🥛 Ethereum is dead...again. 💀

GM, this is Milk Road PRO, the newsletter that’s designed to be the ‘Robin’ to your portfolio’s ‘Batman’.

(We’re here to help and make quips). 

The banana zone is finally here—hooray! 

Everything seems to be skyrocketing...except Ethereum.

Bitcoin is well past previous cycles all time highs. Solana managed to reach previous ATHs too.

Yet, Ethereum remains 20% from last cycle's ATH of $4800.

To be fair, it looks like Ethereum has recently started to catch up. But maybe not as much as we would expect/hope. 🤔

And in the meantime people keep asking: Is Ethereum dead?

Ethereum has been declared "dead" 111 times throughout its history—31 of those times just in 2024 alone.  

So, being called dead? That’s nothing new for Ethereum. 

Sure, it feels more dramatic now when other Layer 1s like Solana already hit ATHs and Sui is pumping hard every day, but it’s just another chapter in Ethereum’s rollercoaster journey.

But…what if this time is different? 🤔

After looking at the year-to-date performance of these three major crypto assets – why should anyone stay bullish on $ETH?

Ethereum is lagging far behind. Bitcoin and Solana have seen 2x the gains of Ethereum.

Which makes this the perfect moment to take a step back and revisit our thesis for Ethereum. 

So we’re breaking it down for you:  

And don’t expect us to go easy on Ethereum. 

P.S. - We’re hosting a PRO AMA next week — scroll to the bottom for more info. 👀

It’s our largest position in our Milk Road PRO Portfolio, so you can bet we’re fully motivated to take off the rose-colored glasses and give it a raw, honest review.

Before we dive in, here’s a quick disclaimer—not the kind you’re used to, but an important one. 😉

By the end of this report, we’ll give you a clear vision of where Ethereum is heading, based on what we’ve learned and understood from the Ethereum community, developers, and researchers. 

However, we won’t be focusing on the nitty-gritty details of specific implementations or the technical feasibility of proposed solutions—that’s way above our pay grade.

And let’s be honest, that kind of stuff can get pretty boring, and most of us get lost pretty quickly. 

So, keep all of that in mind as we move forward!

But now let’s dive in and get real—starting with the things we don’t like about Ethereum. 

…perhaps some of these factors have contributed to ETH’s underperformance so far.

THE THINGS WE DON'T LIKE

We’ve pinpointed 4 things about Ethereum that we’re not too thrilled about, and we’re going to break them down for you one by one.

1/ Missing the north star

A clear and focused goal isn’t just nice to have—it’s essential. Without it, a project becomes a tough sell, no matter how big or successful it might seem.

Look at Bitcoin or Solana. 

Bitcoin aims to become “digital gold” and serves as a store of value. 

Solana aims to deliver cheap transactions at the speed of light (aka: bring “Nasdaq onchain”).

Each one has a well-defined “north star”—a guiding vision that unites people, sparks passion, and builds tight-knit, thriving communities. 

That clarity creates momentum and keeps the hype alive.

But what about Ethereum? Does it want to be a world supercomputer? Ultrasound money? Or a programmable internet layer? It feels like, You name it – Ethereum wants to be it.

Yes, it has a strong community—there’s no denying that. 

But here’s the issue: its lack of a clear, overarching vision is starting to show. 

Other projects with sharper focus are growing faster, stealing the spotlight, and outpacing Ethereum in many ways. 

For newcomers, Ethereum can feel confusing and directionless, which makes it harder to attract new supporters and keep building its momentum.

Without a unifying vision, even the strongest communities can lose steam—and that’s a problem Ethereum needs to tackle.

We get it—this can feel pretty subjective. 

But let’s be real for a moment: what’s easier to explain to a friend—Ethereum, Bitcoin, or Solana? 

Odds are, Bitcoin and Solana are the easier pitch because their missions are crystal clear.

So if you can't sell $ETH to your friend, many other people will face the same issue. 

As a result, all the new people coming in might rather buy something else. Something that has already been pumping like $XRP or something that resonates with them more. 

So who will be the new wave of $ETH buyers? 🧐

(Good question!)

However, the lack of a north star can be resolved relatively quickly, so it’s not such a big deal. 

The technical debt that Ethereum has compared to other faster and cheaper L1s? 

Now, that’s a big deal!

2/ Slow and expensive blockchain

Ethereum is a 9-year-old technology, which means it’s been around long enough to witness major breakthroughs and advancements in the blockchain space. As the first smart contract blockchain, Ethereum was a true pioneer—and that’s both its strength and its weakness.

Weird? Yes. 

But let us explain…

History shows us that the apps we use and love today such as Facebook or Netflix usually aren’t the first versions of an idea. 

They’re often the second, third, or even later iterations that learned from the failures and successes of their predecessors. The same is true in the blockchain world.

Newer blockchains have a unique advantage: they can study Ethereum’s blueprint. They can see what works, what doesn’t, and which early design choices are now holding Ethereum back.

For example: 

👎 Ethereum’s block times are around 12 seconds, and transaction fees can cost a few dollars or more during high traffic. 

