Omar Marques | Lightrocket | Getty Images
It’s been a decade since Ethereum’s inception, and although its native ether token has largely struggled for the last half of it, its future looks brighter than ever.
Ether has become more attractive to institutions in recent weeks largely due to legislation around stablecoins – most of which are issued on Ethereum – being signed into the first-ever U.S. crypto law. There’s also the successful June IPO of Circle, the issuer of the second-largest stablecoin, new leadership at the Ethereum foundation, and, most recently, a boom in ether treasury firms and corporate entrants.
Until very recently, however, it seemed like ether, better known by its ticker ETH, was left for dead. For one, institutional investors struggled to understand its purpose. While bitcoin’s primary digital gold narrative was clear and digestible, Ethereum’s was more complex, having been likened to a world computer, a web3 app store, digital silver, digital oil, ultrasound money and more.
Ether (ETH) last five years
It’s also suffered from weaker revenue following a big technical upgrade last year and has dealt with increasing competition from Solana, which aims to be the solution to Ethereum’s notorious high costs and slow speeds.
The ether ETFs, now about a year old, were starting to look like zombie funds. They’ve amassed about $9 billion in net inflows since listing, helped largely by the latest resurgence, versus bitcoin ETFS’ $36 billion in their first year of trading. The April sell-off in risk assets made things even worse for the coin.
The price of ETH really took off during the 2021 bull market, when it hit an all-time high near $5,000 – a rally characterized by the rise of decentralized finance, better known as DeFi, and NFTs. But it’s struggled to fully come back since the 2022 crash and hasn’t yet revisited those highs. This week, it’s trading near $4,000 — a psychologically and technically challenging resistance level for ETH investors.
“ETH today is roughly where bitcoin was in January 2019 – that’s when bitcoin turned 10,” said Avichal Garg, a co-founder and general partner at Electric Capital, which has long invested heavily in the Ethereum ecosystem. “It’s not a surprise that after 10 years of uptime, that’s just how long it takes for people to get their heads around this. I suspect the next four to five years is where ETH has its institutional arc, the same way that bitcoin did between 2019 and 2024.”
The last 10 years
The idea for Ethereum was conceived by the computer programmer Vitalik Buterin, an early believer in bitcoin who saw the original cryptocurrency network as valuable, but recognized it was not equipped technologically to handle bigger and more sophisticated applications. The whitepaper, written by Buterin and others to detail the vision and use cases of the cryptocurrency, was released in 2013 and the network launched on July 30, 2015.
Over the years, it has powered crypto trends like DeFi, NFTs and decentralized autonomous organizations and tokenization. During the 2021 bull market, it was normal at one point to pay more for transaction fees than the actual NFT or DeFi trade – sometimes more than double.
It initially launched as a protocol similar to the Bitcoin network. But in 2022, it underwent a technical transition called the Merge, which was meant to increase its processing capacity and improve its security in an energy efficient way. It also opened investors up to staking opportunities, which allow them to earn “yield,” or rewards, on their ether holdings.
The next 10 years
Despite the apparent froth in the market – stocks at new records, the return of meme stocks, crypto treasury companies multiplying by the day – the current hype around Ethereum seems to have done a 180 from the last bull run. Instead of meme coins and NFTs, the future is the tokenization of dollars and other traditional assets by the world’s biggest institutions. With a more favorable regulatory environment, they’re embracing crypto technology’s lower costs, faster settlement times, greater transparency about ownership and performance and programmable terms, as well as increased accessibility for retail investors and global reach.
BlackRock CEO Larry Fink has said he sees the “tokenization of every financial asset” as an important step in “the technological revolution in the financial markets.”
Despite Ethereum’s shortcomings, it still leads its competition in the most important factor.
“The North Star that Ethereum has stuck to from the very beginning was a maximally decentralized network,” said Austin King, co-founder and CEO of Omni Network, a blockchain platform that operates on top of Ethereum. “As stablecoins and institutional interest is starting to grow, we really are seeing the value proposition of that extreme level of decentralization really showing once again.”
“So much of the value that this whole technology class is providing is about removing the need to rely on other parties,” he added. “Solana is an incredible network … but where Ethereum really shines is the decentralization of the network. And if you are managing hundreds of billions of dollars, trillions of dollars of assets, what you care about most is ensuring that you actually really do have a neutral platform that people can operate on.”
