{"id":19822,"date":"2025-03-31T08:32:03","date_gmt":"2025-03-31T08:32:03","guid":{"rendered":"https:\/\/dogewisperer.com\/?p=19822"},"modified":"2025-03-31T08:32:03","modified_gmt":"2025-03-31T08:32:03","slug":"ethereum-is-completely-dead-as-an-investment-claims-hedge-fund-cio","status":"publish","type":"post","link":"https:\/\/dogewisperer.com\/?p=19822","title":{"rendered":"Ethereum Is \u2018Completely Dead\u2019 As An Investment, Claims Hedge Fund CIO"},"content":{"rendered":"
\n

In a post on X this past weekend, Quinn Thompson, Chief Investment Officer (CIO) of Lekker Capital, declared that Ethereum (ETH) is \u201ccompletely dead\u201d as an investment. His comments sparked a flurry of responses from prominent figures in the crypto industry, including Nic Carter of Castle Island Ventures, Columbia Business School professor Omid Malekan, and VB Capital\u2019s Scott Johnsson.<\/p>\n

Thompson, who oversees investments at Lekker Capital, set off the debate<\/a> with a post stating: \u201cMake no mistake, ETH as an investment is completely dead. A $225 billion market cap network that is seeing declines in transaction activity, user growth and fees\/revenues. There is no investment case here. As a network with utility? Yes. As an investment? Absolutely not.\u201d<\/p>\n

He also shared a set of metrics to underscore Ethereum\u2019s recent stagnation, including data on active addresses, transaction counts, and new address creation.<\/p>\n

\"Ethereum<\/p>\n

Is Ethereum \u2018Dead\u2019 As An Investment?<\/h2>\n

The provocative statement attracted immediate responses from prominent voices across the crypto ecosystem, triggering a debate over Ethereum\u2019s economic and investment thesis, and specifically, the influence of Layer 2 (L2) scaling solutions on Ethereum\u2019s native token economics.<\/p>\n

Nic Carter, partner at Castle Island Ventures and co-founder of blockchain analytics firm Coinmetrics, swiftly responded, pinpointing Ethereum\u2019s valuation dilemma squarely at the feet of its Layer 2 scaling<\/a> implementations:\u201cThe #1 cause of this is greedy eth L2s siphoning value from the L1 and the social consensus that excess token creation was A-OK. Eth was buried in an avalanche of its own tokens. Died by its own hand.\u201d<\/p>\n

Thompson reinforced Carter\u2019s criticism by suggesting that Ethereum\u2019s community consensus had inadvertently favored token proliferation as a wealth-generation mechanism, ultimately undermining ETH\u2019s investment narrative: \u201cThe social consensus among .eth\u2019s in favor of excess tokens was because the creation of endless L2s, staking, restaking, DA, etc etc all enriched their pockets on the way up but no one wants to face the music now that the market is saying that was a mistake.\u201d<\/p>\n

However, this viewpoint was contested by Omid Malekan, professor at Columbia Business School and specialist in cryptocurrency and blockchain technology since 2019. Malekan underscored Layer 2s\u2019 critical role in blockchain scalability and argued that any value-extraction by these secondary layers was not inherently detrimental to Ethereum\u2019s foundational token economics: \u201cL2s are the only viable way to scale any blockchain. Whether their tokens capture value or not is a separate question. But it can\u2019t be that L2s \u2018siphoned value from ETH\u2019 yet didn\u2019t capture value themselves. Security is not free.\u201d<\/p>\n

Malekan further challenged Thompson\u2019s claim by questioning whether Ethereum could realistically become the first example in history of a widely adopted technological network whose utility failed to generate any meaningful financial return: \u201cIs Ethereum going to be the first network \u2018with utility\u2019 in modern history where the network effects aren\u2019t monetized? Can you provide any other examples of this happening?\u201d<\/p>\n

In response, Thompson clarified his argument, highlighting that monetization is indeed occurring within the Ethereum ecosystem, but not sufficiently accruing to ETH itself to validate the cryptocurrency\u2019s current market capitalization. He illustrated this point with an analogy: \u201cThere\u2019s tons of network effects being monetized all over the place, just not enough to ETH to justify its current valuation. Do all the network effects of the oil network and usage of oil accrue to oil?\u201d<\/p>\n

However, the oil analogy drew skepticism from Scott Johnsson, General Partner at VB Capital, who critiqued Thompson\u2019s comparison due to Ethereum\u2019s unique tokenomics, particularly its deflationary token burning<\/a> mechanics influenced directly by network usage:<\/p>\n

\u201cI don\u2019t disagree with your directional call, but I think this analogy falls flat. ETH \u2018production\u2019 is inversely correlated with usage, which is certainly not the case with oil. So as oil price increases, there is a demand response and a supply response. With ETH, it\u2019s limited to the demand response. If ETH consumption looks like barrel consumption, then the price of ETH is far more likely to accrue value.\u201d<\/p>\n

Yet Thompson continued to disagree with Johnsson\u2019s assessment, arguing that historical patterns do not necessarily support the claim of inverse correlation between Ethereum production and usage: \u201cI disagree. We\u2019ve never seen a sustained period of time where \u2018ETH production is inversely correlated with usage.\u2019 Obviously, the \u2018production\u2019 mechanics differ from oil, but similarly high ETH price is prohibitive to demand, hence L2s and cheaper alternative L1s.\u201d<\/p>\n

Acknowledging a possible misunderstanding, Johnsson clarified he was not predicting future Ethereum usage scenarios, emphasizing instead the theoretically inverse relationship between token burn and transaction volume under the current Ethereum network design: \u201cI think we\u2019re talking past each other a bit. I don\u2019t think it\u2019s arguable that if ETH usage increases that it leads to more burn<\/a> and less inflation (production). I\u2019m specifically not making future predictions on that usage. In any event, your ultimate point is fine imo because the demand side is so sensitive to really any cost.\u201d<\/p>\n

At press time, ETH traded at $1,793.<\/p>\n

\"Ethereum<\/div>\n","protected":false},"excerpt":{"rendered":"

In a post on X this past weekend, Quinn Thompson, Chief Investment Officer (CIO) of Lekker Capital, declared that Ethereum (ETH) is \u201ccompletely dead\u201d as an investment. His comments sparked a flurry of responses from prominent figures in the crypto industry, including Nic Carter of Castle Island Ventures, Columbia Business School professor Omid Malekan, and […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"iawp_total_views":0,"footnotes":""},"categories":[2],"tags":[3,4,5],"class_list":["post-19822","post","type-post","status-publish","format-standard","hentry","category-news","tag-crypto","tag-doge","tag-news"],"_links":{"self":[{"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/posts\/19822","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=19822"}],"version-history":[{"count":0,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/posts\/19822\/revisions"}],"wp:attachment":[{"href":"https:\/\/dogewisperer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=19822"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=19822"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=19822"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}