Ethereum enterprise capitalists (VCs) are “not stupid” and know that investing on the earth’s largest good contract platform received’t end result within the “multiples” they want, in response to a crypto person. Going by the deal with R89Capital, claims that VCs are actually taking a look at Ethereum layer-2 belongings as autos to exit the market, dumping “Ponzi tokens.”
Ethereum VCs Exiting ETH For “Ponzi” Tokens?
The person opines that the first motive why ETH costs might not surge in multiples like rising tokens, together with meme cash like PEPE, as an illustration, is due to the comparatively giant market cap.
According to trackers on October 31, ETH has a market cap of over $215.8 billion and is the second largest after Bitcoin (BTC). Typically, cash with increased market caps are tougher to control and normally have discovered extra institutional adoption than rising tokens.
This is as a result of initiatives with increased market cap are extra liquid, have extra identify recognition, and have seen extra adoption. Even so, whereas they’re simpler to purchase within the second market as a result of increased ranges of liquidity, they are typically much less risky than low market cap tokens.
These low-market tokens can be held for speculative causes primarily because of their upside potential, particularly in trending markets. This signifies that low-market tokens, whatever the issuing platform, enchantment to profit-seeking speculators, not because of underlying fundamentals.
R89Capital aligns with this preview to allege that VCs, trying to recoup their funding, are launching Ponzi tokens on general-purpose layer-2 platforms earlier than dumping them for ETH and ultimately exiting for USD.
In this case, Ponzi tokens, as claimed, are low-market cash that may be meme cash or different well-marketed initiatives. These tokens have increased upsides, are liquid sufficient, and might be offered for ETH in layer-2 decentralized exchanges or fashionable ramps like Binance or Coinbase.
The Ethereum Technical Debt: Scaling Remains A Big Issue
Still, R89Capital didn’t point out which layer-2 initiatives are “Ponzis” however stated the first motive ETH is capped is because of Ethereum’s technical debt.
Over the years, Ethereum builders have been launching new merchandise and scaling options, of which the transition from a proof-of-work to a proof-of-stake system and adoption of layer-2 options stand out. Even so, scaling stays a problem impacting person expertise, particularly when token costs start rallying.
It shouldn’t be uncommon for fuel charges on Ethereum to spike to double-digits in a bull market, discouraging deployment whereas catalyzing migration of some transactions to competing platforms like Solana or layer-2 scaling options like Base or Optimism.
Feature picture from Canva, chart from TradingView
