 Ethereum Foundation infighting and drop in DApp volumes put cloud over ETH price 
2025-01-22
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Ether ETHUSD has struggled to close above $3,500 since Jan. 7, signaling weakness even as the broader cryptocurrency market gained 6% during the same period. This underperformance can be partly attributed to a drop in the volume of Ethereum-based decentralized applications (DApps), raising concerns among traders about whether ETH price will continue to lag behind.
Ethereum onchain activity drops 38%, underperforming peers
Onchain activity on Ethereum has significantly underperformed compared to its peers. Over a 7-day period, volumes dropped 38% to $36.5 billion, according to DappRadar. 
In contrast, activity on the BNB Chain surged by 112%, while Solana gained 36%. Notable declines on Ethereum included Balancer and Morpho, which fell by 65%, and Uniswap, where volumes dropped 40%.
Adding to Ethereum's challenges, it no longer ranks among the top five blockchains in weekly fees. Between Jan. 14 and Jan. 21, Ethereum generated just $46 million in fees. Solana, by comparison, collected $71 million in fees, and when combined with contributions from Raydium, Jito, and Meteora, its total reached $309 million during the same period, based on DefiLlama data.
Criticism has grown over Ethereum’s mechanism that favors layer-2 scaling solutions, especially rollups that use blob space and low-cost state bridging to aggregate transactions. Average transaction fees on Ethereum’s base layer currently stand at $5.50, a level that many DApps find unsustainable.
The ongoing debate focuses on balancing low transaction costs with the need to adequately reward ETH staking. Proposed solutions include raising fees or reducing the inflation rate. Ethereum's leading scaling solutions—Base, Arbitrum, Polygon, and Optimism—currently account for a combined $25.8 billion in weekly decentralized exchange (DEX) volumes.
To put things into perspective, Solana remains the leader in total onchain volumes, recording $118.6 billion in activity over 7 days, according to DefiLlama data. This surge was fueled by the launch of the Official Trump (TRUMP) memecoin on Jan. 18, a record-breaking token endorsed by US President Donald Trump. As a result, platforms like Raydium, Orca, and Meteora saw volume gains of 200% or more.
Despite this, Ethereum retains its top position in total value locked (TVL), holding steady at $66 billion week-over-week, according to DefiLlama. Ethereum layer-2 solutions also grew to $8.2 billion in deposits across Base, Arbitrum, Polygon, and Optimism. However, Solana deposits rose by 29% in just 7 days, reaching an all-time high of $11.2 billion, which has added pressure and uncertainty for ETH investors.
Leadership disputes at the Ethereum Foundation spook investors
Further concerns among Ether holders stem from the internal debate within the Ethereum Foundation (EF). In May 2024, EF implemented a conflict-of-interest policy following criticism that some of its researchers took paid advisory roles at EigenLayer. More recently, on Jan. 21, Ethereum co-founder Vitalik Buterin declared sole authority over EF leadership. 
Buterin responded to criticism on X, stating that leadership decisions would remain his responsibility until reforms establish a "proper board." His comments followed significant backlash directed at EF’s executive director Aya Miyaguchi, who has been accused of inefficiencies during her tenure since 2018.
These controversies, coupled with reduced staking incentives for ETH, have hindered Ethereum’s market momentum. Meanwhile, Solana (SOL) has capitalized on the memecoin frenzy, challenging Ethereum's dominance. As a result, there appears to be no clear catalyst for Ether to outperform its competitors in the short term.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.