Ethereum (ETH) surprised the market with a sharp price increase on the morning of April 21, 2025 — a move that caught many off guard amid recent concerns over Ethereum’s weakening network fundamentals, plummeting transaction fees, and mounting competition from rival blockchains like Solana.
Ethereum Fees Hit 5-Year Low — A Cause for Concern?
According to on-chain analytics firm Santiment, Ethereum’s average transaction fees have dropped to their lowest point since 2020. The primary reason: a dramatic decline in smart contract activity and user engagement.
Low network usage typically signals weakening demand — not a bullish sign. In fact, ETH’s recent network activity slump had sparked fears that Ethereum was losing its position as the leading smart contract platform.
Solana Overtakes Ethereum in Staking — Adding Fuel to the Fire
To make matters worse, Ethereum was overtaken by Solana in total staked value on April 20, 2025, according to data from Beaconcha.in. Solana’s staking yield currently stands at an attractive 8.31%, significantly higher than Ethereum’s.
Adding to the momentum, the SOL/ETH ratio has surged tenfold, from 0.0088 to 0.0866 since June 12, 2023 — showing that investors are increasingly rotating capital from Ethereum into Solana.
So Why Did ETH Surge Today?
Despite these red flags, Ethereum’s price defied expectations and rallied. The move seems to be driven by renewed optimism around the upcoming Pectra upgrade and fresh developer initiatives led by co-founder Vitalik Buterin.
Pectra Upgrade: Ethereum’s Strategic Counterattack
Slated for mainnet launch on May 7, 2025, the Pectra upgrade is designed to address Ethereum’s most pressing issues: high fees, network congestion, and limited scalability.
Phase 1 Highlights:
- Blob data capacity for Layer-2 rollups will be doubled from 3 to 6, allowing for lower gas fees and more efficient data storage.
- Support for stablecoin-denominated gas fees (e.g., USDC, DAI), making the network more user-friendly and accessible.
Phase 2 (Expected Q4 2025 – Q1 2026):
- A new data structure that enhances storage efficiency and scalability.
Vitalik’s Bold Proposal: EVM to RISC-V?
Vitalik Buterin recently suggested replacing Ethereum’s smart contract language architecture with RISC-V, a simplified instruction set computing model widely used in modern processors. The goal? To drastically boost the performance and efficiency of the Ethereum Virtual Machine (EVM)’s execution layer.
While still in the research and discussion phase, the proposal demonstrates Ethereum’s proactive stance in adapting to next-gen Layer-1 challengers like Solana and Sui.
The Market Reacts: Renewed Confidence in Ethereum
Ethereum’s recent rally can be seen as a vote of confidence from the market — driven not by current metrics, but by future potential.
Investors appear to be betting that the Pectra upgrade and Vitalik’s architectural proposals could reinvigorate Ethereum’s competitiveness in the face of rising Layer-1 rivals. These technical advancements, if successfully deployed, could restore Ethereum’s dominance and spark a longer-term bullish trend.
Final Thoughts
Ethereum’s price action today is a reminder that markets often look forward, not backward. While recent metrics painted a grim picture, the strategic roadmap, innovative proposals, and timely upgrades have injected fresh momentum into the Ethereum narrative.
If Ethereum can successfully deliver on its promises in the coming months, the current rally might just be the beginning of a broader reversal — one that could put ETH back on top of the Layer-1 race.
