Ethereum Classic (ETC) Rating Overview: Struggling with Relevance and Growth

Ethereum Classic: A Once-Promising Blockchain Now Struggling with Relevance, Security, and Adoption in the Rapidly Evolving Crypto Landscape.

Oct 02, 2024

Tech/Adoption Grade: CCC
Market Performance Grade: CCC

Key Takeaways:

Ethereum Classic earns a CCC (Poor) rating due to its lack of recent development, stagnant ecosystem growth, and security concerns. While it maintains minimal activity through mining operations, the project faces severe challenges in both adoption and relevance.

Why CCC?

1. Severe Lack of Development:

Since 2022, Ethereum Classic has seen no significant upgrades or meaningful technological advancements. The development community has been largely inactive, with few updates on GitHub or from core teams.
Two major development teams (ETCDEV and IOHK) have reduced their involvement, leaving ETC with little innovation compared to its competitors like Ethereum, Cardano, and others.

2. Security Issues and 51% Attacks:

Ethereum Classic has a troubled history of network security. It has suffered multiple 51% attacks over the past few years, leading to significant losses of trust in its security.
Although the migration of Ethereum miners to ETC post-Merge temporarily increased the network’s hash rate, the overall security remains a major concern.

3. Dwindling Ecosystem and Lack of Adoption:

ETC's ecosystem is almost non-existent. There are very few decentralized applications (dApps) or active developers, and virtually no recent partnerships or developments have been announced.
The project is severely underused, with transaction volumes and on-chain activity near historic lows. Competing chains like Ethereum and Solana have taken the lead in terms of dApps and DeFi, leaving ETC far behind.

4. Stagnant Market Position:

ETC is available on most major exchanges, but its market performance has stagnated. Despite sporadic increases in trading volume, it continues to rank far below top-tier cryptos in liquidity and activity.
The network's economic activity is minimal, and its use case has shrunk significantly, being perceived more as a relic of Ethereum’s past rather than a viable blockchain for the future.

Ethereum Classic's Core Strengths:

1. Ideological Consistency:

Ethereum Classic continues to champion the idea of immutability and “Code is Law,” which appeals to a niche group of blockchain purists. This has kept a small, dedicated user base that values decentralization and resistance to rollback decisions like Ethereum’s DAO hard fork.

2. Proof-of-Work Leadership (Post-Ethereum Merge):

ETC is one of the few smart contract platforms still using a Proof-of-Work (PoW) consensus, now that Ethereum has transitioned to Proof-of-Stake. This could potentially appeal to miners who prefer PoW systems.

3. Availability on Major Exchanges:

Ethereum Classic benefits from being listed on top exchanges like Binance, Coinbase, and Crypto.com, providing liquidity and market access for its token (ETC). However, this hasn’t translated into substantial long-term growth.

Ethereum Classic’s Risks:

1. Security Concerns:

Multiple 51% attacks in the past have eroded trust in the network. The cost to execute such attacks remains low, making Ethereum Classic vulnerable to future attacks.

2. Lack of Developer Activity:

Developer interest in ETC has been minimal, with little-to-no innovation over the past few years. While Ethereum and newer chains continue to push forward with dApps, DeFi, and NFT ecosystems, Ethereum Classic has been left behind with few active projects.
This stagnation in development severely hampers the project's ability to compete or evolve.

3. Market Adoption:

ETC’s transaction volume and daily active users are minimal compared to other blockchains. Ethereum Classic has failed to capture market share in decentralized finance (DeFi), NFTs, or enterprise adoption, sectors that are thriving on platforms like Ethereum, Binance Smart Chain, and Solana.

4. Wealth Centralization:

Wealth in ETC is heavily concentrated in a small number of wallets, posing risks of manipulation and illiquidity. This centralization further discourages new investors and users.

Master On-Chain Analysis

Gain deeper insights into blockchain networks with my On-Chain Analysis Course.

What You’ll Learn:

Analyze Bitcoin’s network and spot trends.
Interpret data for market sentiment.
Understand crypto valuations with on-chain metrics.

Clear, actionable modules to help you stay ahead in the crypto space.

Join Now

Momentum:

1. Price Performance:

The price of ETC has remained largely stagnant over the last two years, despite some speculative rallies following the Ethereum Merge in 2022. However, these short-term spikes did not result in long-term value creation or sustained growth.

2. Network Activity:

On-chain activity remains near historic lows. With almost no new dApps or significant use cases, Ethereum Classic has become more of a speculative token rather than a blockchain with meaningful utility.

Outlook for Ethereum Classic:

Current Price: ETC is trading at approximately $15–$20, which reflects its speculative nature but also highlights its failure to retain value. Despite being operational, Ethereum Classic lacks the ecosystem or technical innovation required to justify long-term optimism.

While there’s still a niche appeal due to its ideological stance on immutability, the project has stagnated to a point where it poses more risks than rewards for most investors.

Final Thoughts:

Ethereum Classic is a blockchain struggling to maintain relevance in the rapidly evolving crypto landscape. Its focus on immutability and Proof-of-Work has failed to attract significant developers, users, or projects, leaving it with minimal adoption. Additionally, ongoing security concerns from previous 51% attacks cast a shadow over the network's credibility. While still functional, Ethereum Classic is far from the innovation leader it once aspired to be and is unlikely to experience substantial growth without drastic changes in its direction.

Rating: CCC (Poor) due to the high risks and limited potential for future growth.

Disclaimer:
The Insight Labs Global Crypto Ratings is a forward-looking research system. Insight Labs or its analysts may hold positions in Bitcoin or other assets mentioned in the ratings. The information provided by Insight Labs is for educational purposes only. It is not intended to be, and should not be taken as, legal, tax, investment, financial, or any other form of professional advice.

Crypto products are unregulated and involve substantial risks, including complete loss of principal, pricing volatility, and inadequate liquidity. Insight Labs cannot guarantee the accuracy of the information provided and assumes no responsibility for decisions made based on this information.

Insight Labs