👍 In contrast, newer blockchains are offering block times of less than a second and transaction fees that cost just fractions of a penny.

These design improvements give newer blockchains a competitive edge, allowing them to deliver faster, cheaper, and more scalable solutions. In many ways, these blockchains act as refined versions of Ethereum, learning from its strengths while avoiding its limitations. 

Ethereum’s early decisions—while groundbreaking at the time—are now harder to reverse, slowing down its ability to scale and innovate further.

Ethereum is well aware of these challenges, which is why the community made a pivotal decision back in October 2020: to focus on scaling through Layer 2 solutions.

Those L2s were supposed to bring Ethereum fast and cheap block space. And guess what? They delivered! 

Transactions take less than a few seconds to process and cost less than a fraction of a penny.

And while it was the right decision and a necessary move for Ethereum at the time, it’s far from being Ethereum’s end game. Now we are going to explain why. 

3/ L2 Decoupling

This is a highly controversial topic, and people are firmly split into two camps. 

✅ Some love L2s, seeing them as a great solution for scaling and a huge win for Ethereum. 

❌ Others argue that L2s are parasitic, siphoning value away from Ethereum instead of strengthening it.

While L2s offer solutions to Ethereum’s scalability challenges, the current dynamic leans heavily in favor of L2s.

L2s benefit greatly from Ethereum by relying on its robust security (used as settlement layer) and ensure trust, saving them the immense effort of building their own secure foundation. 

They also tap into Ethereum’s extensive ecosystem, leveraging its developer tools, smart contracts, and wallets to accelerate their growth without reinventing the wheel. 

Additionally, Ethereum’s large community and liquidity naturally flow into L2s, giving them a significant head start in building their networks and economies.

That’s all great, but here’s the problem: L2s have no real incentives to stay loyal to Ethereum. 

Currently, L2s use Ethereum as a settlement layer and data availability layer (no need to go into details here).

The issue is that Ethereum has no leverage to ensure L2s continue using it instead of seeking out much cheaper alternatives for these services.

After all, they’re businesses trying to make money. So, what are the odds that everyone will stick with Ethereum? 🥺

Yeah, we know—they all say today they’re here to stay. But will they really? 

Let’s take Base as an example. It’s the fastest L2 right now, and we don’t expect it to slow down anytime soon.

But Base is backed by Coinbase, and $COIN is a publicly traded stock. 

Do you think Coinbase’s board cares more about aligning with Ethereum and the chorus of "blah, blah, Ethereum alignment, blah, blah, blah," or about making stakeholders happy and focusing on profits?

(Are you a realist or are you naive? That’s the real question).

We’d love to believe in their commitment, but unless Ethereum offers them something more, they won’t stick around forever.

These are tough, uncomfortable questions, but we have to face the reality! 

…now, it’s not all doom and gloom however—or parasitic. 

Let’s be fair and show the other side. 

L2s have been a game-changer for Ethereum, boosting its scalability by an impressive 24x in terms of transactions per second.

Ethereum on its own can handle only about 15 transactions per second (TPS), but when you add in all the L2s, that number skyrockets to 372 TPS.

Thanks to L2s, many of Ethereum’s ecosystem metrics—like TVL, trading volume, and stablecoin supply—are hitting all-time highs. 

TLDR: L2s have helped Ethereum scale, but now Ethereum needs to find ways to provide more value to L2s. Otherwise, they might look elsewhere, and Ethereum risks missing out on capturing the value created on top of its network.

And despite this growth in TPS and helping ethereum to scale, the user experience isn’t as seamless or smooth as you might hope – which leads us to the last thing we’re not too thrilled about…

4/ Liquidity fragmentation

We all know the user experience in crypto is far from perfect—it’s bad, and we need to do a lot better!

Right now, the Ethereum ecosystem is made up of Ethereum mainnet plus around 100+different L2s. 

The problem? 

You can only use an L2 if you already have funds there. 

For instance, if you’ve got funds on Arbitrum but need to do something on Optimism, you’re stuck bridging your funds over. 

That means extra steps, added friction, and increased risk for the user.

And it doesn’t stop there…

Imagine you’re a successful lending app on Ethereum mainnet. Sure, you can deploy your contracts on Base or another L2, but then comes the real challenge: 

Rebuilding liquidity from scratch. 

Every time you launch on a new L2, you’re stuck fighting to attract an entirely new pool of users and funds. 

For builders, this fragmented system isn’t just frustrating—it’s an uphill battle every single time.

TLDR: Neither users nor builders are satisfied with the current state of things. It’s clunky, fragmented, and anything but seamless. 🥺

But there’s something that could fix it all and make both users and builders happy—and we’ll dive into that later.

It’s important to remember that the best technology doesn’t always come out on top—and that’s why this battle is far from over. 

Just look at Facebook, Google, or YouTube… 

They all started by building massive network effects without any clear plan for monetization, yet they’ve grown into trillion-dollar giants. 

Their success shows that the path to the top is never easy or straightforward.

With that in mind, let’s focus on what makes Ethereum truly unique today.

THE THINGS WE LIKE