Why Ethereum is still the world’s #2 despite a more than 80% drop in value per token

Ethereum remains the world’s #2 cryptocurrency by market cap despite an >80% drop from its all-time high (ATH) because market cap depends on circulating supply, not just price. Here’s why ETH still dominates

1. Market Cap ≠ Just Price – Supply Matters

• Ethereum’s ATH was ~$4,900 (Nov 2021), but its circulating supply was ~118M ETH.
• Today (2024), ETH trades at ~$3,500, but supply has grown to ~120M ETH due to staking & gradual issuance.
  • ATH Market Cap: 4,900×118M=∗∗ 4,900×118M=∗∗ 578B**
  • Current Market Cap: 3,500×120M=∗∗ 3,500×120M=∗∗ 420B**
  • Drop from ATH: ~27% (not 80%) because supply increased.

Wait, but didn’t ETH drop >80% at one point?
Yes, price-wise, ETH fell ~85% from ATH during bear markets (e.g., to ~$880 in June 2022). But market cap didn’t drop 85% because supply grew.

2. Ethereum’s Utility Keeps It #2

Unlike meme coins or smaller altcoins, Ethereum maintains dominance because:

• Smart Contract Leader: >80% of DeFi (Decentralized Finance) runs on Ethereum or its L2s (Arbitrum, Optimism, Base, etc.).
• NFT & Token Standard: ERC-20 (tokens) & ERC-721 (NFTs) are industry standards.
• Institutional Adoption: Major companies (JP Morgan, Visa) use Ethereum for blockchain solutions.
• Staking & Security: After “The Merge,” ETH became a yield-bearing asset (~3-5% APR via staking).

3. Competitors (Solana, BNB, etc.) Haven’t Fully Surpassed ETH

• BNB (#3): Centralized (Binance-controlled), mostly used for trading discounts.
• Solana (#4): Faster & cheaper, but has had reliability issues (downtimes).
• Ethereum’s L2s (Arbitrum, Base): Actually strengthen ETH’s dominance because they settle transactions on Ethereum.

4. Future Upgrades (EIP-4844, “Dencun”) Reduce Fees

Ethereum’s biggest criticism is high gas fees, but:

• Proto-Danksharding (EIP-4844) reduced L2 fees by 10-100x in 2024.
• More scaling solutions (e.g., danksharding) will keep ETH competitive.

Conclusion: ETH is Still #2 Because…

✅ Market cap depends on price × supply (not just price).
✅ Real-world utility (DeFi, NFTs, enterprise adoption).
✅ No true competitor has fully replaced it (Solana & BNB have weaknesses).
✅ Scaling improvements keep it relevant long-term.

Even with price volatility, Ethereum’s network effects and developer dominance make it hard to displace. Unless a major flaw emerges or a competitor solves scalability without trade-offs, ETH will likely stay #2. 🚀

What is Ethereum?

Ethereum is a decentralized, open-source blockchain that enables smart contracts and decentralized applications (dApps). Unlike Bitcoin (which is primarily digital money), Ethereum is a global computing platform where developers can build apps that run without censorship or downtime.

Key Features of Ethereum

1. Smart Contracts

• Self-executing agreements written in code (e.g., “If X happens, automatically do Y”).
• Used for DeFi (decentralized finance), NFTs, DAOs, and more.

2. Ether (ETH) – The Native Cryptocurrency

• ETH is used to pay for transactions (“gas fees”) and secure the network.
• It can be traded, staked (earning ~3-5% rewards), or used in dApps.

3. Decentralized Applications (dApps)

• Apps that run on Ethereum (not controlled by any company), including:
  • DeFi (Uniswap, Aave, MakerDAO)
  • NFTs (OpenSea, CryptoPunks)
  • Gaming & Social Media (Decentraland, Lens Protocol)

4. Proof-of-Stake (PoS) Consensus

• Since “The Merge” (2022), Ethereum uses PoS (not Proof-of-Work like Bitcoin).
• Validators stake ETH to secure the network (more energy-efficient).

5. Layer 2 Scaling (Rollups: Arbitrum, Optimism, Base)

• Ethereum’s mainnet can be slow/expensive, so Layer 2s process transactions faster & cheaper.

