In 2023, Ethereum's position was undermined by SEC enforcement practices, leading to most US cryptocurrency exchanges refusing to offer staking. The regulator's desire to grant the coin the status of a security and oppose the emergence of spot ETFs with it by all means also hurt its investment appeal.

This resulted in Ethereum losing 26% to Bitcoin over the past year.

Negative dynamics against several crypto assets couldn't compensate for the yield from staking at ~4%, leading to a decrease in the number of those willing to participate. However, the network has experienced an influx of validators in the past two weeks, causing the queue to grow to 2.5 days.

The reason for the renewed interest was the Starknet project, which has planned a free coin distribution starting from 20 February. Some of them will go to Ethereum validators. Starknet is a layer 2 (L2) network, helping to reduce fees and increase the speed of Ethereum transactions.

Another positive trend was the February launch of the experimental protocol ERC-404 tokens, which combines the functions of ERC-20 and ERC-721. The first ones were 10,000 Pandora tokens, each of which was backed by NFTs. This is part of the game since it's unknown which NFTs the user will receive when purchasing Pandora. NFTs can be unbundled from the tokens when sold independently.

Despite the experimental nature of ERC-404 and the lack of official adoption by the Ethereum Foundation, the excitement around the new protocol has already resulted in a noticeable increase in fees.

New projects, experiments, and the expected lower fees on L2 networks after the Dencun update could boost Ethereum, reversing the negative impact of last year's events.

StormGain Analytical Group 
(platform for trading, exchanging and storing cryptocurrency)

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