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ToggleIf you missed last week's news— I sold my ETH . For someone who built their career, community, identity, and business on Ethereum, this was no small decision.
tl;dr: The argument that "ETH is Money" has not failed; it has played out. Ethereum has received the price it deserves from ETH, and I don't believe ETH as an asset will be repriced, either upwards or downwards.
P.S. I am extremely bullish on Ethereum. I expect Ethereum to continue to perform exceptionally well as a network. However, I believe only a small portion of this success will be reflected in ETH.
The following is the article content compiled and edited by Dynamic Zone:
"ETH as currency" has always been a high-stakes gamble.
Currency is a game of coordination, and coordination is difficult.
Ethereum itself is a whole stack of coordination challenges spanning multiple layers, and the "ETH is Money" argument requires success at every layer, and success sufficient to build market confidence.
There is only one condition for ETH to become a currency: every layer of Ethereum's technology—the social stack—must be better than its competitors.
Given the ambitions of the Ethereum project, achieving the "most successful version of Ethereum" will always be a huge challenge. Despite its shortcomings, the Ethereum project has done a very good job and deserves its current market capitalization.
However, the window of opportunity for $ETH to be "repriced" by the market appears to be closing.
ETH is indeed a currency to some extent. But it's not the most successful version we initially pursued.
Ethereum is a coordinated game.
A Turing-complete blockchain is such a powerful concept that Ethereum's greatest potential was to take the entire crypto industry—all of it.
The only obstacle for Ethereum to achieve 100% dominance is coordination.
What Ethereum needs to do at the same time
- Foundation level : Ethereum's leadership must be sufficiently decentralized, and governance requires "rough consensus" to establish credible neutrality in order to maximize Ethereum's adoption.
- Market reaction : Ethereum leadership must remain responsive to market dynamics and operate like a startup facing an existential threat of obsolescence.
- L2 Autonomy and Binding : Ethereum L2 must be able to make market choices independently of the base layer, while also being economically bound to the overall Ethereum economy and brand.
- Roadmap pacing : The execution sequence of the Ethereum roadmap must maximize and preserve Ethereum's momentum and market dominance, suppressing competition to boost confidence in ETH.
- Technological speed : Key technologies must be developed and engineered at a sufficiently fast pace so that Ethereum can both prove its utility to the outside world and continue to stay ahead of its competitors.
The core of the "ETH is Money" argument is to produce a financial asset so revolutionary and powerful that its unique nature as a "global store of value" compels previously indifferent people to actively hold it. Ethereum's brand and ETH's strength must be so strong that baby boomers not only feel secure but are also attracted to include ETH as a meaningful part of their retirement portfolios.
In order for "ETH is Money" to become a reality, everything upstream of ETH must be of a very high standard.
Ethereum is not Bitcoin—it has chosen the difficult path. Bitcoin chose to strip everything off the blockchain to elevate BTC's status. Ethereum, on the other hand, chose to stack everything on the blockchain to maximize the utility of its block space. Only by doing this optimally, ahead of its competitors, can ETH potentially achieve global currency status.
We've reached a point where Ethereum has earned its share of the largest potential market capitalization it deserves.
My concern is that the window of opportunity for this match has already closed.
The environment may never have allowed "ETH is Money" to happen.
Looking back over the years, I see a host of environmental challenges that Ethereum should have overcome.
1. L1 assets and revenue are inextricably linked.
No matter how much you criticize the difficulty of valuing smart contract chains based on fees and revenue—fees and revenue are clearly the way L1 native assets enhance their pricing power.
By 2026, we have a wealth of data showing that these things are closely related: L1 activity, L1 fees, and the appreciation of L1 native asset prices.
- 2021 : ETH’s dominance occurred when its L1 revenue market share was at its highest.
- 2024 : SOL’s dominance will emerge as its L1 revenue market share grows independently relative to other industries.
- 2026 : NEAR is undergoing a price repricing, accompanied by L1 revenue and NEAR burning fundamental growth.
You can also look at BNB and TRX—perhaps the two projects with the highest cumulative revenue in history. Their price trends are exactly what I expected ETH to be like—if ETH can maintain a higher L1 fee market share after 2022.
2. The "strong version" of the cryptocurrency failed.
@0xMakesy said it very well:
Ethereum represents a "strong version" of cryptocurrency—crypto for cryptocurrencies themselves, self-sustaining and self-perpetuating. DeFi, NFTs, DAOs—we are the rebels, building an alternative financial system created by and for the people, connecting imagination to currency.
There is also a "weak version": the efficient ledger infrastructure at the back end of financial institutions. The weak version was supposed to fuel the strong version, turning the demand for the network ledger into an inward flow—towards encryption, to Ethereum, and ultimately to ETH.
Perhaps, if Ethereum had performed better, faster, and stronger, and if the crypto industry hadn't attracted such a large group of scammers and predators, it would have long since earned the reputation and respect I always thought it deserved. But the only period in which cryptocurrency enjoyed a positive brand in the public eye lasted only from the end of 2020 to the beginning of 2022. For the rest of that time, cryptocurrency's reputation has been one of scams, fraud, get-rich-quick schemes, and utterly useless to ordinary people.
