🌎 Ethereum Loses Ground to Solana Amid Decline in TVL

Ethereum’s Fight for Relevance in the Blockchain Space

Ethereum’s journey has started to look less like a steady climb and more like a rocky descent. Once celebrated as a pioneer in smart contracts, it now faces relentless competition and internal discord.

Ethereum’s Struggles: A Decline in Total Value Locked

In November 2021, Ethereum’s total value locked (TVL) hit an all-time high of $107 billion. However, by the end of 2023, this number had dwindled to just $30 billion — a staggering decline. Although 2024 offered a glimmer of recovery, with TVL climbing to $66 billion by mid-year, as of January 2025, Ethereum remains stuck at $64.5 billion.

Meanwhile, its closest competitor, Solana, has scripted a far more compelling comeback story. After plunging from a TVL of $10 billion in late 2021 to a mere $210 million in early 2023, Solana roared back to life, hitting an all-time high of over $12 billion this month — outpacing Ethereum’s recovery in both speed and scale.

Ethereum’s Technological Shortcomings

Beyond TVL, Ethereum appears to be losing ground on critical metrics like transaction volume and user fees. While Ethereum processes an average of 1-1.2 million daily transactions as of early 2025, Solana dwarfs this with a jaw-dropping 60-65 million transactions per day.

Additionally, despite Ethereum charging higher fees per transaction, Solana’s daily fee volume is consistently higher, averaging $5-6 million this month and peaking at $35 million during the buzz surrounding the inauguration of Donald Trump as the 47th U.S. president.

The Ethereum Foundation’s Identity Crisis

The Ethereum Foundation (EF), a nonprofit organization long viewed as the backbone of Ethereum’s development, is itself in a state of upheaval. Internal discontent, growing competition, and questions about the foundation’s vision have left the EF grappling with its identity at a time when Ethereum’s future has never been more precarious.

Ethereum’s co-founder, Vitalik Buterin, has been working on a restructuring initiative aimed at addressing inefficiencies and improving communication between the EF and Ethereum’s developers. However, this effort has not been without controversy, with critics arguing that Buterin’s central role in the process undermines Ethereum’s ethos of decentralization.

The Second Foundation: A Competing Vision for Ethereum’s Future

Konstantin Lomashuk, the founder of Lido — a protocol managing over 28% of Ethereum’s staked ETH — has proposed the idea of the “Second Foundation,” a competing vision for Ethereum’s future that aims to decentralize power within Ethereum by creating a parallel entity that challenges the Ethereum Foundation.

The Second Foundation’s vision includes addressing Ethereum’s staking mechanism and preserving Ethereum’s decentralization and censorship resistance while introducing more robust governance mechanisms.

Prominent Figures Take Aim at Ethereum’s Path Forward

Critics argue that the EF lacks urgency, vision, and a coherent strategy to maintain its dominance. Kyle Samani, Managing Partner at Multicoin Capital, and Justin Sun, founder of Tron, have taken to social media to highlight Ethereum’s shortcomings and suggest bold, if polarizing, strategies for its revival.

Community and Developers Turn Their Back on Ethereum

Ethereum’s challenges are no longer confined to leadership controversies or competitor attacks — its very community is fracturing. The calls for leadership reforms have reached a boiling point, with many investors and developers expressing their disillusionment with the current state of Ethereum’s leadership and direction.

At a time when trust and unity are critical, the Ethereum leadership must act decisively. Whether through reforms, better communication, or a stronger focus on its decentralized principles, the network needs to bridge the widening gap between its ideals and the community’s expectations.

If it fails to adapt, Ethereum risks ceding its leadership position to competitors better equipped to meet the moment.