Thank you for this piece. There’s so much FOMO around Ethereum lately among higher networth investors and traditional finance people.
Shallow house of cards narratives like “Ethereum is better for the environment because POS is better than POW” are being pushed.
I’ve heard a couple of times that “Ethereum has version 2.0 coming out while Bitcoin is still stuck not upgrading as much.”
How do smart peopel fall for these narratives?
I’ve been triggered quite a bit by DeFi as well, people are talking about DeFi as if it’s a fundamental value driver for ETH as money or an asset!
Your piece makes me feel at ease with my thoughts on this as well. I have been looking at ETH being used as money and it’s nowhere close to Bitcoin!
Bitcoin is being used as money, Ethereum is being used as FOMO fuel!
Your smart contract fuel analysis makes perfect sense.
The higher ETH price goes, the harder it will be to use ETH as money, or even use ETH to execute smart contracts & use DeFi apps.
Only about 2.5% of ETH is currently being used as collateral (they like to say “locked in DeFi” but it’s not locked).
Significant majority of the DeFi volume is fiat-backed stablecoins like USDT. ETH bulls like to say that this is a good thing.
This is the network value thesis that got disproven in the 2018/2019 token rektoning bear market.
If the value of tokens transferred on a blockchain meant value accrual to the blockchain’s token, then the OMNI token would be worth Billions by now. USDT transferred hundreds of billions of dollars worth of value riding on the OMNI layer, while the OMNI token just kept going down in value.
So why would volume mean fundamental value accrual to ETH when it didn’t mean fundamental value accrual to BTC or OMNI?
It doesn’t. It’s just empty FOMO.
I’m not saying that ETH *can’t* be money … because money is what we say it is, it’s just that ETH *is not* being used as money!
Like you clearly lay out in the article, it’s got value as a smart contract fuel, and Ethereum can succeed as a network – but the smart contract fuel ETH needs to stay cheap for that to work.
I think ETH the token is way overvalued at $250.
