Ethereum Enters Rebuilding Phase as Buterin Advocates for Cultural Change

Vitalik Buterin, co-founder of Ethereum, the largest altcoin, has unveiled a strategy to revamp the ETH blockchain. In response to months of criticism directed at the Ethereum Foundation, the 31-year-old addressed noteworthy concerns regarding the challenges faced by new developers joining the blockchain platform.

Ethereum (ETH) currently has $59.88 billion in total value locked on its network. Layer 2 and Layer 3 chains are designed to enhance user adoption and scalability, utilizing the security of ETH.

Buterin’s Vision for a Streamlined Ethereum Blockchain

Buterin acknowledged that the Ethereum blockchain comprises layers of technical complexities that hinder developers in onboarding, maintaining, or creating projects on the platform.

The Ethereum Virtual Machine (EVM), seen as the backbone of the ETH blockchain, is something Buterin believes could be replaced with a more straightforward alternative. His aim is to simplify the Ethereum blockchain to a level akin to Bitcoin, fostering greater adoption of both the chain and its native cryptocurrency.

In a blog post dated May 3, Buterin indicated that simplifying the architecture could lead to lower infrastructure development costs, reduced maintenance expenses, and better performance on the Ethereum blockchain.

Ethereum’s Competitive Advantage Against Bitcoin in the Coming Five Years

In his proposal, Buterin outlined a plan to make Ethereum as accessible as possible, drawing comparisons to the Bitcoin blockchain. He noted that Bitcoin’s technical framework is easily understandable by high school students, enabling programmers to engage in client projects as a side hobby, illustrating his vision for the evolution of ETH.

Essentially, Buterin proposed that the Ethereum development team set a clear maximum code target for future updates. The objective is to streamline Ethereum and align it more closely with Bitcoin regarding consensus.

He presented several coding guidelines for developers designed to simplify the process, potentially attracting more contributors to build on the chain.

While Buterin anticipates Ethereum competing with Bitcoin in five years, the ETH/BTC ratio recently hit its lowest value in over five years. The last time ETH/BTC reached 0.01766 was in January 2020.

This low may indicate a bottom for Ethereum. Since that moment, the ratio has started to recover, trading at 0.02237 as of this writing.

Further Decentralization of Ethereum

The Ethereum Merge faced criticism for seemingly compromising decentralization by transitioning the consensus mechanism from Proof-of-Work to Proof-of-Stake. However, Buterin holds a different view, asserting that simplifying the Ethereum blockchain would actually enhance its decentralization.

Both simplification and decentralization are vital for boosting the chain’s “resilience” and require cultural shifts within the project. Buterin admits in his blog that the benefits may not be immediately apparent.

Determined to revitalize Ethereum from within and increase competition with Bitcoin, Buterin elaborates on the “extra effort” costs involved in his blog post.

Predicting Ethereum Prices

Ethereum exited its consolidation phase on May 7 and has started to climb. ETH is currently 11% shy of its resistance level R1 at $2,550, with the next significant resistance, R2, positioned at $2,745.

If a downturn occurs, Ethereum may find support at the lower boundary of an FVG at $1,850.

Key technical indicators, such as the RSI and MACD, suggest potential further gains for Ethereum. The RSI is trending up at 80, and the MACD is displaying green histogram bars above the neutral threshold.

Ethereum ETF Flows and the Tokenization Trend

On May 8, U.S.-based Spot Ethereum ETFs recorded $16.11 million in outflows, contrasting with Bitcoin’s net inflows. Institutional investors remain hesitant to invest in altcoins, while Bitcoin benefits from increasing stablecoin reserves on exchanges and positive daily net inflows to Spot ETFs.

While Solana competes with Ethereum for dominance across various metrics in decentralized exchanges, ETH remains the leading choice for real-world asset tokenization.

No discussion about tokenization is complete without mentioning BlackRock’s BUIDL, a tokenized U.S. Treasury fund that was launched on the Ethereum blockchain in early 2024 and currently manages over $2.5 billion in assets.

Currently, Ethereum commands a 74% market share in tokenized U.S. Treasuries, amounting to $6.2 billion. These elements are contributing to ETH’s recent price increases and are likely to foster its rally in the short to medium term.