Author: Xiao Bing, Shen Chao TechFlow

This is an obituary.

It's not for Ethereum, Ethereum is still alive; it's for the story of "ETH is Money".

The person writing the obituary is David Hoffman, co-founder of Bankless, the world's most tireless Ethereum evangelist over the past six years. In 2019, when ETH was hovering around $150 and nobody believed it had a future, he and his partner proclaimed, "ETH is sound money" and "ETH is a tri-state asset"; those papers later repeatedly cited in institutional research reports were originally penned by him.

Then last week, he sold all the ETH he had.

The crypto community exploded. Some said he betrayed, others said he bottom-fished, and his partner Ryan mocked on Twitter: "David probably sold at the floor."

But Hoffman wrote a long article, earnestly explaining why.

After reading it, I want to say that this article is worth a serious read for anyone still heavily invested in ETH.

First, let's state the conclusion.

Hoffman is not bearish on the Ethereum network. Quite the opposite, he claims to be "significantly bullish" on the Ethereum ecosystem.

What he is bearish on is the ETH token.

More accurately, he does not believe that ETH will be repriced by the market, whether upwards or downwards.

This sounds very academic. Translated into plain language: the Ethereum chain will become increasingly successful, but this success will no longer translate into the price of ETH.

The current market value of ETH is what it deserves as its market value.

The story is over.

So what exactly is the story of "ETH is Money"?

Simply put, it aims to make ETH a new global currency. Not in the sense of a stablecoin, but truly, a store of value, a safe-haven asset, competing alongside gold and the US dollar.

To allocate a bit of ETH in the retirement funds of American grandpas and grandmas.

This sounds very sci-fi. But in 2021, it actually seemed feasible.

The most candid part of Hoffman's article is that he acknowledges that for this story to hold, too many things must happen simultaneously.

The Ethereum Foundation needs to be sufficiently decentralized but also have the urgency of a startup.

Layer 2s need to develop independently while being tethered under the Ethereum umbrella.

The technological roadmap needs to be executed in the correct order, fast enough to leave competitors behind.

The entire crypto industry needs to prove itself, to make ordinary people believe this is the future, not just another scam camp.

Each of these things is very challenging.

Each must be done correctly at the same time for ETH to become money.

And then what?

Then Solana rose, and tokens like BNB and TRX, those "on-chain ATMs”, saw their prices perform even better than ETH.

In the article, Hoffman made a very poignant comparison: L1 public chain tokens ultimately speak in terms of the revenue from on-chain fees. ETH was strong in 2021 because its fee revenue accounted for a large portion of the industry. SOL flying in 2024 follows the same logic.

And Ethereum? It has outsourced all the work to Layer 2, which takes 97% of the profits, while the application layer collects the remaining fees. What about the ETH mainnet?

Providing the safest block space to the world at cost; tokenizing the world's assets at cost; providing security for DeFi at cost…

Hoffman used a beautiful phrase: Ethereum is a giver, not a taker.

It is the most successful nonprofit organization in the world.

It is too noble.

So noble that architecturally, it refuses to take a cut from the value it creates.

At this point, you should understand.

For ETH to become money, Ethereum must "win".

But the Ethereum chain, by design, does not intend to "win".

What it aims to do is to provide a safety net. It is a public good. It is the water, electricity, and gas that everyone can use.

Can the stocks of utility companies turn into gold?

No, they cannot.

Hoffman expressed a more poignant fact in the article: for Ethereum to make ETH become money is analogous to "winning a war it structurally refuses to participate in."

To translate, did you bind your hands and feet when you designed it, and still expect to win the championship?

There is another more awkward fact.

Hoffman quoted a perspective from Nic Carter on Bankless in 2020, suggesting that stablecoins might have a parasitic relationship with ETH.

Back then, there were $3 billion of stablecoins on Ethereum.

Today, there are $163 billion. A 54-fold increase.

Is this number good for the Ethereum network? Of course, it is. The US government is firmly grasping onto Ethereum now precisely because of this. The Trump administration publicly stated it would use Ethereum to maintain US dollar hegemony.

But consider this: the biggest beneficiary of Ethereum's success is the US dollar.

It is the dollar that has become more like money on Ethereum, not ETH.

Hoffman also proposed an even harsher possibility.

He said perhaps the "strong encryption narrative," which encompasses DeFi, NFT, DAO and the like—crypto-native, self-circulating, and opposing traditional finance—was never meant to hold.

The crypto industry had a brief "glory moment," from late 2020 to early 2022. During that time, ordinary people thought this thing was cool, rebellious, and had a sense of future.

And then what?

Then came scams, schemes, Meme frenzies, and utter uselessness.

Hoffman wrote in the article, "the image of crypto in the public’s mind is that of fraudsters, money grabbers, get-rich-quick myths, and it holds no value for ordinary people."

When he said this, he was a co-founder of Bankless, one of the most hardworking advocates for cleansing the image of this industry over the past six years.

Currency coordinates games. A currency's "Schelling point," that is, the consensus of everyone collectively choosing it as money, is sustained by belief.

The global belief at that moment in 2021 may have been a distortion caused by the pandemic.

That window has closed.

So Hoffman sold.

Not because he is bearish. But because he feels that the most romantic story, the transformation of ETH into global currency, has reached the limit of what it can achieve.

Ethereum will continue to succeed. Layer 2s will make a fortune, applications will consume all the fees.

But ETH, the token itself, is likely to remain as it is.

It won't crash. Nor will it skyrocket.

It has already attained its deserved market value.

Hoffman refers to this status as “played out.”

Not a failure, but rather that the game is over.

Like a long card game, the last card has been turned over; you won some, lost some, but the game has ended.

Having written this, I want to say something of my own.

The most respected people in the crypto industry are not those who shout "to the moon," toughen up when prices rise, and play dead when prices fall.

They are those who have sincerely believed in something, invested in it, and then in the face of reality, dare to say, "I might be wrong."

The last paragraph of Hoffman's article reads,

“Ethereum has chosen the hardest, most ambitious, and most idealistic path. It has earned its deserved market value. I am extremely bullish on the Ethereum network. But for the ETH token, I no longer see the logic for its repricing in any direction.”

“So I sold my ETH. Not because I am bearish, but because I want to allocate capital to other opportunities that I see.”

Honesty, restraint, no shifting blame, no playing tricks.

This is the rarest thing in the crypto world.