In a post on X last weekend, Quinn Thompson, Chief Investment Officer at Towker Capital, declared that Ethereum (ETH) is “completely dead” as an investment. His comments sparked a surge in response from prominent figures in the crypto industry, including Nic Carter of Castle Island Ventures, Omid Malekan, Professor of Columbia Business School, and VB Capital’s Scott Johnsson.
“Undoubtedly, ETH because the investment is completely dead,” said Thompson, who oversees Towker Capital’s investments.
He also shared a set of metrics to highlight Ethereum’s recent stagnation, including data on active addresses, transaction counts, and new address creation.
Is Ethereum “dead” as an investment?
The provocative statement attracted immediate responses from prominent voices across the crypto ecosystem, sparking debate over the impact of Ethereum’s economic and investment papers, particularly Layer 2 (L2) scaling solutions.
Nick Carter, a partner at Castle Island Ventures and co-founder of Coinmetrics, a blockchain analytics company, has accurately identified the Ethereum valuation dilemma directly at the feet of the implementation of layer 2 scaling, saying, “The cause of this #1 is worthy of the greedy eth l2s siphoning from l1, the social consensus that exists in L1 and Eibar. The token died in his own hands.”
Thompson bolstered Carter’s criticism by involuntarily supporting the spread of tokens as a wealth-generating mechanism, and ultimately undermining ETH’s investment narrative, and ultimately undermining ETH’s investment narrative. It undermined the social consensus that supports excessive tokens. The market says it was a mistake. ”
However, this perspective has been contested by Omid Malekan, a professor at the Columbia Business School and expert in cryptocurrency and blockchain technology since 2019. Malekan highlighted the important role of Layer 2 in blockchain scalability, and argued whether these secondary layers of appendixes are inherently harmful, whether only Etherum’s smain is born or not. Capture values are another question.
Malecan also challenged Thompson’s argument further by questioning whether Ethereum could be a realistic first example in the history of a widely adopted technology network that failed to generate meaningful financial returns.
In response, Thompson clarified his argument, highlighting that monetization is actually happening within the Ethereum ecosystem, but has not occurred enough of itself to examine the current market capitalization of cryptocurrencies. He explained this point by analogy. “Many network effects are monetized here and there, and it’s not enough to justify the current assessment. Will all the network effects and use of oil accumulate in oil?”
However, the oil analogy drew skepticism from Scott Johnsson, general partner at VB Capital. He criticized Thompson’s comparisons for Ethereum’s unique talk nemics, particularly for the deflationary token burning mechanics that are directly affected by the use of networks.
“I don’t oppose your call in direction, but I think this analogy will be flat. ETH ‘production’ is inversely correlated with use. This certainly doesn’t apply to oil. Therefore, as oil prices rise, there is a demand response and a supply response.
However, Thompson continues to oppose Johnson’s assessment, arguing that the historical pattern does not necessarily support the claims of inverse correlation between Ethereum production and usage. Obviously, the “production” mechanics differ from oil, but similarly high ETH prices prevent demand, so there are L2 and cheaper alternatives, L1. ”
Accepting the possibility of misunderstanding, Johnson revealed that he did not anticipate future Ethereum use scenarios, instead highlighting the theoretical inverse relationship between token burns and transaction volumes. Events, your ultimate point is great to IMO as the demand side is really very sensitive to any cost. ”
At the time of pressing, ETH traded for $1,793.
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