Ethereum’s Contradictory Landscape: Loopring’s Closure and Foundation Cuts Test Network Resilience

Loopring shuts down DEX and relayer services due to weak adoption and technical obsolescence. Ethereum Foundation cuts budget and delays Glamsterdam upgrade, while ETH price slides but staking interest remains strong.

Loopring, the first zero-knowledge rollup on Ethereum and a project that once proved the viability of scaling blockchain transactions through ZK technology, has ceased operations. On June 28, the protocol pulled the plug on its decentralized exchange, automated market maker, and relayer services. The wind-down is orderly: the team will publish final balances, convert AMM positions into base tokens, launch a two-week audit period, and then disburse remaining funds in tranches to Ethereum layer-1 addresses. Only balances of ten dollars or more qualify, and Loopring is covering gas costs itself.

The reasons for Loopring’s exit are stark: weak user adoption, a lack of business development, and technical obsolescence. Unlike newer zkEVM networks, Loopring lacked a virtual machine, severely limiting compatibility with Ethereum smart contracts. Today, more than 27 active layer-2 networks compete on Ethereum — including Arbitrum, Base, zkSync Era, Scroll, and Linea — and the market has pivoted toward EVM-compatible designs with deep liquidity and genuine user demand. Loopring’s specialized, non-EVM architecture simply could not keep pace.

That kind of competitive pressure is also evident at the foundation level. The Ethereum Foundation has cut a fifth of its workforce, slashing the operational budget by 40%. At the same time, the much-anticipated Glamsterdam upgrade has been pushed back to the second half of 2026, after originally being slated for the first half. The upgrade is designed to introduce block-level access lists that enable parallel transaction processing, boosting speed and lowering fees. It also aims to separate block producers from validators to enhance security. But the budget cuts have raised questions about whether development momentum can be sustained.

Market conditions are adding to the strain. Ether has lost nearly half its value since the start of the year, recently trading at $1,592 — more than 30% below its 200-day moving average. At another recent quote of $1,626, the token hovered dangerously close to its 52-week low. US spot Ethereum ETFs saw net outflows of over $273 million by the end of June. Bitcoin slipped below $60,000 for the first time since October 2024, pulling ether down alongside it. In a symbolic shift, Tether’s market capitalization surpassed Ethereum’s for the first time.

Yet beneath the surface, network fundamentals tell a different story. Nearly 40 million ETH are staked — roughly 33% of the total supply — and the entry queue exceeds 3 million ether, with a waiting time of more than 52 days. That signals sustained interest in securing the network. Daily transaction counts hover around 3 million. Large investors are leaning into the dip: one whale cluster has accumulated over 1 million ether this year alone. Last week, investment firm BitMine Immersion Technologies bought $43 million worth of ETH, bringing its total holdings to around $9 billion. That kind of accumulation provides a floor of support near the recent low of $1,512.

The Loopring shutdown is funneling capital directly back to Ethereum’s layer 1, keeping funds within the ecosystem for now. But the broader question is where those users and their capital ultimately migrate — to newer, EVM-compatible rollups or out of Ethereum entirely. With the Foundation tightening its belt and a key upgrade delayed, the network’s resilience is being tested on multiple fronts.