On February 21, popular Bitcoin maximalist Fred Krueger issued a warning about the world’s first-ever smart contract network, Ethereum.

In a post on X (formerly Twitter), Krueger stated that Ethereum is rapidly losing its essence with growing competition in decentralized finance (DeFi).

Ethereum Is An Overvalued Shiba Inu

According to the Bitcoin advocate, Ethereum has fallen down the value chain and is now more of a meme coin like Shiba Inu despite its $361 billion market valuation.

Giving his reasons for this pessimistic outlook, Krueger pointed to the dwindling active users of the smart contract network. He noted that the Ethereum blockchain’s daily active users (DAUs) have dropped from 120,000 in early 2021 to just 66,000 over the last year.

ETH is completely detached from reality. A deep dive.
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ETH is at $3,000. Surely this must mean that a ton of people are using ETH, and that this number is only going up, right?

Nope.

Eth, the chain has dropped from 120K… pic.twitter.com/141GwtB0yz

— Fred Krueger (@dotkrueger) February 21, 2024

Krueger also reviewed Ethereum’s most popular decentralized exchange (DEX) Uniswap V3. He noted that the automated market maker (AMM) protocol has also faced user decline, with its 2020 user base of 60,000 dropping to 16,000 in the stated period.

Further damning details shared by Krueger showed that the Ethereum blockchain is quite pricey and has a slow transaction output. The crypto ecosystem has Solana, Avalanche, Near, Cardano, and other base-layer protocols with lower fees and higher transaction output.

To him, Ethereum’s presence in this ecosystem is becoming irrelevant, reducing its chances of becoming a store of value for users like Bitcoin.

Ethereum introduced the ability to build decentralized applications (dApps) on blockchain technology using smart contracts.

It has become the default home of several dApps servicing decentralized finance (DeFi), non-fungible tokens (NFTs), decentralized autonomous organizations (DAOs), and the Metaverse in the last couple of years.

Its slow transaction output and high fee have led to the creation of layer-2 scaling solutions like Optimism and Polygon as they enable faster transactions for a fraction of the cost, however.

Ethereum Daily Transaction Increases By 8.5% in One Year

Many see Ethereum as the next ETF beneficiary after Bitcoin, given its growing popularity.

Krueger doubts the Securities and Exchange Commission’s (SEC) head, Gary Gensler, will be inclined to grant a green light. He cited the Ether asset’s premined model as a bad precedent.

Despite several asset management firms like BlackRock and VanEck filing applications for an Ethereum spot ETF, the SEC has yet to approve the service.

Just had @vaneck_us submit an updated S-1A for their spot #Ethereum ETF filing. pic.twitter.com/eHn3iCYuQu

— James Seyffart (@JSeyff) February 16, 2024

Industry experts, however, project approval within the year’s first half as interest in Ethereum ramps up. If a spot ETF is approved, the price of the Ether asset could significantly surge.

For the time being, the transaction records on the Ethereum network are on an impressive run. According to data from Ycharts, the daily transaction output on Ethereum stood at 1.150 million on February 20, up from 1.147 million from the previous day and 1.060 million from 2023.

This data reflects an increase of 0.27% from the transaction output of February 19 and 8.5% from the previous year.

While some of Krueger’s concerns about high transaction fees and slow output are valid, the overall transaction health of the Ethereum blockchain remains strong. Approval of a spot ETF could further boost network interest.

The post Bitcoin Advocate Fred Krueger Issues Stark Warning About Ethereum – Here’s What You Need to Know appeared first on Cryptonews.