Ethereum Faces Growing Pressure as Solana Rises with Speed and Low Fees

• Ethereum’s governance limits stakeholder influence, slowing innovation while Solana’s efficiency attracts more users.
• Ethereum’s reliance on L2s introduces centralization risks, while Solana’s speed and cost-effectiveness drive adoption.
• Power struggles hinder Ethereum’s evolution, risking stagnation as Solana grows with a more adaptable approach.

Analyst Justin Bons believes that “Ethereum has governance issues and a lack of scalability preventing its growth.” At the same time, Solana’s blockchain has bigger speed, lower fees, and efficiency. Ethereum struggles to outrun the bear as Solana grounds SOL.

Ethereum’s Governance Problem

The governance system of Ethereum is a major barrier. Ethereum, in contrast to Solana, depends on a small team of developers who make important choices. As a result, stakeholders in Ethereum have little to no influence over its course. This top-down strategy hinders innovation and stops essential scaling advancements.

Moreover, Ethereum’s reliance on Layer 2 (L2) solutions further complicates the situation. While L2s aim to improve scalability, they introduce centralization risks. Many L2s have admin keys that pose security threats. Additionally, centralized sequencers can engage in systemic censorship, creating a less decentralized network.

Solana’s Rapid Growth

Despite its flaws, Solana continues to attract users. The security risks of Ethereum’s L2 solutions are often outweighed by the odd outage. Because of its cost-effectiveness and transaction speed, Solana also has a competitive edge. Consequently, Ethereum’s market share and user base are decreasing.

Besides, the success of Solana highlights Ethereum’s failure to evolve. If Ethereum had implemented true on-chain governance, its trajectory might have been different. Instead, Ethereum remains dependent on the Ethereum Foundation and its developers. This structure prevents stakeholders from influencing critical decisions.

The Parasitic Relationship Between Ethereum and L2s

Ethereum’s dependence on L2s is a growing concern. These solutions extract value without contributing meaningfully to Ethereum’s ecosystem. If Ethereum scaled effectively, many L2s would become obsolete overnight. However, L2 providers resist change to maintain their profitability. Consequently, Ethereum remains stagnant while its competitors flourish.

Additionally, moving from centralized governance to decentralized decision-making is challenging. Those in power rarely relinquish control willingly. History shows that power struggles often lead to stagnation. Ethereum risks following Bitcoin’s path, where innovation slows, and market relevance declines.