Bankless Founder: Why I Cleared My ETH Holdings

Bankless Co-founder David Hoffman publicly sells ETH and writes a lengthy article explaining his farewell to the "ETH is Money" thesis. He states that while Ethereum as a network and ecosystem still has great potential, the opportunity for ETH to be re-priced as an asset has already played out.
(Background: Wall Street no longer loves Ethereum: Why are fundamentals and ETH prices diverging?)
(Additional context: What exactly causes Ethereum (ETH) to lose its vitality?)

Table of Contents

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• "'ETH is Money' has always been a gamble"
• Ethereum is a coordination game
  • What Ethereum needs to accomplish
• The environment perhaps never allowed "ETH is Money" to happen
  • 1. L1 assets are inseparable from revenue
  • 2. The "strong version" of cryptocurrency has not succeeded
  • ETH as money relies on "strong cryptography"
  • 3. Ethereum's utility also helps other currencies
• Ethereum is a giver, not a taker
• The "ETH is Money" thesis demands too much from Ethereum
• The "ETH is Money" thesis has not failed

If you missed last week's news — I sold my ETH. For someone building their career, community, identity, and business on Ethereum, this decision was not made lightly.

tl;dr: The "ETH is Money" thesis has not failed; it has already played out. Ethereum has achieved the ETH price it deserves, and I do not believe ETH as an asset will be re-priced, whether upward or downward.

P.S. I am extremely bullish on Ethereum. I expect Ethereum as a network to continue performing excellently. But I believe only a tiny part of this success will be reflected in ETH.

Below is the compiled and organized content of the article:

"'ETH is Money' has always been a gamble"

Money is a coordination game, and coordination is hard.

Ethereum itself is a complex coordination challenge across multiple layers, and the "ETH is Money" thesis requires success at every layer, and success enough to build market confidence.

The only condition for ETH to become money is: Ethereum’s technology—every layer in its social stack—must outperform competitors.

Considering Ethereum’s ambitious plans, achieving the "ultimate successful version" of Ethereum will always be a huge challenge. Despite various shortcomings, Ethereum has done very well and deserves its current market cap.

However, $ETH the window for the market to "re-price" ETH seems to be closing.

ETH is indeed a form of money to some extent. But not the most successful version we initially pursued.

Ethereum is a coordination game

A Turing-complete blockchain is such a powerful concept that Ethereum’s greatest potential was originally to take the entire crypto industry—everything.

The only obstacle for Ethereum to achieve 100% dominance is coordination.

以太坊需要同時做到的事

• 基金會層級:以太坊的領導必須足夠去中心化,治理需要「粗略共識」以建立可信中立性,才能將以太坊的採用率最大化。
• 市場反應:以太坊領導層必須對市場動態保持回應,並像一家面臨被淘汰存在性威脅的新創公司一樣運作。
• L2 自治與綁定:以太坊 L2 既要能獨立於基礎層自主做出市場選擇,又要在經濟上與整體以太坊經濟與品牌綁定。
• 路線圖節奏:以太坊路線圖的執行順序必須能最大化並保留以太坊的動能與市場主導地位,壓制競爭以提升對 ETH 的信心。
• 技術速度:關鍵技術必須以足夠快的步伐研發與工程化,讓以太坊既能對外證明效用,又能持續領先競爭對手。

「ETH is Money」論述的核心,是要生產出一種如此革命性、如此強大的金融資產,以致於它能憑藉作為「全球價值儲存」的獨特性質,迫使原本漠不關心的人主動持有。以太坊的品牌與 ETH 的實力必須強到讓嬰兒潮世代不只感到安全,還會被吸引把 ETH 當成退休投資組合中有意義的部位。

為了讓「ETH is Money」成真,ETH 上游的一切都必須做到非常高的水準。

以太坊不是比特幣——它選擇了困難的路。比特幣選擇從區塊鏈上剝離一切,以提升 BTC 的地位。以太坊則選擇在區塊鏈上堆疊一切,以最大化其區塊空間的效用。只有以最佳方式、在競爭者之前做到這件事,ETH 才有可能達到全球貨幣的地位。

我們走到了部分的位置,以太坊也取得了它應得的最大潛在市值的份額。

我擔心的是,這場賽局的時間窗口已經關閉。

環境或許從未允許「ETH is Money」發生

回顧過去這些年,我看見以太坊本應克服的大量環境挑戰。

1. L1 assets and revenue are inseparable

No matter how you criticize the difficulty of valuing smart contract chains based on transaction fees and revenue—transaction fees and revenue are clearly the way to enhance the pricing power of L1 native assets.

By 2026, we already have extensive data showing these are tightly linked: L1 activity, L1 fees, and L1 native asset appreciation.

• 2021: ETH’s dominance appeared when it had the highest market share of L1 revenue.
• 2024: SOL’s dominance emerged as its L1 revenue grew independently within the industry.
• 2026: NEAR is experiencing a price revaluation, accompanied by growth in L1 revenue and NEAR burn fundamentals.

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 originally expected ETH to look like—if ETH had maintained a higher L1 fee market share after 2022.

