Title: "Exploring ETH's Current 'Dilemma' from a Primary Market Perspective" Author: Lao Bai, Investment Research Partner at ABCDE Capital

Since the ETH article @ jasonn_chen998, which was filled with anger and indifference, there have been many articles discussing the dispute between ETH and Solana online in recent days. I have no intention of repeating or elaborating on it. Let me add a perspective (not Fud), which is from the perspective of innovation and financing in the primary market, as many of these projects have not yet entered the public eye and are still in full swing.

I have talked about over 1000 projects in ABCDE for two years. Although it certainly cannot cover the overall situation of the primary market, the sample size should not be small. The feeling in 2023 is that ETH and Solana are developing separately in the primary market, and even due to the expectations of Eigenlayer and the entire Restaking+LRT ecosystem, ETH's momentum in the primary market will be even stronger.

In the 24th year, there was a relatively significant shift, as the entire market no longer paid for the completely surplus Infra projects, and the phenomenon of "empty city ghost chains" sparked everyone's disgust. In August's "The Next Decade of Ethereum," V God himself also showed a clear shift in tone, stating that "basically, I believe the tools we already have or will soon have are sufficient to build the best applications in every field suitable for using Ethereum.

In my personal opinion, the combination of three independent but closely related events in the second half of the year, namely the transformation of V-talk style, the seed round financing of nearly $100 million for an AI Infra project, and the opening of only over 100 million FDVs for Matr1x with 2.5 million downloads, is a turning point, that is, the peak of Infra and the low valley of its applications. Afterwards, Infra began to turn downwards and the application slowly improved. Of course, this is a timeline that stretches into the next few years and will not be achieved overnight.

Several major innovations of Crpyo in the past, including the ICO in 2017, Defi Summer in 2020, Play2Earn in 21-22, NFTs, etc., all happened on ETH without exception, and more importantly, on ETH L1. This has also led to the soaring price of ETH. But the current market sentiment, from the perspective of coin price, is full of confidence in Solana breaking through its previous high, and there is endless concern about ETH returning to 4000, not to mention ETH breaking through 10000 as mentioned earlier. Solana PumpFun is thriving in the secondary market, while ETH's TVL is still far ahead, but its applications are still the same old faces from 20-21, and more and more users are moving to L2. L1 Gas remains low throughout the year.

The primary market actually faces the same problem. In the past six months, my personal and obvious feeling is that there have been more application-oriented projects, such as various prediction/gambling markets, AI applications, Depin, micro innovative Defi, Payfi, 3A game masterpieces, and so on. I'm not sure which track the next breakthrough point for big innovation will be on, but based solely on my mental image, I can create an ecological distribution map of a project. The general situation is as follows:

Prediction/Gaming Market - Ton/Solana/Monad AI - Solana/Base/Monad Depin - Solana/MegaETH/Monad Defi - Arbitrum/Blockchain/MegaETH/Monad Payfi - Ton/Solana/Monad/MegaETH Game - Sui/Ronin/Immutable X RWA - ETH/Solana

As can be seen, regardless of where the next major application level innovation lies, Solana currently has the greatest opportunity, followed by Monad and MegaETH. Apart from some RWA related projects, it is rare to see new projects that run entirely on ETH L1. Arb and Base are the most effective in L2 (referring to the application level, OP has basically taken the path of blockchain Infra), but unfortunately, even if there are explosive or phenomenal applications running on them, the value that ETH L1 can capture in the existing architecture is probably very limited.

I personally think the most promising new track is AI and PayFi. Currently, Solana and Base are far ahead in AI. Base has completed the first AI to AI payment in history and recently launched a new fully on chain AI agent that can create an AI agent with a built-in encrypted wallet and Twitter account (optional) within 3 minutes. Solana, not to mention, has directly given birth to the new track of AI Meme. Of course, if you really study Goal and ACT carefully, you will know that they are not as simple as memes, but have the potential to create a new track and paradigm.

Payfi is a competition between two veteran players, Ton and Solana, and two newcomers, Monad and MegaETH. This is a track that is almost never counterfeited, and most people know that Crpyto is actually most suitable for payments, which is also the original intention of Satoshi Nakamoto's invention of Bitcoin. It all depends on which time and which chain/project can ultimately fulfill his long cherished wish. (Finally, a few Payfi projects based on the Lightning Network have emerged recently, let's see if this round of Lightning can rise.)

Saying so much is not to continue Fud ETH, and I personally don't think Solana can really flip ETH with this round of prosperity. ETH alone is enough to secure the second place with its current community and technological accumulation. My only concern is whether ETH is willing to settle for the status quo. Innovation and value capture occur in L2, while its L1 is content with DA and settlement (while also facing competition from projects such as Celestia), and the coin price has remained calm. But I don't really have an answer myself. It is an established fact that ETH L1 currently has weak value capture for L2, and L1's GAS and TPS are not sufficient to support Mass Adoption type applications. Relying solely on the old Defi+may not be enough to see ETH reach a peak of $10000 on the new RWA track. If BTC is priced between 150000 to 200000, Solana is priced between 500-1000, and ETH is still hovering around three to four thousand in the next few years, the confidence and status accumulated in the past 10 years will also be gradually eroded.

How to break the deadlock? This is probably not the responsibility of VC, we look forward to ETH developers and entrepreneurs telling us the answer.

Original link: Lao Bai's X

(责任编辑：市场数据)

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