How Is Ethereum Different from Bitcoin?

Why Does Ethereum Matter?

• Decentralized Internet: Ethereum enables Web3, where users control their data and assets.
• Banking the Unbanked: DeFi allows anyone with internet access to borrow, lend, and trade.
• Censorship Resistance: Apps on Ethereum can’t be shut down by governments or corporations.
• Tokenization: Real-world assets (stocks, real estate) can be represented as tokens on Ethereum.

Future of Ethereum

• Scalability Upgrades (Danksharding, more L2s) → Cheaper & faster transactions.
• Privacy Enhancements (zk-SNARKs, stealth addresses).
• Enterprise Adoption (Visa, JP Morgan, and others use Ethereum for payments and settlements).

Conclusion

Ethereum is more than just a cryptocurrency—it’s a global platform for decentralized apps, finance, and digital ownership. While Bitcoin is “digital gold,” Ethereum is like the internet’s decentralized backbone.

🚀 Fun Fact: Over 80% of all blockchain developers work on Ethereum or its ecosystem!

Is there a possibility that other chains will overtake Ethereum?

Yes, there is a possibility but less chance that other blockchains could overtake Ethereum, but it depends on several factors. Ethereum currently dominates as the #1 smart contract platform Even Bitcoin has fewer users than Ethereum, but competitors are improving rapidly. Here’s a breakdown of the risks and challenges Ethereum faces.

1. Ethereum’s Strengths (Why It’s Still #1)

✅ Network Effects – Largest developer community (~4,000+ monthly active devs, 4x Solana).
✅ Institutional & Enterprise Adoption – JP Morgan, Visa, and central banks use Ethereum.
✅ L2 Scaling (Arbitrum, Optimism, Base, etc.) – Ethereum’s rollups handle 100K+ TPS combined.
✅ Decentralization & Security – Strongest validator set (~1M validators) vs. competitors.
✅ Established dApps – Uniswap, Aave, MakerDAO, and most DeFi/NFTs are Ethereum-native.

2. Threats to Ethereum’s Dominance

A. Scalability & High Fees

• Even with L2s, Ethereum’s base layer is expensive (~1−1−50 per tx during congestion).
• Competitors like Solana (SOL), Near (NEAR), and Sui (SUI) offer cheaper & faster transactions.

B. Rising Competitors

C. “Ethereum Killers” Gaining Traction

• Some chains are specializing in areas where Ethereum struggles:
  • Solana → High-speed trading, NFTs.
  • Avalanche → Institutional DeFi.
  • Polygon (MATIC) → Ethereum-compatible but cheaper.

D. Regulatory Risks

• If the SEC classifies ETH as a security, it could hurt adoption in the U.S.

3. Can Ethereum Be Overtaken?

• Short-Term (1-3 years) → Unlikely. Ethereum’s ecosystem is too entrenched.
• Long-Term (5+ years) → Possible if:
  • Ethereum fails to scale (L2s don’t keep up with demand).
  • A competitor solves scalability without sacrificing decentralization (e.g., Solana fixes downtime issues).
  • A major Ethereum hack or governance failure occurs.

4. Most Likely Scenario?

• Ethereum remains #1 but loses some market share to Solana, Cosmos, and Avalanche.
• Multi-chain future where Ethereum is the “settlement layer,” and other chains handle niche use cases.

Final Verdict

🚀 Ethereum is still the safest bet for smart contracts, but competitors are closing the gap.
⚠️ Never underestimate crypto’s unpredictability – a new chain could emerge and flip the script.

Would you like a deeper dive into any specific Ethereum competitor? (e.g., Solana vs. Ethereum, BNB Chain risks, etc.)

Join our gang by purchasing the Animalverse Club NFT, which is the key to accessing a ton of benefits.
Animalverse SoicialFi is a web3 social media platform designed to connect users around the world without the influence of algorithms, promoting equal access to information. The platform aims to create a decentralized environment where users can freely share and consume content and send crypto, which is fully consistent with the principles of blockchain technology. Let’s be a part of AVC ecosystem  Home  BlackMarketplace  Groups  Games  Jobs  Blog News