welcome to money is freedom
a podcast
exploring how finance and freedom connect in our lives
created from thoughtful research
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m a I this series brings you clear
meaningful insights into finance and beyond
welcome to Episode 40
where we unpack Ethereum's 2025 crisis
from price drops and leadership shifts
to booming L Twos and Solana's rise
despite the noise
Ethereum's fundamentals are stronger than ever
is this the setup for its biggest comeback yet
let's break it all down
okay so
you might have caught some of the recent chatter
around Ethereum and let's be honest
some of it hasn't sounded great
yeah there's definitely
been a bit of negativity floating around
exactly so before we just run with those headlines
we wanted to do a proper
deep dive into what's really going on
good idea we've gathered a bunch of articles
some analysis all from this month April 2025
basically to try and cut through some of that noise
makes sense get to the core of it
yeah our mission here is really to
get a solid grasp on Ethereum's current situation
figure out the most important insights
and tackle those big questions for you
like is Ethereum actually in trouble
uh what are the real challenges it's facing
and you know
maybe crucially despite all this stuff
why might it still be a major force down the line right
because the daily price swings
the um
the social media storms they can create a lot of F U
d fear
uncertainty and doubt it happens for sure
but to really understand things
you benefit most from looking at the fundamentals
you know the tech underneath
and the actual context behind these headlines okay
so yeah let's tackle this perception of trouble head on
what are the main reasons
these sources are giving for the sort of
negative vibe around Ethereum lately
all right let's unpack that
a big one that keeps coming up is well
the competition specifically Solana
ah yes
Solana speed right
their transaction speeds are just really fast
you're talking less than a second for confirmations
compared to Ethereum's what
12 seconds on average exactly around 12 seconds
and that speed difference
yeah it's definitely catching people's attention
it impacts how apps feel how responsive they are
definitely a factor for user experience
and then there's the uh
the classic issue
high gas fees on the main Ethereum network
that still seems to be a hurdle for a lot of people
it hasn't gone away completely
no and that kind of feeds into this broader feeling
that using Ethereum can be well
a bit complicated and maybe even sluggish sometimes
and it's interesting how those technical points
connect with the um
the human side of things to the community
how so well
the sources also mention reports of
let's say disagreements
or friction within the Ethereum community itself
ah okay
internal stuff yeah
now some debate is totally normal
even healthy in these big decentralized projects right
huh but it's something else
we need to kind of
factor in when looking at the whole picture right
and it feels like these internal tensions
maybe combined with the tech worries
could be making some developers and uh
bigger investors a bit nervous
that seems plausible the source
actually mentioned some pretty significant withdrawals
something like $400 million
pulled out in this one month
that definitely makes you pause
wow $400 million
yeah that's not insignificant
it does raise questions about confidence levels
at least in the short term
and look we can't ignore the price
ETH has dropped quite a bit from its peak
didn't it down to around what 15
twenty dollars this month
yeah roughly 15
1520 based on these reports
down from over $4,000 well
at the same time
Solana's price apparently hit a new all time high
like $295
yeah it's kind of tempting
to just draw a straight line between all those points
isn't it yeah
it is tempting absolutely
market sentiment price action
they often reflect those immediate trends and feelings
yeah but
you know
for the listener trying to get the long term picture
you really need to understand the underlying strengths
the innovation that's still happening
it's not just about the market mood today
okay so fundamentals versus feeling exactly
now speaking of fundamentals
a huge part of Ethereum's
strategy to deal with its own limitations
like speed and cost is these layer 2 scaling solutions
right the L Twos
can you maybe explain a bit about how those work
and what's the sort of potential paradox or catch 22
that our sources are bringing up about them
sure so the way I think about it
picture Ethereum's main network
layer 1 as like a really busy city center
okay it gets congested
things can get expensive like high gas fees
layer twos are like these efficient
suburbs that have popped up around the city
ah nice analogy
they handle a ton of the day to day activity
the transactions much faster and way cheaper
but they still rely on the main city
layer 1 for their ultimate security and like
final settlement gotcha
like arbiterum optimism
those kinds of networks exactly those yeah
they're big examples but here's where it gets
well tricky maybe
or just really interesting
uh huh while these L Twos are fantastic for users
faster cheaper
uh huh their very success could theoretically
mean less activity happening directly on layer 1
right
because people are doing their stuff on the L2 instead
yeah and if there's less activity on L1
that potentially means less revenue
being generated there from fees
and that revenue is what pays the validators
