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Ethereum's "revenge is successful", what are the opportunities for ambush in the ETH ecosystem?

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Between the rise and fall, the community shouted "Ethereum is finally resurrected"

The Ethereum revenge has been successful.

This morning, ETH broke through $2400 and as of writing, the price is $2414, with a 24-hour increase of 8.47%. Meanwhile, Solana's price has fallen from its high point of $123 on December 26th to $104, a decrease of 15%.

Between the ups and downs, the community is shouting "Ethereum has finally revived". If Ethereum were given a script, the rivalry between it and its "neighborhood rival" Solana would be the most talked-about drama in the cryptocurrency industry.

Ethereum ecosystem "resurrection" reasons

Currently, the encryption industry has entered a critical period of bull and bear alternation, and the market is gradually returning to caution from the frenzy and excitement.

Bull and bear cycles continue to alternate

Through the market sentiment index on the BlockBeats website, it can be seen that since October, the news of Bitcoin spot ETF has been progressing step by step, and various protocols and inscriptions in the Bitcoin ecosystem have pulled the encrypted market out of the bear market bottom of 2023. Subsequently, multiple public chains took on the hot narrative, further boosting market sentiment through inscriptions, memes, and NFTs, and the entire crypto field believes that the bull market has begun.

However, during this process, the prices of the two mainstream tokens, Bitcoin and Ethereum, have been fluctuating within a certain range, while new innovations in the ecosystem have seen exaggerated price increases. For example, Ethereum-based NFTs such as ETHS have surged to over $16,000, which is 6-7 times the price of Ethereum at that time, demonstrating the frenzy in the market.

However, with the rise of the inscription market, which is hailed as the starting point of this bull market, showing a weak trend, people realize that the value anchoring development of the current inscription is still immature. The entire cryptocurrency market is still in a transitional phase of bull and bear alternation, with short-lived rise myths and inconsistent market performance. Every narrative and ecological cryptocurrency project will emerge during this period to make its presence felt. Therefore, the price fluctuations of Ethereum are a normal reaction to this market phase.

On December 28th, Grayscale officially stated on social media that ETH had generated strong returns (over 80%) in 2023, but lagged behind BTC and some other smart contract blockchain tokens. The ratio between the ETH and BTC price indices recently reached its lowest level since mid-2021. In fact, the price increase of most smart contract platform tokens this year has been lower than that of Bitcoin, and ETH is basically in line with this group.

The CryptoSector index rose by about 94% in 2023, only slightly higher than the increase in ETH. Despite falling behind Bitcoin and some other cryptocurrencies in 2023, ETH still outperformed traditional asset classes. Therefore, we believe that the rebound of ETH should be seen as evidence of the expansion of the cryptocurrency recovery.

Solana Ecosystem Fund Flowback

The Ethereum price increase cannot ignore another factor, which is the "rival" Solana facing a situation of capital outflow.

Last week, BitMEX founder Arthur Hayes claimed to have received divine inspiration during meditation, instructing him to sell the SBF-supported token SOL and expressing his admiration for Ethereum founder Vitalik. Ethereum prices briefly rose that day, but market attention remained focused on the Solana ecosystem.

Recently, the meme coin frenzy on the Solana blockchain, including BONK, WIF, SILLY, etc., has led to super high returns for DEXs such as Raydium and Jupiter. On December 16th, the DEX trading volume on the Solana network was approximately $1.475 billion, surpassing Ethereum's $1.164 billion, with a weekly trading volume of $6.429 billion, an increase of 52.75%. This has become a strong proof in the community that Solana will flip Ethereum.

On December 26th, according to DefiLlama data, the past 7 days saw the protocol fees of Solana's ecosystem DEX Raydium reach 161 million US dollars, surpassing the protocol fees of the Bitcoin network (102 million US dollars) and the Ethereum network (76.59 million US dollars), ranking first. However, according to the latest data, Raydium's 7-day protocol fees have fallen to fifth place, with a drop of 70% from its peak.

Through the price changes of SOL, it can be seen that Solana's strong performance is slowing down. Currently, SOL's market capitalization has also dropped to fifth place, and its price has fallen from the high point of $123 on December 26th to $103, a decrease of 16%.

The price performance is always the most sensitive reflection of the market situation, and currently it is in an unstable period of bull and bear alternation. Hot money always chooses to lurk in places with more wealth opportunities, and Ethereum's opportunity will be next year.

Upgrade of Cancun and ZK L2 Airdrop Expectations

The Cancun upgrade is currently considered an important milestone for the Ethereum ecosystem's resurgence in the market. Following the Shanghai upgrade, the Cancun upgrade is an additional upgrade to the ETH blockchain. The highly anticipated EIP-4844 proposal will drive the goal of reducing costs and increasing speed for Ethereum L2. This will increase the speed of Ethereum Layer2 by 10 times, and even has the potential to increase it by 100 times with lower costs.

The high gas fees in the Ethereum ecosystem have made many cryptocurrency users complain that they cannot afford it. If the Cancun upgrade can successfully reduce the cost of transactions on Ethereum, combined with the well-established infrastructure in the Ethereum ecosystem, the expected price increase of Ethereum will be the first shot.

This morning, Vitalik Buterin published an article on the Ethereum Research forum proposing three simplified designs for Ethereum's proof-of-stake system, including a decentralized staking pool, two-tiered staking, and a validator committee mechanism.

Many people believe that this is the key factor behind the rise in ETH prices this morning. In addition, tokens from Ethereum Layer 2 projects have also seen a general increase in prices, with the total locked value (TVL) of Layer 2 reaching the threshold of $20 billion, an increase of 23.06% in the past 7 days.

Meanwhile, in the Layer 2 zk camp, the expected airdrops of Starknet and zkSync have brought new attention to the Ethereum ecosystem. On December 1st, the Starknet Foundation confirmed a screenshot of the airdrop plan draft and stated that the airdrop snapshot had been taken. Previously, with the Layer 2 "PUA" discourse sparked by Blast, other Layer 2 solutions on Ethereum realized that they must take action in order not to be abandoned by the market. Therefore, next year, these Layer 2 solutions with technical capabilities and expected airdrops will form a consistent market sentiment with Ethereum.

What are the potential opportunities?

Since the Ethereum ecosystem is so highly anticipated next year, what opportunities can we prepare for in advance? Ethereum co-founder Vitalik gave several positive signals today.

Today, Vitalik posted on Warpcast, saying "I'm glad to see that there is already one Rollup entering the first stage this year (and a few more projects are very close to the first stage). This is a real decentralized progress, and I hope to see ten Rollups enter the first stage next year and achieve a certain degree of sequencer decentralization." From the screenshot posted by Vitalik, it can be seen that the Rollup he referred to as entering the first stage is Arbitrum and Metis Andromeda, which implements decentralized sequencers.

OP Ecosystem

Optimism is the leader in the price rebound of the Ethereum ecosystem. On December 27th, OP rose to $4, currently priced at $3.84, hitting a new all-time high, with a 24-hour increase of 18%.