remains risky.
### Long-term Price Trends
Before considering Ethereum investments, it’s crucial to recognize that its price drop didn’t just occur in 2025. Over the past year, its value has fallen nearly 50%, lagging behind competitors like Bitcoin, Solana, Cardano, and Tron. Over the past three years, Ethereum has lost over 45% of its value, comparable to Cardano, but significantly underperforming Bitcoin, Solana, and Tron.
Ethereum could potentially recover due to its brand recognition and large user base. However, the key question is not just about Ethereum’s recovery but how it compares to other cryptocurrency investments. At present, investing in faster, more efficient blockchains like Solana and Tron may be more prudent. It may be wise to wait and see if Ethereum can enhance its efficiency and reputation with investors before making any investment decisions.
