On the morning of January 8, Trump posted on Twitter and his social media platform Truth Social, announcing the launch of a meme coin named TRUMP on Solana. Within just four hours, TRUMP's market value soared to $16 billion, making it the second-largest meme coin by market value after Dogecoin. On January 9, the price of TRUMP continued to surge, with its market value reaching up to $80 billion at one point. It not only surpassed Dogecoin to become the largest meme coin by market value but also came within just $50 billion of SOL's market value at the time, achieving in two days what it took Dogecoin 11 years to accomplish.
The native token of Solana, SOL, also benefited from this trend and continued its upward trajectory. In fact, on January 16, the New York Post reported that Trump is "open" to the idea of using digital currencies issued in the US, such as SOL, USDC, and XRP, as strategic reserves. SOL and XRP (Ripple) are expected to launch spot ETFs this year, with their prices rising by more than 40% in the past week alone. The community is increasingly vocal about the possibility of flipping Ethereum.
In contrast, ETH (Ethereum) and its ecosystem's DeFi-related tokens (such as LINK, AAVE, and ENA) performed less impressively during the "Trump rally" in December of last year. Ethereum, in particular, as the second-largest cryptocurrency by market value after Bitcoin and one of the only two with a spot ETF, saw its price increase significantly less than that of BTC, SOL, and XRP. Moreover, the Ethereum Foundation has recently faced criticism from the founders of several high-profile projects and is currently in a difficult situation.
The Impact of Trump's Coin Launch
Firstly, TRUMP is not a meme coin that was "spontaneously" launched on Pump.fun, the largest meme coin issuance platform on Solana. Instead, it is the result of a coordinated effort, "long in the making," involving Solana and multiple protocols and projects on its chain. It can be seen as a VC coin disguised as a meme coin. The collaborators include Jupiter, the largest DEX aggregator on Solana, the liquidity protocol Meteora, the meme coin trading platform Moonshot, and the market maker behind it is Wintermute, which is also the primary market maker for many high-market-value meme coins, including the well-known meme coin PEPE.
Secondly, in the short term, the launch of TRUMP has created a significant "suction effect," draining market liquidity and causing a collapse in the prices of cryptocurrencies outside the Solana ecosystem. Deployed on the Solana chain, TRUMP will further strengthen market recognition of the Solana ecosystem. Meme coins and AI coins on the Solana ecosystem have also gained more liquidity, increasing the revenue of DeFi protocols on Solana. The crypto market has also welcomed a wave of new users, with Moonshot reporting that it has attracted over 400,000 new users within 24 hours. Additionally, chain tools like GMGN have become beneficiaries, with their short-term revenue exceeding that of the largest DeFi protocol, Uniswap.
Lastly, in the long term, Trump is fulfilling his crypto policy promises. Combined with his statement at the World Economic Forum in Davos that he plans to make the US the "world capital" of AI and cryptocurrency, Trump's own coin launch actually indicates a relaxed stance on crypto industry regulation. Trump's family business, World Liberty Financial, is not only involved in the DeFi space but is also actively laying out in RWA (real-world assets), which may encourage more traditional financial institutions to enter the DeFi space. Additionally, domestic US cryptocurrencies are expected to see policy benefits, such as Solana, Ripple, and Sui, with the former two seeing a glimmer of hope in the ETF approval process.
Here, let's further introduce Solana and Ripple and their differences from Ethereum.
Ethereum was born in November 2013 when Russian-Canadian programmer Vitalik Buterin published a white paper titled "Ethereum: The Next Generation Smart Contract and Decentralized Application Platform." Compared to Bitcoin's single cash system function, Ethereum is a decentralized global computer platform that can run smart contracts of any complexity. ETH (Ethereum's native cryptocurrency) is the second-largest cryptocurrency by market value after Bitcoin and is one of the only two with a spot ETF. Ethereum is the beginning of Web3, pioneering the era of blockchain smart contracts and catalyzing the explosion of DeFi projects on Ethereum in the summer of 2020, such as Uniswap, the largest DEX on Ethereum, which saw its trading volume exceed $450 billion in 2023, surpassing the spot trading volume of the largest US exchange, Coinbase.
Ripple was born in September 2012, a bit earlier than Ethereum. Its predecessor was the RipplePay project, which was taken over by Jed McCaleb, Chris Larsen, and Arthur Britto to create Ripple (XRP). Ripple was established to revolutionize the global remittance industry, replacing old systems like SWIFT. Strictly speaking, Ripple is not a public blockchain but a permissioned blockchain because it uses the PoA (Proof of Authority) consensus mechanism, where transactions and blocks are validated by approved validators (known as the UNL list), making it more centralized compared to traditional blockchains like Bitcoin and Ethereum but also demonstrating better scalability. Additionally, Ripple donated $5 million worth of XRP to support Trump's presidential inauguration.
Solana was born in November 2017 when former Qualcomm engineer Anatoly Yakovenko published a white paper introducing "Proof of History" (PoH), a mechanism for keeping time among distrusting computers. With PoH, Anatoly set out to build the Solana blockchain, aiming to match the performance of a single machine and overcome the scalability constraints of traditional blockchains like Ethereum, allowing for more efficient data dissemination between nodes and thus achieving a high-performance Layer1 where its software scales at the speed of hardware. Solana has many technical advantages that directly address Ethereum's shortcomings, such as its ultra-fast speed, with a real maximum average daily transactions per second reaching 1,000, compared to Ethereum's 20; and its ultra-low fees, with Solana's transaction fees being only one percent of Ethereum's.
Ethereum's Internal and External Challenges
If Ethereum's predicament were to be described in four words, it would be "internal and external troubles."