who secure the whole network precisely
so it's like are the suburbs becoming so popular
they might starve the city center
uh huh of the resources it needs to maintain itself
uh huh it's a bit of a double edge sword
that's a great way to put it
if most of the economic action
moves to these super efficient LTW
how does the core Ethereum network
keep paying for its security
yeah that raises a really critical question
for anyone holding ETH or building on Ethereum
where does the value actually end up
in this whole ecosystem
does it still flow back to the ETH token
now our sources do say the Ethereum
dev community is very aware of this
and they're actively
looking at ways to make sure things stay balanced
what are some of the ideas they're kicking around
okay so to tackle this this potential value drain
they're exploring some pretty smart strategies
it seems like what
one idea is basically charging rent or more formally
data availability fees
the L Twos would pay Ethereum layer 1
just for posting their transaction data there
for using it as an anchor okay
so the suburbs
pay a fee to connect to the city's infrastructure
kind of like that yeah
like paying a toll for using the main highway
another approach is making LTWOs
pay a slice of their transaction fees
back to the Ethereum validators on layer 1 ah
creating a more direct economic feedback loop
exactly
and then there's the one that gets a lot of discussion
the idea of having LTWOs actually burn ETH tokens
as part of their operation
burning ETH how does that help
well
the thinking is if you reduce the total supply of ETH
by burning it the ETH that's left becomes scarcer
and if demand stays the same or grows
that scarcity could push up the value of ETH itself
right basic supply and demand
so that could potentially offset any drop in layer 1
fee revenue that seems to be the hope
yeah okay
so it's clear that
while L2 solves really immediate problems
for users low fees
speed
the long term health of Ethereum's base layer
really depends on getting these economic incentives
right it's a critical balancing act
definitely feels like it now
shifting gears just a little bit
you mentioned the speed difference with Solana earlier
yeah the sub second versus 12 seconds right
the sources talk about a specific proposal
trying to chip away at Ethereum's block time
ah yes
e I p 7
7 8 1
that's the one the goal there is
apparently
to get Ethereum's average block time down to
maybe eight seconds from 12 to 8
that's a decent improvement
yeah it's noticeable
it could make apps feel snappier
help Ethereum compete better on that front
yeah it's about optimizing
how blocks get passed around the network
basically faster block propagation
right but um
like with many things in this space
there's often a trade off
isn't there precisely
and the sources flag
a pretty big concern related to decentralization here
yeah what are the potential downsides
of speeding up Ethereum's block time
that much well
the main worry is about the hardware
if you need to process blocks much faster
it could mean you need more powerful
maybe more expensive computers to run an Ethereum node
ah raising the barrier to entry for node operator
exactly if running a node becomes too costly
or needs really specialized gear
then fewer people fewer organizations
might be able to participate
in actually securing the network
and fewer participants means less decentralization
which is you know
a core principle for Ethereum
for the whole blockchain idea really right
so it's about finding that balance
that sweet spot between getting better performance
and making sure the network stays widely distributed
and uh permissionless
it's that classic engineering problem
isn't it you optimize for one thing
and it often affects something else
and this kind of leads us into that discussion
around the Ethereum community itself
and that internal friction we touched on earlier
what were some of the specific cultural challenges
the sources highlighted yeah
this is where the sort of people part comes in
and it sounds like there are some maybe worrying signs
one thing mentioned is maximalism
ethereum maximalism yeah
like a really strong sometimes maybe even aggressive
uh huh stance where any criticism of Ethereum
even if it's meant constructively
gets shut down really hard
uh huh not very welcoming to feedback then
apparently not always they mentioned a developer
Max Resnick who left after raising some concerns
and facing backlash
that kind of thing
really highlights the potential problem
it could make for a pretty stifling atmosphere
if you want open discussion
yeah that kind of environment could definitely
slow down innovation
or scare off people with good ideas
but maybe different viewpoints
what else did the sources say
about the community's health
another point was about the influence of the loudest
voices particularly on platforms like Twitter or X
as it's called now ah
the Twitter effect right
while social media can be useful
it seems like sometimes these really informal
loud conversations
are maybe drowning out the more formal channels
like the etherium magicians form
where the deeper
technical debates are supposed to happen
so the noise overshadows the substance
possibly it can make it harder for regular contributors
people who aren't big names on social media
to actually get their ideas heard
or seriously considered I can see that
and there were even some reports
kind of concerningly of developers feeling like
unsafe or hesitant to even share new ideas
because they're afraid of getting attacked online
