In this last weekend, in a post on X, but the Capital Chief Investment Officer (CIO), Quin Thompson announced that the Etharium (ETH) is “completely dead” as an investment. His comments created a hurry to reactions from major figures in the Crypto industry, including Nick Carter of Castle Island Ventures, Professor Omid Malecon of Columbia Business School and Scott Johnson of VB Capital.
Thompson, who takes care of investment in capital, set Discussion With a post: “Don’t make any mistake, ETH is completely dead as an investment. A $ 225 billion market cap network that transactions activity, user growth and fee/revenue fall.
He also shared a set of matrix to outline the recent stagnation of the atherium, including data on active addresses, transactions calculations and new addresses.
Is the Etharium ‘dead’ as an investment?
The stimulating statement attracted immediate reactions from the major sounds in the crypto ecosystem, which triggers a debate on the economic and investment thesis of the atherium, and in particular, the effect of layer 2 (L2) scaling solution on the original token economics of the Etharium.
Nick Carter, partner in Castle Island Ventures and co-founder of blockchain analytics firm Coinmatrics, responded rapidly, while squint at the feet of his layer, square the valuation dilemma of the atherium, for the implementation of 2 scaling implementation, “This is the #1 reason for his lover Eth L2S.
Thompson reinforced Carter’s criticism, suggesting that the community consensus of the atherium inadvertently favor the spread of tokens as a money-creation system, eventually to reduce ETH’s investment story: “Social consent in favor of additional tokens. Now when the market is saying that was a mistake.”
However, this approach was faced by OMID Malecon, Professor at Columbia Business School and specialist in Cryptocurrency and Blockchain technology since 2019. Whether the price capture or not is a different question.
Malecan further challenged Thompson’s claim whether Etherium can actually become the first example in the history of a widely adopted technical network, whose utility failed to generate any meaningful financial returns: “Is the first network with utility in modern history where the network effects are not muddy? Can you provide any other example of this?”
In response, Thompson clarified his argument, highlighting that the mudlization is actually happening within the atherium ecosystem, but is not adequately acquired for ETH to validate the current market capitalization of cryptocurrency. He portrayed this point with an analogy: “Tons are having tons effects of network effects everywhere, simply not enough for ETH to justify its current assessment. All network effects of oil networks and oil for oil are all network effects?”
However, the oil analogy attracted skepticism from General Partner at Scott Johnson, VB Capital, who criticized Thompson compared to the unique tokenomics of the atherium, especially impressed its defamation token burning mechanics with network use directly:
“I do not disagree with your directional calls, but I think this analogy gets flat. Eth is adversely correlated with ‘production’ use, which is definitely not a case with oil. So as the price of oil increases, a demand response and supply response. With Eth, with Eth, it is limited to the reaction of the demand. If the price of the demand is limited.”
Nevertheless, Thompson continued to disagree with Johnson’s assessment, arguing that historical patterns do not necessarily support the claim of inverse correlation between atherium production and use: “I disagree. We have never seen a continuous period where ‘ETH is contrary to the production use.” Apparently, ‘production’ varies from mechanics oil, but similarly high ETH price is prohibitory for demand, so L2S and cheaper alternative L1s. ,
Accepting a possible misunderstanding, Johnson clarified that he was not predicting future atherium use scenarios, instead instead emphasizing the in -theoretically reverse relationship between token burn and transactions under current atherium network design: “I think we are talking to each other. I do not think that it is a future point in the future. IMO because the demand side is really sensitive to any cost. “
At the press time, ET traded at $ 1,793.
Image made with Dall.E, chart from traudingview.com
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