ETH, as a currency, relies on "strong encryption".
ETH's outstanding performance as an "internet currency" coincided perfectly with the moment when the world was forced to go online. The world discovered cryptocurrency for the first time, and in that brief window of opportunity, it was incredibly cool.
Currency is a coordinated game, and a currency's Schelling point is held together by belief. In 2021, the wider society believed in ETH: it was cool, disruptive, and populist. Bitcoin possesses the same qualities, and has been far better able to maintain them than ETH since 2021.
This raises a disturbing possibility: the strong version of cryptocurrency may never have been a stable equilibrium. COVID is an extremely distorted monetary era, and perhaps ETH's status as a currency can only be sustained under that distortion. If so, then for ETH to become a currency, the "strongly encrypted" version must have been better suited to function than it actually is.
3. Ethereum's utility is also helping other currencies.
Is Bitcoin a currency? Is the US dollar a currency? Is gold a currency? It doesn't matter—whatever currency it is, it will be tokenized on Ethereum.
In 2020, Nic Carter argued in Bankless that stablecoins, as the native unit of Ethereum, were likely parasitic. At that time, Ethereum had $3 billion in stablecoins. Today, that number is $163 billion—a 54-fold increase.
Ethereum's utility lies in helping to strengthen a monetary network "whatever money is," which is why the US is so optimistic about the adoption of stablecoins in cryptocurrencies. Ethereum is helping the US maintain the dollar's hegemony, which is also a clear policy of the current administration.
The positive spillover effects of $ETH as a currency are clearly far less than the value the US government sees in the Ethereum stablecoin ecosystem.
Ethereum is a giver, not a taker.
Ethereum is essentially a giver, not a taker.
- It provides the world's most secure block space for L2 at cost price .
- It tokenizes assets worldwide at cost price .
- It protects billions of dollars of assets in DeFi at cost price .
Ethereum does everything it does without adding a price.
This is the nature of open-source software, and this is the power of Ethereum. Ethereum supplies its entire set of vital value to the world—at cost.
Ethereum is noble. Ethereum is good.
Ethereum is the world's most successful non-profit organization.
Naturally, massive adoption will occur on Ethereum. It is, and will continue to be, perhaps the most influential open-source software project ever created by humankind, and its "non-profit protocol" is one of its core characteristics.
This is why ETH's path to becoming a currency requires sustained and extremely high levels of market dominance.
Ultimately, transaction fees will approach zero as blockchain space is commoditized. As long as it's Ethereum and not its competitors that are commoditizing it, Ethereum can maintain its profits and dominant position.
Ultimately, the fat protocol theory will give way to the fat application theory, with the application layer eating up the remaining profits. As long as they are applications on Ethereum and not competitors, this is fine for ETH.
The concepts of "ETH as currency" and "Ethereum as a giver" are difficult to reconcile. Ethereum's architecture is deliberately designed to return everything to the ecosystem, taking only the minimum necessary value to maintain the network.
Architecturally, ETH was not prioritized in Ethereum; this is a feature, not a bug. ETH will only become a currency if Ethereum wins a battle that it architecturally refused to participate in.
This is feasible when Ethereum can maintain a very high market dominance.
The "ETH is Money" argument places too many demands on Ethereum.
"ETH as currency" requires everything to go smoothly for Ethereum. The margin for error is much smaller than I originally thought. Ethereum's momentum in 2021 and 2022 makes "ETH as currency" seem like a pre-ordained path.
In hindsight, Solana's rise in 2021, accompanied by a surge in anti-Ethereum sentiment, was the first major sign that the Ethereum-ETH coordination game was not proceeding as planned.
- The Ethereum Foundation needs decentralization to allow for alternative power structures. But it also needs to respond to the market with the urgency and momentum of a startup facing existential obsolescence.
- The L2 team needs the freedom to make its own decisions, but it also needs to operate under the larger brand umbrella of Ethereum and ETH. The integration of synchronization technologies between Ethereum and its L2 needs to be implemented more quickly.
- Smart contract chains are valued based on transaction fees. To escape this paradigm, Ethereum needs to rewrite the rules with "successful brute force".
The argument that "ETH is Money" has not failed.
It simply hasn't reached its full potential yet.
Ethereum did something noble: it chose the most difficult, ambitious, and ideologically pure path for the future.
It achieved some impressive victories and also lost some challenges.
Ethereum has earned the market capitalization it deserves.
I am extremely optimistic about the Ethereum network and its ecosystem—Ethereum's architecture is designed to maximize the success of its applications, L2, and ecosystem. The fat application theory means that Ethereum applications take all the transaction fees, and the Rollup Central roadmap means that L2 takes 97% of the profit margin.
As for the asset ETH, I find it difficult to see it being structurally repriced—whether up or down.
So the reason I sold ETH was not because I was bearish on ETH, but because I believed the "ETH is Money" narrative had run its course , and I wanted to allocate my capital to other opportunities I saw in the market.
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