Bankless co-founder David Hoffman mentioned he bought his ETH after concluding that the “ETH is cash” thesis has largely performed out, marking a notable shift from one in all Ethereum’s most seen public advocates. Hoffman mentioned he stays “massively bullish” on Ethereum as a community, however not sees a transparent path for ETH, the asset, to obtain a structural rerating from right here.
“For somebody who constructed a profession, group, id, and enterprise round Ethereum, this selection doesn’t come calmly,” Hoffman wrote. “The ETH is Cash thesis didn’t fail… it performed out. Ethereum acquired the ETH worth it deserves, and I don’t see ETH being rerated as an asset, larger or decrease.”
The argument shouldn’t be that Ethereum has failed. Hoffman’s thesis is extra uncomfortable for ETH holders: Ethereum might proceed to succeed as infrastructure whereas solely a marginal share of that success accrues to ETH itself. In his framing, the community has develop into one in all crypto’s most vital open-source methods, however its design selections more and more favor functions, rollups and exterior financial belongings over ETH’s personal financial premium.
Hoffman Says Ethereum’s Financial Window Is Closing
Hoffman described Ethereum as an unlimited coordination recreation, the place the “ETH is cash” thesis required a number of layers of the ecosystem to align without delay. Ethereum wanted decentralized management, responsive governance, quick technical execution, coherent L2 incentives, and sufficient market dominance to make ETH the pure financial Schelling level of the ecosystem.
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That, he argued, was at all times a slender path. “Cash is a coordination recreation, and coordination is difficult,” Hoffman wrote. “The Ethereum undertaking itself is a stacked set of coordination challenges throughout a number of layers, and the ‘ETH is cash’ thesis required all of them to succeed, and succeed with confidence.”
In Hoffman’s view, Ethereum made the tougher architectural selection in contrast with Bitcoin. Bitcoin stripped its base layer all the way down to elevate BTC’s financial function. Ethereum added programmability and sought to maximise blockspace utility. That method created huge floor space for adoption, but in addition made ETH’s financial standing depending on Ethereum profitable throughout expertise, tradition, governance and market construction on the identical time.
Hoffman mentioned Ethereum achieved “a number of the means there,” however not the maximal model of the thesis many ETH bulls as soon as anticipated.
Charges, L2s And The Asset-Seize Downside
A central a part of Hoffman’s argument is that smart-contract L1 tokens stay tied to exercise, charges and income. He pointed to ETH’s dominance in 2021, Solana’s resurgence in 2024, NEAR’s 2026 rerating alongside income and burn progress, and long-running charge mills corresponding to BNB and TRX as examples of the market rewarding chains that retain or increase direct income seize.
Ethereum, against this, has intentionally moved towards a construction the place worth leaks outward. Rollups scale execution, functions seize extra of the user-facing margin, and Ethereum gives safe settlement at low value. Hoffman described this as a function of Ethereum’s ideology and structure, however a problem for ETH as an asset.
“At its coronary heart, Ethereum is a giver, not a taker,” he wrote. “It provides L2s with the world’s most safe blockspace, at value. It tokenizes the belongings of your entire world, at value.”
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That framing sits on the core of his resolution. Ethereum could also be “noble,” “good,” and “the world’s most profitable non-profit,” Hoffman argued, however that doesn’t routinely make ETH a greater funding from this level ahead. He mentioned the rollup-centric roadmap means L2s can take “97% margins,” whereas the fat-app thesis leaves extra economics with functions quite than the bottom asset.
Stablecoins And The ‘Robust Crypto’ Downside
Hoffman additionally argued that Ethereum’s utility might more and more strengthen different types of cash. He famous that Ethereum hosted $3 billion in stablecoins in 2020 and $163 billion in the present day, a 54x improve. The community’s success as settlement infrastructure, in that sense, has helped increase tokenized {dollars}, not essentially ETH’s function as cash.
He additionally questioned whether or not the “sturdy model” of crypto (DeFi, NFTs, DAOs and another monetary system constructed for its personal sake) ever grew to become a secure sufficient cultural or financial equilibrium. The second when ETH functioned most convincingly as web cash, he argued, coincided with the COVID-era surge in on-line exercise, threat urge for food and public fascination with crypto.
“ETH excelled as web cash on the precise second everybody was pressured onto the web,” Hoffman wrote. “The world found cryptocurrency for the primary time, and for that transient window, it was cool.”
The implication is that ETH’s financial premium might have trusted a broader crypto-native growth that didn’t maintain. Ethereum stored constructing, however the public narrative round crypto shifted again towards scams, grifts and hypothesis, weakening the social basis wanted for ETH to develop into a dominant store-of-value asset.
Hoffman closed by stressing that he’s not bearish on Ethereum itself. His resolution, he mentioned, displays a capital allocation name after the “ETH is cash” thesis reached a mature consequence.
At press time, ETH traded at $2,080.
Featured picture created with DALL.E, chart from TradingView.com
