Finally, @VitalikButerin perfectly pointed out why I’m bearish on ETH, and @fundstrat’s $BMNR.
$ETH as a token is a terrible investment, especially above $4K.
This is what Tom Lee, Cathie Wood’s ARK innovation, Vitalik and others didn’t understand:
There is a disconnect between Ethereum as a network and ETH as a utility token.
Ethereum network (that’s growing) does not translate to the token price appreciating.
If you bought $ETH near the end of 2021, you would have lost money. Meanwhile $BTC price has appreciated close to 300% since then. Why?
Layer 2s.
1. Vitalik encouraged users to move to L2s (like Base) over the past few years. As a result now these networks move billions in volume but all fees go to companies like Coinbase (sequencer) not validators on Ethereum.
2. L2s pay fees to store their data but this is just incredibly minimal compared to the economic value they siphoned off of Ethereum mainnet.
That’s it. Layer 2s siphoned off profit, activity, while the Ethereum’s network receives barely anything for data storage. Value accrual went to companies like Coinbase, not ETH token holders.
Ethereum’s Network usage is at an all-time high, but Mainnet revenue has collapsed and there’s little economic incentive to hold the token as an investment.
Unless there’s protocol changes that generate reasonable value accrual to the ETH token from L2 activity, don’t bother with ETH as an investment.
$ETH as a token is a terrible investment, especially above $4K.
This is what Tom Lee, Cathie Wood’s ARK innovation, Vitalik and others didn’t understand:
There is a disconnect between Ethereum as a network and ETH as a utility token.
Ethereum network (that’s growing) does not translate to the token price appreciating.
If you bought $ETH near the end of 2021, you would have lost money. Meanwhile $BTC price has appreciated close to 300% since then. Why?
Layer 2s.
1. Vitalik encouraged users to move to L2s (like Base) over the past few years. As a result now these networks move billions in volume but all fees go to companies like Coinbase (sequencer) not validators on Ethereum.
2. L2s pay fees to store their data but this is just incredibly minimal compared to the economic value they siphoned off of Ethereum mainnet.
That’s it. Layer 2s siphoned off profit, activity, while the Ethereum’s network receives barely anything for data storage. Value accrual went to companies like Coinbase, not ETH token holders.
Ethereum’s Network usage is at an all-time high, but Mainnet revenue has collapsed and there’s little economic incentive to hold the token as an investment.
Unless there’s protocol changes that generate reasonable value accrual to the ETH token from L2 activity, don’t bother with ETH as an investment.
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