or facing negativity wow
that's not good that really goes against the whole open
collaborative vibe
that usually drives these kinds of projects
totally and you have to think
if that kind of culture takes hold
it could really impact how fast things get developed
how well the platform adapts
it's a serious challenge
for any big open source community really
you need that open communication
you need a culture that actually values different views
and yes constructive criticism
the sources do mention
some efforts are underway to try and fix this though
what are they trying yeah
it sounds like there's an awareness
that these cultural issues
need addressing um
things like community newsletters were mentioned
trying to create more inclusive online spaces
or forums
ways to encourage better dialogue
make sure more voices get heard and respected
okay
so positive steps but it probably needs ongoing effort
seems like it yeah
a real commitment from the community itself
now speaking of direction and leadership
the sources also talked about some recent changes
at the top of the Ethereum Foundation
what's going on there right
the leadership shuffle at the Ethereum Foundation
back in March 2025
it does seem to signal a potential shift
in how Ethereum's development
and maybe it's public face or manage
how so well
I am Miyagiuchi moving into the president role
focusing on global outreach and longer term strategy
that suggests maybe a more external facing push
and then bringing in Shao Wei
Wang and Tommaso to handle the day to day
direction and engineering decisions
these are people with really deep
technical roots in the ecosystem
who are they Wang comes from a research background
building core systems Staffack founded Nethermind
which is a major client team
crucial infrastructure
so they bring serious operational and technical chops
got it experience from the trenches
exactly and on top of that
you see new initiatives
popping up under this new leadership
like something called Etherealize
Etherealize what's
that it seems
aimed at bringing in more institutional players
but with a focus on making sure they're aligned
with Ethereal's core values
it suggests they're proactively
trying to engage with a wider world
hmm interesting
so adapting leadership as the project evolves
yeah and that willingness to adapt
could be seen as a pretty positive sign
for Ethereum's ability to navigate the future
okay that makes sense
so we looked at the headwinds
the challenges the community stuff
but then the sources kind of pivot
don't they
they start talking about what they call the bullish
fundamentals they do
it's almost like saying okay yeah
that's the negative narrative you might be hearing
but let's actually lift the hood and look at the engine
exactly what's really happening on the network
so what are some of these key underlying strengths
that maybe the market isn't
fully appreciating right now right
this is where the story gets quite different
despite the price action
despite some of that negative talk
the actual on chain metrics
they paint a pretty compelling picture
okay like what
first off just the sheer amount of activity
transaction volume
it's actually surging across both layer 1
and significantly the layer 2
so people are actually using it a lot
a lot the fact that L
Twos combined
are now apparently processing more transactions
than Ethereum's main layer
that's huge
it shows those scaling solutions are working
and being adopted wow
more than L1 itself that's what the sources indicate
build millions of dollars in value
moving around every week and it's not just one thing
it's defi it's NFTs
it's gaming all sorts of applications
it points to a really active
vibrant ecosystem okay
that's a strong counterpoint
what else and there's stable coins
ethereum is still absolutely dominant there right
things like USDC tether
exactly USDC
USDT d a I
the big ones Over $70 billion worth of stable coins
are apparently built on or anchored to Ethereum
70 billion that's massive
it is and those stablecoin protocols
rely on Ethereum's security and reliability
as their foundation
that's a huge vote of confidence in the core technology
wouldn't you say yeah absolutely
you wouldn't park $70 billion somewhere
you didn't trust precisely
and it's not just about the apps
or the money moving around
it's also about the user base itself right
are more people actually coming into Ethereum
what did the sources say there
yeah they touched on that too
said that even with the market UPS and downs
the number of unique Ethereum addresses
just keeps climbing it's over 250 million now
250 million unique addresses
and even when the price is down
new addresses are still being created every day
so it suggests
a pretty steady flow of new users coming in
maybe if his wallets are getting easier
maybe new apps are drawing them in right
continued growth even in a bear market
that's often seen as a healthy sign
now what about those fees
we talked about the high gas costs
that were such a barrier
has anything actually improved there
yes definitely significant progress
according to these reports
after the merge the big switch to proof of stake
and also other upgrades like uh
Pro Dunk Sharding Pro Dunk Sharding
right aimed at making L2 data cheaper
exactly the average gas fees
on the main network have apparently come down
quite a bit but maybe more importantly
the layer twos
they're now offering near zero transaction costs
for most typical things people do
near zero on L Twos that's a game changer for usability
