Leap through the Ethereum Madhouse
By Yanz & Liam
Edited by Liam
“I actually sold it this time!”
On April 22, the ETH/BTC exchange rate briefly fell to 0.01766, hitting a new low since 2020.
Lin Feng, who has continuously invested and held Ethereum for 4 years, couldn't hold on anymore and made a heartbreaking declaration in his circle of friends. Compared to simply cutting meat, this is more like a collapse of faith and a farewell to a dream.
Also on this day, institutional investors are taking action.
Galaxy Digital traded ETH for SOL, and the crypto VC Paradigm also transferred 5,500 ETH (approximately $8.66 million) to the brokerage platform Anchorage, which is suspected to be ready for sale.
The most ironic thing is that there is another organization that has joined the coin sales force — the Ethereum Foundation. A wallet linked to the Ethereum Foundation deposited 1,000 ETH (approximately $1.85 million) to Kraken.
Ethereum, a project that was once regarded as the standard-bearer of the blockchain revolution, seems to have reached its darkest hour.
Behind this group escape is a story of being forced to say goodbye to ideals one by one, and it is also a difficult choice of beliefs and interests time and time again.
And all of this was recorded, witnessed, and remembered in the group chat called “Ethereum Madhouse.”
Ethereum Madhouse
“Our group name at the beginning wasn't actually 'Ethereum Madness', but rather 'I made a mistake, I regret buying Ethereum'”
On February 3, 2025, the cryptocurrency market fell collectively. At one point, Ethereum plummeted 25%, hitting a minimum of $2080.19 per coin, which caught many Ethereum holders by surprise, including oranges.
Orange, who previously worked for a venture capital agency (VC), entered the crypto market in 2021, and his research on Ethereum technology established his belief in entering the industry.
However, the drop in the price of Ethereum to $3,300 made Orange feel bad, repeatedly muttering, and the group chat “I'm wrong, I regret buying Ethereum” came into being.
On February 3rd, tangerines panicked even more —“I can't get away, so what about the brothers?”
In order to seek psychological comfort and to warm up in a group, this small group of originally only 6 friends began welcoming more “wrongdoers”: superplayers such as Big Orange and Du Jun, as well as senior VC executives. Everyone gathered here to heal each other and seek psychological comfort.
As Ethereum continues to fall, the number of “sick people” grew day by day, gradually expanding and stabilizing to 250 in just one month — Orange said:“Buying Ethereum is' 255 '”This deliberately controlled number has a self-deprecating meaning.
“At first, some people called for bottoming out at $3,000, then dropped to $2,500 and $2,100, and the sound of bottoming out became less and less. At the end of the day, everyone started laughing, saying that those who wanted to copy the bottom would ask Teacher Yang Yongxin to make a call. So we changed the group name to “Ethereum Madhouse” because everyone thought they were crazy.”
Source: big orange @0xVeryBigOrange
As the group leader, Orange has seen it all. He is an observer and a member of an insane asylum imprisoned behind bars. But he was helpless, one could even say,Most of the people who stayed in the group were helpless.
Oranges can't help but miss the summer of 2020.
That summer, Uniswap surpassed Coinbase's trading volume. Compound's fueled liquidity mining made countless people rich overnight, and the decentralized finance DeFi concept took the entire cryptocurrency world by storm.
DeFi Summer is like a frenetic technological feast, Ethereum as the protagonist of this feast，It has attracted the attention of countless investors and developers.
For traditional Web2 VC practitioners like Orange, this is not only an opportunity to make money, but also an enlightenment and baptism of ideas.
“We actually did a lot of research at the time,” Orange recalled. “Vitalik and the Ethereum Foundation (EF) drew a lot of 'flatbreads', such as sharding technology (sharding), zero-knowledge proof (zk)... I thought this was the future at the time.”
Similarly, Lin Feng also bought Ethereum in the midsummer of 2020. At the time, he was full of hopes and expectations, and was very excited about Ethereum's vision of a “world computer.”
“As an Ethereum holder at the time, I was very proud. This was a true investment of value, innovation at the level of human civilization.”
In addition to individuals like Orange and Lin Feng, a large number of traditional VCs also entered the emerging world of Web3 that summer with their curiosity and hopes for the New World.
As the founder and spiritual leader of Ethereum, Vitalik's words and actions have received widespread attention, and everyone has followed Vitalik's guiding investment layout. A large number of VCs are betting heavily on the Ethereum ecosystem infrastructure. Vitalik's optimistic ZK and Layer 2 track valuations have skyrocketed, Scroll is valued at $1.8 billion, ZkSync is valued at $2 billion, Starknet is valued at $8 billion... Various types of capital have entered the market, betting on Ethereum's dream of expansion.
However, after the DeFi Summer boom receded, in the new cycle, the technical narrative was abandoned by investors and replaced by the opposite of technology, MEME, as if it were a mockery.
