Ethereum started out with the goal of becoming the decentralized computer of the world, and the chain accrued value since the ICO, rallying to its peak of $4,878 in November 2021. Since then ETH erased 71% of its value over four years.
The most notable shift that is considered the catalyst for the decline in Ether price is its Layer-2 centric scaling model. The move fueled by the Dencun upgrade that slashed transaction costs for Layer 2 chains, reshaped Ethereum’s ecosystem dynamics.
The profitability of Layer 2 chains has ignited the debate over whether Layer 2s are squeezing value out of Ethereum or nurturing the partnership where they derive security and pass on revenue to the ETH blockchain.