it really is it tackles one of the biggest
longest running complaints
and makes Ethereum
way more practical for everyday stuff
for a huge number of users
okay good
and final let's talk about the ETH token itself
the supply dynamics
what's the effect of moving to proof of stake in that
EIP one find 5
9 fee burning thing right
this is actually a really
interesting piece of the puzzle
so the move to proof of stake in 2022
that wasn't just about energy savings
although the energy saving is huge
like over 99.95% less energy
massive reduction yeah
but it also drastically cut down
how much new ETH gets created
less inflation much less
and then you add EIP 1 5
5 9 on top of that
which burns a part of the transaction fee
with every block
taking ETH out of circulation permanently
exactly yeah
especially when the network is busy and fees are higher
more ETH gets burned
the result is that the total supply of ETH
is actually starting to trend deflationary
meaning the total amount of ETH in existence
can actually go down over time
yes that's the trend
this growing scarcity if demand keeps up
could have really big
long term implications for ETH's value
absolutely
that potential for ETH to become a deflationary asset
is a powerful narrative assuming of course
the network stays useful and in demand right
so when you put all those fundamentals together
the rising transaction volume across L1 and L2
the stablecoin dominance the growing user base
the much lower fees now especially on LTWO'S
and this deflationary supply pressure
it paints a very different picture
than just looking at the recent price charts
doesn't it it really does
it highlights a network that's actually hit some major
technical milestones scalability
sustainability with proof of stake security
even if the current market
story hasn't quite caught up yet
hmm which brings us to the big question
I suppose Ethereum's resilience
its future outlook based on everything we've looked at
what gives Ethereum this ability to kind of
weather these storms well
the source is really stress Ethereum's history here
it's been through rough patches before
face big challenges
and has a track record of navigating them and evolving
it's not static not at all
it's constantly being worked on upgraded
refined
by this huge decentralized community of developers
but it's more than just code right
the sources frame Ethereum as also being this um
strong community a shared culture
almost a collective belief
in this idea of a decentralized internet
that social layer
the community provides a lot of strength yeah
that strong foundation
seems to give it a lot of resilience
when things get tough okay
and while those fundamentals seem solid
and the history shows resilience
the sources also say okay
but here's where Ethereum still needs to focus
where it needs to keep pushing
what are those key areas absolutely
it's not like the work is done
there's a clear need to keep making the base layer
layer 1 even faster and cheaper
things like charting
that's still crucial for the long run
continued core development for sure
and then there's the community aspect again
really fostering a more positive inclusive environment
yeah tackling that toxicity issue
making sure diverse voices can actually contribute
that's essential health of the community is key
definitely
and just making wallets and apps easier to use
that's always ongoing trying to get broader adoption
user experience always important
and also just getting better at communicating
what makes Ethereum valuable yeah
you know to developers to users
especially when there are all these shiny
new alternatives popping up
telling its story effectively yeah
and finally circling back to that L2 economic issue
making sure those economic ties between the L
Twos and layer 1 are strong
so that value does continue to flow back to ETH
and secure the network that remains super critical
right nailing that L1L2 value relationship
these are all
definitely vital areas for Ethereum to keep working on
if it wants to stay at the forefront
seems like it so okay
let's try and wrap this deep dive up for our listeners
the bottom line seems to be that yes
despite the negative headlines
despite the real challenges Ethereum is facing
when you dig into the sources
you find a network with pretty strong fundamentals
underneath yeah
lots of development still happening
and a proven history of getting through tough spots
right the sources
really push you to look past the day to day noise
the price charts and actually examine the activity
the tech improvements
the sheer amount of building happening on
around Ethereum it actually reminds me of this analogy
one of the sources used
which I thought was kind of memorable
they called Ethereum the cockroach of crypto huh
the cockroach of crypto okay
explain that one well
the idea being that it's just incredibly resilient
it's weathered so many storms
so many predictions of its demise
but it just keeps building
keeps evolving keeps surviving relentlessly huh
that's actually a pretty powerful image
not glamorous maybe but powerful
it speaks to endurance exactly
so maybe the final thought for you the listener is this
while the crypto spotlight often jumps to the newest
flashiest thing
what does Ethereum's quiet maybe sometimes
messy but persistent evolution
tell us
what does that resilience suggest about finding real
long term value versus just chasing the hype
something to think about
as you watch this whole space continue to unfold
consider that difference between hype
and fundamental strength