“We were adamant at the time that Solana wouldn't be the 'Ethereum killer', but now it seems like the market doesn't care about the core issues of privacy and security at all.” This divergence made Orange feel helpless, but what really stuck him in trouble was his deep affection for Ethereum.
As a loyal believer, he not only held large amounts of Ethereum during the bull market, but also chose to stake ETH in exchange for long-term gains. However, when the market entered a cold winter, the price of ETH plummeted, and the pledged assets were unable to be withdrawn, Tangerine, like many members of the madhouse, found itself in a dilemma.
In fact, most of these trapped people are not speculators with a “get rich overnight” mentality. Instead, they are long-term holders who have experienced many rounds of market fluctuations and have a certain understanding of Ethereum, commonly known as old chives.
The mystery of this cycle is evident here — the paper hand is rewarded for PVP, the diamond hand is punished, and constantly experiences the double torment of reality and perception.
For them, Ethereum is both a symbol of hope and an inescapable shackle.
They love Ethereum because it represents technological innovation and future possibilities; they also hate Ethereum because the pain and hardships caused by falling prices are real.
For Lin Feng, the pain of selling Ethereum comes, on the one hand, from real financial losses, but more of a “loss of heart.” He became a self-proclaimed value investor because of Ethereum in the crypto world. He used to be proud to invest in Ethereum, but now reality is making him deny who he used to be. What made him even more ashamed was that he discovered that the beliefs he once boasted to the outside world were not firm. Faced with the K line, which continued to decline, he simply couldn't ignore the price; in the end, he chose to cut meat and give up.
Lin Feng sold Ethereum and also sold his old dream.
However, most patients are still waiting in the “ward”.Not only are they eager to return to the hospital; the dream they planted in the story three years ago is also waiting for another hot summer.
There is no new story for Ethereum
“There was no paradigm shift on Ethereum this year!”
The well-known KOL Big Orange is also a member of the Ethereum Madhouse. On Twitter, he is the “head of the E Guard” in everyone's eyes.
On March 21, 2024, Big Orange tweeted,Starting today, I'm a dead long on Ethereum. Before May, Ethereum wasn't at a record high; I ate poop.
Despite the fervent love, Big Orange also acknowledged the current lack of innovation in Ethereum.
“There is nothing new that is impressive.” Yuan Jie, co-founder of the public chain Conflux, calls himself “Web3 Investment Promotion Director”. He once aspired to be an “Ethereum killer,” and has also witnessed the rise and decline of the Ethereum ecosystem.
The boom in DeFi, NFTs, and GameFi in the last cycle is still memorable for him. “At that time, there were lots of new things to learn every day, and in the process of learning, participation was also a good return on wealth.”
In the “golden age,” Ethereum had the best story. In that year, the on-chain ecosystem exploded, and the “divine religion” of Ethereum reached a climax. Capital, developers, and users focused their attention on specific directions (such as Layer 2, DeFi, ZK technology, etc.) and expanded blindly for a while, and investors came and went.
The story of three years ago nourished the previous cycle of prosperity, but now, that story is over.
Just as the land lost its fertility due to overcultivation, when it comes to the present, Yuanjiao示，“Vitalik participated too deeply in guiding the direction of the industry and formulating routes with his charisma, causing Ethereum's resource allocation to fail.”
Whether it's a breakthrough at the technical level or a new application in the ecosystem, Ethereum has failed to provide enough freshness to attract the attention of the market.
Boil frogs in warm water, and the main Ethereum chain is facing the dilemma of a “gradually barren land.”
“The volume of transactions and activity on the chain is very low, and the entire ecosystem has cooled down, so Ethereum's deflation mechanism (EIP-1559) is not working well.” In Big Orange's view, the deflation mechanism of EIP-1559 is like a beautifully designed irrigation system, but in the absence of sufficient “water source” (liquidity), this system can only stand in vain and cannot provide real nourishment for the Ethereum ecosystem.
What's more complicated is that “blood-sucking flowers” have bloomed on such barren land.
Layer 2, which carries Ethereum's dream of expanding, is dominated by the world. Each Layer 2 has adopted Ethereum as orthodoxy, yet each has founded a feudal nation, devouring the value of the Ethereum main network and continuously weakening Ethereum's control over its own ecosystem.
“Everyone is scrambling to transfer Ethereum assets to their own chain, because they have a lot more points and will get more airdrop tokens when the time comes.” Yuan Jie seemed a bit excited. He attributed these “blood-sucking flowers” driven by a short-term profit-seeking mentality and the current ecological homogenization results to a human “prisoner's dilemma.”