2. 加密貨幣的「強版本」沒有成功

@0xMakesy 說得很好:

以太坊代表的是加密貨幣的「強版本」——加密為了加密本身,自我維持、自我延續。DeFi、NFT、DAO——我們是叛逆者,在打造一個由人民、為人民的另類金融系統,把想像力接到貨幣上。

也有「弱版本」:金融機構後端的高效率帳本基礎設施。弱版本本應為強版本注入燃料,把對網路帳本的需求轉化為向內流動——流向加密,流向以太坊,最終匯聚到 ETH。

或許,如果以太坊執行得更好更快更強、如果加密產業沒有吸引到那麼一大群騙子與掠奪者,這個產業早已贏得我一直以為它應得的聲望與尊重。但加密貨幣在大眾眼中唯一一段擁有正面品牌的時期,只從 2020 年底持續到 2022 年初。除此之外的時間,加密貨幣的名聲一直是騙局、詐欺、快速致富的伎倆,以及對普通人毫無用處。

ETH as money relies on "strong cryptography"

ETH’s excellent performance as "internet money" coincided precisely with the moment the world was forced online. The world first discovered cryptocurrencies, and in that brief window, it was cool.

Money is a coordination game, and a currency’s Nash equilibrium is maintained by belief. In 2021, society believed in ETH: it was cool, disruptive, populist. Bitcoin shares these traits, and after 2021, ETH’s ability to maintain these traits was much stronger.

This raises an unsettling possibility: the strong version of cryptocurrency may never be a stable equilibrium. COVID was an extremely distorted monetary era, and perhaps ETH’s status as money only held up under such distortions. If so, then ETH becoming money from the start depended on "strong cryptography"—a version that must perform better than actual operation.

3. Ethereum’s utility also helps other currencies

Is Bitcoin money? Is the US dollar money? Is gold money? It doesn’t matter—whatever is money will be tokenized on Ethereum.

In 2020, Nic Carter argued on Bankless that stablecoins are likely parasitic on ETH as the native unit of Ethereum. At that time, Ethereum had $3 billion in stablecoins. Today, it has $163 billion—growing 54 times.

Ethereum’s utility is in helping to strengthen the monetary network of "whatever is money," which is precisely why the US is so optimistic about adopting cryptocurrencies and stablecoins. Ethereum is helping the US maintain dollar hegemony, and this is a clear policy of the current government.

The positive spillover effects of $ETH as money are evidently far less valuable than what the US government sees in Ethereum’s stablecoin ecosystem.

Ethereum is a giver, not a taker

The essence of Ethereum is that it is a giver, not a taker.

• It provides the safest blockchain space for Layer 2 at cost price.
• It tokenizes assets worldwide at cost price.
• It protects billions of dollars in assets within DeFi at cost price.

Ethereum does not mark up anything it does.

This is the nature of open-source software, and it is also Ethereum’s strength. Ethereum supplies its entire set of critical value propositions to the world—at cost.

Ethereum is noble. Ethereum is good.

Ethereum is the most successful non-profit organization in the world.

Naturally, widespread adoption will happen on Ethereum. It is, and will continue to be, perhaps the most influential open-source project ever built by humans, with "non-profit protocol" as one of its core features.

This is why the path of ETH toward becoming money requires sustained, extremely high market dominance.

Eventually, transaction fees will approach zero as block space becomes commoditized. As long as Ethereum is the one commoditizing, not its competitors, Ethereum can preserve its profits and dominance.

In the end, the "fat protocol" theory will give way to the "fat application" theory, where application layers capture the remaining profits. As long as these are applications on Ethereum rather than competitors, this is no problem for ETH.

The "ETH is Money" and "Ethereum is a giver" theses are hard to reconcile. Ethereum’s architecture is deliberately designed to give everything back to the ecosystem, taking only the minimum necessary to keep the network running.

From an architectural perspective, ETH is not prioritized within Ethereum—that’s a feature, not a bug. ETH will only become money when Ethereum wins a battle it deliberately refuses to fight in its architecture.

This is feasible when Ethereum maintains an extremely high market dominance.

"ETH is Money" thesis demands too much from Ethereum

"ETH as money" requires everything about Ethereum to go smoothly. The tolerance for error is much smaller than I initially thought. Ethereum’s momentum in 2021 and 2022 made "ETH as money" seem like the default path.

Looking back, Solana’s rise in 2021, accompanied by anti-Ethereum sentiment, was the first major signal that the coordination game between Ethereum and ETH was not proceeding as planned.

• The Ethereum Foundation needs to decentralize, allowing alternative power structures to emerge. But it also needs the urgency and momentum of a startup facing existential threats to respond to the market.
• L2 teams need autonomy but also must operate under the larger Ethereum and ETH brand. Faster technical integration between Ethereum and its L2s is required.
• Smart contract chains are valued by transaction fees; escaping this paradigm requires Ethereum to rewrite the rules with "successful brute force."

"ETH is Money" thesis has not failed

It simply has not reached its maximum potential.

Ethereum has done noble work, choosing the most difficult, ambitious, and ideologically pure path for the future.

It has achieved some awe-inspiring victories and lost some challenges.

Ethereum has already earned its deserved market cap.

I am extremely bullish on Ethereum’s network and ecosystem—its architecture is designed to maximize application success, L2 growth, and ecosystem expansion. The "fat application" thesis means ETH’s applications will take all transaction fees, and the Rollup-centric roadmap means L2s will capture 97% of profits.

As for ETH as an asset, I find it hard to see it being structurally re-priced—up or down.

So, my reason for selling ETH is not because I am bearish on ETH, but because I believe the "ETH is Money" thesis has already played out, and I want to reallocate capital to other opportunities I see in the market.