Ether (ETH), the second-largest cryptocurrency by market capitalization, is dealing with growing criticism from some traders and analysts who query its long-term funding attraction.
Crypto enterprise capitalist Nic Carter of Fort Island Ventures pointed to 2 key points undermining Ether’s worth: the rise of layer-2 (L2) scaling networks and unchecked token issuance.
In a March 28 publish on X, Carter argued that “grasping Eth L2s” are siphoning off worth from Ethereum’s base layer whereas giving little again.
Carter Blames Ethereum’s Token Bloat for Decline
He additionally criticized the Ethereum group’s acceptance of extreme token creation, claiming that “ETH was buried in an avalanche of its personal tokens. Died by its personal hand.”
His feedback adopted a equally stark evaluation from Quinn Thompson, founding father of Lekker Capital, who declared that Ethereum is “fully useless” as an funding.
Thompson cited declining transaction exercise, lowered consumer development, and falling community revenues as indicators that ETH not provides a powerful funding case, regardless of its utility as a blockchain platform.
The #1 reason for that is grasping eth L2s siphoning worth from the L1 and the social consensus that extra token creation was A-OK. Eth was buried in an avalanche of its personal tokens. Died by its personal hand.
— nic carter (@nic__carter) March 28, 2025
Latest market information seems to assist their issues. Ether is at the moment buying and selling round $1,894, down over 5% up to now week, in keeping with CoinMarketCap.
Its ETH/BTC ratio has additionally fallen to 0.02260, marking its lowest stage in almost 5 years, based mostly on TradingView information.
Again in September 2024, Carter warned that Ethereum’s charge income had plummeted by 99% over six months as L2s captured consumer exercise and income with out contributing to Ethereum’s base layer.
Some, like Cinneamhain Ventures accomplice Adam Cochran, have proposed options reminiscent of Primarily based Rollups, which goal to realign incentives to assist Ethereum’s core protocol.
As soon as considered as a possible $10,000 asset by 2025, Ether’s prospects have dimmed.
Customary Chartered just lately slashed its forecast, reducing the 2025 goal to $4,000.
In keeping with Geoffrey Kendrick, the financial institution’s world head of digital belongings analysis, platforms like Base are actually producing substantial earnings from inside the Ethereum ecosystem, contributing to the revised outlook.
Ethereum Burn Fee Hits All-Time Low
Ethereum community exercise has hit a brand new low, with simply 53.07 ETH (price roughly $106,000) burned on March 23 , marking the bottom every day burn because the introduction of its fee-burning mechanism beneath EIP-1559.
The EIP-1559 improve, carried out in 2021, aimed to simplify transaction charges and cut back ETH provide by burning the bottom charge in every transaction.
In periods of excessive utilization, the EIP-1559 mechanism could make Ethereum deflationary. Nonetheless, present community situations recommend in any other case.
Primarily based on current information from Ultrasound.cash, Ethereum’s provide is now anticipated to develop by 0.76% yearly.
The low burn price aligns with falling on-chain exercise.
Metrics reminiscent of energetic addresses, new handle creation, transaction depend, and every day buying and selling quantity have all seen important drops in current weeks.
These developments increase issues about slowing consumer engagement on Ethereum, particularly amid rising competitors from Layer 2 networks and different blockchains providing decrease charges and sooner transactions.
The publish VC Blames Layer-2s and Token Inflation for Ether’s Waning Funding Enchantment appeared first on Cryptonews.