Ethereum's price momentum has slowed due to leadership controversies within the Ethereum Foundation and the expanding market share of Solana's decentralized applications (DApps).
Since January 7, Ether (ETH) has struggled to break the $3,500 resistance, underperforming the broader cryptocurrency market, which saw a 6% rise during the same period. This weakness stems partly from declining transaction volumes in Ethereum-based DApps, raising concerns among traders about ETH's price trajectory.
Ethereum On-Chain Activity Drops 38%, Lagging Behind Competitors
Data from DappRadar reveals a 38% decline in Ethereum's weekly DApp transaction volume, dropping to $36.5 billion—a significant underperformance compared to rivals like:
- BNB Chain: +112% activity surge
- Solana: +36% growth
- Ethereum-based platforms: Balancer (-65%), Morpho (-65%), and Uniswap (-40%)
DefiLlama reports further challenges: Ethereum fell out of the top five blockchains by weekly fee revenue, generating just $46 million (January 14–21). In contrast, Solana earned $71 million in fees, with its ecosystem (Raydium, Jito, Meteora) totaling $309 million.
Criticism mounts over Ethereum’s reliance on Layer 2 scaling solutions, which aggregate transactions via data sharding and low-cost state bridges. With an average base-layer transaction fee of $5.50, many DApps face unsustainable costs.
Key Debate: Balancing Staker Rewards vs. Affordable Fees
Proposed solutions include:
- Increasing transaction fees
- Reducing inflation rates
Ethereum’s leading Layer 2s—Base, Arbitrum, Polygon, and Optimism—collectively handle $25.8 billion in weekly DEX volume. Meanwhile, Solana dominates total on-chain activity ($118.6 billion in 7 days), fueled by meme coins like TRUMP (endorsed by Donald Trump), which boosted platforms like Raydium and Orca by 200%+.
Despite Ethereum’s $66 billion TVL dominance, Solana’s deposits surged 29% to a record $11.2 billion, intensifying pressure on ETH investors.
👉 Explore Ethereum’s Layer 2 solutions
Ethereum Foundation Leadership Dispute Unnerves Investors
ETH holders face additional uncertainty due to internal conflicts at the Ethereum Foundation. Key developments include:
- May 2023: Implemented conflict-of-interest policies after researchers faced backlash for paid advisory roles at EigenLayer.
- January 21: Co-founder Vitalik Buterin asserted sole decision-making authority, pledging future governance reforms.
Buterin addressed criticism on X, stating leadership would remain under his purview until a "proper board" is established. Executive Director Aya Miyaguchi (2018–present) also faced scrutiny for perceived inefficiencies.
These controversies, coupled with reduced staking incentives, have dampened Ethereum’s momentum. Solana’s SOL, riding the meme coin wave, now challenges ETH’s dominance—with no near-term catalyst for Ethereum to regain ground.
FAQ Section
Q: Why is Ethereum’s DApp volume declining?
A: High gas fees ($5.50 avg.) and competition from faster, cheaper chains like Solana drive users away.
Q: How does Solana’s fee revenue compare to Ethereum’s?
A: Solana earned $71M in fees (Jan 14–21) vs. Ethereum’s $46M, with ecosystem projects pushing its total to $309M.
Q: What’s the impact of Ethereum’s leadership changes?
A: Short-term uncertainty as Vitalik Buterin centralizes decision-making, though long-term governance reforms are planned.
👉 Stay updated on Ethereum’s development
This article is for informational purposes only and does not constitute financial advice.
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