
In a publish on X this previous weekend, Quinn Thompson, Chief Investment Officer (CIO) of Lekker Capital, declared that Ethereum (ETH) is “completely dead” as an funding. His feedback sparked a flurry of responses from outstanding figures within the crypto trade, together with Nic Carter of Castle Island Ventures, Columbia Business School professor Omid Malekan, and VB Capital’s Scott Johnsson.
Thompson, who oversees investments at Lekker Capital, set off the debate with a publish stating: “Make no mistake, ETH as an investment is completely dead. A $225 billion market cap network that is seeing declines in transaction activity, user growth and fees/revenues. There is no investment case here. As a network with utility? Yes. As an investment? Absolutely not.”
He additionally shared a set of metrics to underscore Ethereum’s current stagnation, together with knowledge on lively addresses, transaction counts, and new tackle creation.

Is Ethereum ‘Dead’ As An Investment?
The provocative assertion attracted rapid responses from outstanding voices throughout the crypto ecosystem, triggering a debate over Ethereum’s financial and funding thesis, and particularly, the affect of Layer 2 (L2) scaling options on Ethereum’s native token economics.
Nic Carter, accomplice at Castle Island Ventures and co-founder of blockchain analytics agency Coinmetrics, swiftly responded, pinpointing Ethereum’s valuation dilemma squarely on the toes of its Layer 2 scaling implementations:“The #1 cause of this is greedy eth L2s siphoning value from the L1 and the social consensus that excess token creation was A-OK. Eth was buried in an avalanche of its own tokens. Died by its own hand.”
Thompson bolstered Carter’s criticism by suggesting that Ethereum’s neighborhood consensus had inadvertently favored token proliferation as a wealth-generation mechanism, finally undermining ETH’s funding narrative: “The social consensus among .eth’s in favor of excess tokens was because the creation of endless L2s, staking, restaking, DA, etc etc all enriched their pockets on the way up but no one wants to face the music now that the market is saying that was a mistake.”
However, this viewpoint was contested by Omid Malekan, professor at Columbia Business School and specialist in cryptocurrency and blockchain know-how since 2019. Malekan underscored Layer 2s’ essential position in blockchain scalability and argued that any value-extraction by these secondary layers was not inherently detrimental to Ethereum’s foundational token economics: “L2s are the only viable way to scale any blockchain. Whether their tokens capture value or not is a separate question. But it can’t be that L2s ‘siphoned value from ETH’ yet didn’t capture value themselves. Security is not free.”
Malekan additional challenged Thompson’s declare by questioning whether or not Ethereum may realistically turn out to be the primary instance in historical past of a extensively adopted technological community whose utility did not generate any significant monetary return: “Is Ethereum going to be the first network ‘with utility’ in modern history where the network effects aren’t monetized? Can you provide any other examples of this happening?”
In response, Thompson clarified his argument, highlighting that monetization is certainly occurring inside the Ethereum ecosystem, however not sufficiently accruing to ETH itself to validate the cryptocurrency’s present market capitalization. He illustrated this level with an analogy: “There’s tons of network effects being monetized all over the place, just not enough to ETH to justify its current valuation. Do all the network effects of the oil network and usage of oil accrue to oil?”
However, the oil analogy drew skepticism from Scott Johnsson, General Partner at VB Capital, who critiqued Thompson’s comparability on account of Ethereum’s distinctive tokenomics, notably its deflationary token burning mechanics influenced instantly by community utilization:
“I don’t disagree with your directional call, but I think this analogy falls flat. ETH ‘production’ is inversely correlated with usage, which is certainly not the case with oil. So as oil price increases, there is a demand response and a supply response. With ETH, it’s limited to the demand response. If ETH consumption looks like barrel consumption, then the price of ETH is far more likely to accrue value.”
Yet Thompson continued to disagree with Johnsson’s evaluation, arguing that historic patterns don’t essentially assist the declare of inverse correlation between Ethereum manufacturing and utilization: “I disagree. We’ve never seen a sustained period of time where ‘ETH production is inversely correlated with usage.’ Obviously, the ‘production’ mechanics differ from oil, but similarly high ETH price is prohibitive to demand, hence L2s and cheaper alternative L1s.”
Acknowledging a doable misunderstanding, Johnsson clarified he was not predicting future Ethereum utilization eventualities, emphasizing as an alternative the theoretically inverse relationship between token burn and transaction quantity beneath the present Ethereum community design: “I think we’re talking past each other a bit. I don’t think it’s arguable that if ETH usage increases that it leads to more burn and less inflation (production). I’m specifically not making future predictions on that usage. In any event, your ultimate point is fine imo because the demand side is so sensitive to really any cost.”
At press time, ETH traded at $1,793.

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