Internal Troubles
The Ethereum Foundation has recently become a target of criticism, mainly due to its inaction, continuous sale of ETH on-chain, lack of communication with the community, and strategic issues with Layer 2. Kain Warwick, the founder of Synthetix and Infinex, believes that Layer 2 should buy back ETH. Michael Egorov, the founder of Curve, more aggressively argues for abandoning Layer 2 development in favor of Layer 1. Stani Kulechov, the founder of AAVE, believes that the Ethereum Foundation needs to undergo thorough reforms in 12 areas.
On January 18, Vitalik stated that following criticism of the Ethereum Foundation for its lack of engagement with the Ethereum ecosystem, there will be "significant changes" in the foundation's leadership structure, communication with the network developer community, and support for them. Regarding the issue of selling ETH on-chain, on January 21, the Ethereum Foundation announced the establishment of a wallet address to begin participating in DeFi. The organization plans to inject approximately $150 million worth of ETH into the wallet, although it noted that it might take a few days to complete the setup.
On January 22, Konstantin Lomashuk, co-founder of Lido, forwarded a post hinting at the establishment of a "Second Foundation." He said, "Ethereum is the ultimate world computer, and every Ethereum enthusiast can help it grow, evolve, and succeed. If the second foundation is indeed established, it must have a clear goal to complement the great work of current contributors. I thank everyone for their support and believe that we need more organizations to contribute to Ethereum."
On January 24, Vitalik published an article discussing Ethereum's scaling strategies for 2025 and beyond, emphasizing Ethereum's unique advantages in decentralization and practical application value. He stated that the success of Layer 2 has confirmed the development philosophy of the Ethereum ecosystem and emphasized the continued commitment to the Layer 2 strategy. Vitalik pointed out the two major challenges currently faced: scaling and heterogeneity issues, with specific plans including increasing data block capacity, strengthening interoperability and ZK-EVM, security construction, and optimizing the economic model.
External Threats
The two cryptocurrencies with market values close to Ethereum's are Ripple and Solana. However, Ripple is not really a competitor, as previously mentioned. Ripple is a permissioned blockchain, and since its main customers are international banks and investment companies, its key goal is regulatory compliance rather than decentralization, making the use of a permissioned blockchain understandable. Therefore, Ethereum's main competitor is still Solana, another public blockchain. Setting aside the "Trump factor," we can compare the two blockchains in terms of decentralization, scalability, and ecosystem.
It is generally believed that Ethereum has a higher degree of decentralization than Solana. The reason for using "generally believed" is that decentralization itself is an abstract concept that is difficult to measure. Common indicators include the number and distribution of nodes, the distribution of token holders, client diversity, the Nakamoto coefficient, and governance processes. To avoid controversy, the author represents a personal view: if Ethereum's decentralization is given a score of 100, Solana would be around 70 to 80, while other PoS blockchains are below 60.
However, if we score scalability, Solana could get 90 points, while Ethereum is below 10. Ethereum's approach to solving scalability issues is to use Layer 2, which involves building additional network layers on the Ethereum chain to process more transactions while maintaining security and decentralization. Currently, Base is the largest Layer 2 on Ethereum, developed in collaboration with Coinbase and Optimism, with a maximum TPS of 300, which is still significantly lower than Solana's.
The ecosystem is Ethereum's greatest advantage. Ethereum's mainnet launched six years earlier than Solana, accumulating a large number of developers and users, with a significant amount of infrastructure and applications built around Ethereum with long-term goals. However, since 2024, the number of new developers on Solana has surpassed that of Ethereum. For users, most transactions occur on DEXs on the chain. Due to the wealth effect of meme coins and AI coins on Solana, active users have recently surpassed those on Ethereum.
Conclusion
The impact of Trump's coin launch and Ethereum's internal and external challenges.
The author personally is not that pessimistic about Ethereum's future development. Having joined the Web3 industry in 2020, the author was initially attracted by Ethereum's innovation and has been a contributor to LXDAO and ETHPanda, having met Vitalik and listened to his shares on multiple occasions.
From an emotional perspective, the author believes that Vitalik is an exceptional leader with a "computer culture" temperament. Despite the lack of flamboyant marketing rhetoric, he is capable of listening to information, responding to issues, and making decisions. Therefore, the author also believes that the Ethereum Foundation can successfully reform under Vitalik's leadership.
From a technical standpoint, the author believes that Ethereum has established a long-term and detailed technical roadmap to adhere to the decentralization philosophy. In the future, Ethereum can achieve TPS of over 100,000, second-level transaction confirmation, and low transaction fees through Layer 2, provided that it can deliver on time according to the roadmap.
As for the competitor Solana, Solana is currently positioned as a consumer-grade public blockchain and has gradually occupied users' minds in the ToC field. After all, users are less concerned with decentralization and more with tangible low transaction fees and high transaction speeds. For Ethereum to match Solana's high performance might take another three to five years of technical implementation, so the chances of catching up in this cycle are slim.
However, Ethereum can take a completely different route and position itself as a financial-grade public blockchain, that is, Layer 1 focusing on the ToB direction to attract traditional financial institutions to expand Web3 business, such as RWA. The real-world financial business is inherently a conservative system that demands higher stability, low risk, low maintenance, etc. Ethereum has never experienced downtime, its decentralization is still stronger than Solana's, its ecosystem is significantly stronger than Solana's, it still has the most developers, the most complete infrastructure, and the prosperity of DeFi in a cycle has also accumulated a lot of financial safety usage constraints and contract templates. All of these are attractive bait for traditional financial institutions.
