“The Era of $0.4 Fees Has Opened, But”...Will Ethereum Lose its Home Turf to Hyperliquid?

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Ethereum (ETH), a global smart contract platform, has transitioned its technological ecosystem to a multi-layered structure to address high costs and liquidity fragmentation. Ethereum, which dominates the majority of the decentralized finance market, recently improved verification efficiency by 87%, strengthening its market dominance. A major structural transformation of the platform is expected to occur with the large-scale hardfork upgrade in 2026.

Guy Turner, host of the cryptocurrency-focused YouTube channel Coin Bureau, stated in a video released on May 23 (local time) that Ethereum is solidifying its position as a global decentralized computer. Turner explained that Ethereum, founded in 2013 by eight co-founders including Vitalik Buterin, transitioned to a Proof-of-Stake structure in 2022. Since then, it has established an economic model that secures network safety through validators' staking. A portion of the gas fee is burned with each transaction, a structure that continuously increases asset scarcity.

Ethereum built Layer 2 on top of its mainnet to address slow speeds and surging gas fees. This is a measure to solve the blockchain trilemma, which makes it difficult to simultaneously satisfy security, decentralization, and scalability. It introduced rollup technology, which bundles and processes transactions off-chain and then records only a summary on the mainnet. The current average transaction fee on the mainnet is around $0.4. In the cheaper Layer 2 market, Arbitrum, Base, and Optimism handle about 90% of the total transaction volume.

Last year's Pectra and recent Fusaka hardfork upgrades have changed the user experience. EIP-7702, introduced in Pectra, implements account abstraction, supporting gas-free transactions and security recovery. EIP-7594, included in the Fusaka upgrade, introduced peer data availability sampling. This allows validators to verify by only checking a portion of the data, reducing node download data volume by 87%. Through the first rollup improvement proposal, passkeys, which approve transactions with biometric authentication like fingerprints or facial recognition, have also been applied.

Ethereum is preparing for the Glamsterdam upgrade in the first half of this year, a parallelization technology that processes transactions simultaneously. In the fourth quarter of the second half, the Hegota upgrade will be implemented to reduce the storage burden on nodes. According to the roadmap recently published by the Ethereum Foundation, five long-term goals have been established, including achieving immediate transaction finality and quantum resistance. Buterin suggested that instead of relying solely on Layer 2 for scalability, a balanced approach between the base layer and Layer 2 is more reasonable.

Currently, Ethereum accounts for 52% of the total locked assets in decentralized finance. 50% of circulating stablecoins and 53% of tokenized real-world assets are based on the Ethereum mainnet. However, assets are scattered across numerous Layer 2s, leading to liquidity fragmentation. Most Layer 2s operate with a single sequencer node, which presents a centralization weakness as a single point of failure. There are also concerns that Ethereum could lose actual fee revenue if market demand shifts to independent networks like Hyperliquid.

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