Yuan Jie thinks this may not be Vitalik's intention, but in the process of planning to use Layer 2 to expand the boundaries of the Ethereum ecosystem,It ignored “the human nature of everyone who wants to get rich quickly and compete for the same household property,” and eventually “falls into a cycle of internal affairs and self-extinction.”
The Layer 2 network is highly fragmented, splitting the user experience and on-chain liquidity. In DeFi Summer, the composability advantage that the Ethereum main network was once proud of has completely disappeared. Instead, Solana has become a habitat for many consumer applications due to its simple characteristic of being “fast.”
“Today's ETH, I think of ATOM, and I'm really afraid ETH will repeat ATOM's mistake”.
Lin Feng believes thatETH's plight is similar to ATOM's, and both are experiencing an “upstream shift in value.”
In the Cosmos ecosystem, various sovereign application chains (such as OSMO, JUNO, etc.) are interconnected through the IBC protocol, but they capture the value of their own ecosystem, and ATOM, as a central hub, fails to effectively capture value from these chains.
After the rise of various types of Ethereum L2, relying on sequencers, they obtained large amounts of MEV and transaction fee revenue, drastically reducing the value flowing back to the Ethereum main network and weakening ETH's ability to capture value.
“If EthereumMain chainWith a successful upgrade and a significant increase in carrying capacity, Ethereum may truly usher in a new peak of development”, Big Orange thinks so.
How to reinvent greatness?
On April 22, when many institutions were selling ETH, F2Pool co-founder WangChun once again exchanged 50 WBTC for 2,794 ETH, worth about US$4.36 million, bringing a hint of thought to those who still hold ETH.
Ethereum, a land that once nurtured countless innovative fruits, seems to need a long “fallow period.”
When farming was fallow, some cut meat, and others persisted.
Big Orange chose to stick to it. Big Orange gained a lot from the 2021 bull market, and his feelings for Ethereum have long gone beyond a simple investment relationship. For him, ETH isn't just an asset; it's more like a belief.
Among the “E Guards” that still exist today, everyone has become external advisors to the Ethereum Foundation to make suggestions and suggestions for Ethereum. According to their respective “reform measures,” they can be roughly divided into two factions.
One faction is on the right, advocating drastic reforms, believing that Ethereum should pursue “practicality” more, comply with regulations, and “be close to authority.”
For example, Orange believes that Ethereum needs to “stop pretending to die” and actively embrace compliance.
“Since the birth of humanity, some things have been predestined. You can't compete with a national machine. If you want to survive well or show your abilities, you shouldn't fight against the entire national machine.”
The Ethereum Foundation needs to balance ideals and bread. Yuan Jie doesn't deny the purity of the Ethereum Foundation's focus on academic discussions and technological innovation, but a pragmatic commercial sector is necessary.
“If Trump is in power and we need Trump to accept Ethereum, then we need someone who doesn't hate Trump to fix him. Vitalik if you can't do it yourself, then let someone else do it. A good foundation, as a non-profit organization, should be able to accommodate all kinds of decisions.”
Lin Feng even believes that in the past, the Ethereum Foundation paid too much attention to ideology, ignored real creation and construction, and was too “weak.”The Ethereum Foundation needs a Trump-like reformer to completely revolutionize the culture.
Another faction is on the left. They believe that the greatest value of Ethereum lies in “decentralization,” the last “place of idealism” in the crypto world other than Bitcoin.
The well-known KOL Blue Fox notes that he only looks at Ethereum a little bit,“Will the future continue to maintain these core values of decentralization, security, and no need to trust. If you maintain it, continue to support it, and if it changes, no matter how high the price is, they will just go away.”
“The crypto world needs an internationalist fighter; apart from Satoshi Nakamoto, who disappeared, no one can match Vitalik.” Investor Jacob invests in Ethereum and despite facing huge financial losses, he still shares Taifang's values of not compromising with authority.
“SOL and other emerging high-performance public chains are essentially capital-driven corporate stock logic. Naturally, high efficiency is also more likely to cause market popularity.But Ethereum is a new form of human civilization.”
Behind this dispute between left and right is a different understanding of blockchain priorities --Is it pragmatic, pursuing efficiency and commercial success, or adhering to the spirit of decentralization and freedom?
In the dark, confidence is more important than gold.
IOSG founder Jocy called for“Ethereum isn't going away; it's the most successful decentralized organization in the Web3 industry. Looking forward to the future, please cherish your Ethereum and view its value and innovation in a ten-year dimension.”
Back to the “Ethereum Madhouse,” the shelter that was initially born out of fear, is now a corner that bears witness to history.
Whether it's the moment Lin Feng presses the sell button, or every day Big Orange holds steadfastly, or every mood swing Orange sees in a madhouse, they are recording and shaping the history of Ethereum.
No matter what the future holds, regardless of current departure or persistence,Those who were crazy about Ethereum will always remember that hot summer and the one that convinced them of the future of Ethereum.
