Original article by Bankless Co-founder David Hoffman
Compiled by / Odaily Planet Daily Qin Xiaofeng (@QinXiaofeng 888 )
Last week, David Hoffman, one of Ethereum's staunchest believers and a co-founder of Bankless, proactively published an article stating that he had "sold his last ETH," sparking intense debate within the Ethereum community (Recommended reading“Bankless Founder Sells All ETH, Collective Disillusionment in Ethereum Faith”).
On May 27th, David Hoffman posted a lengthy explanation on X detailing why he sold his ETH. He stated that selling ETH was not because he is bearish on ETH, but because he believes the narrative of 'ETH is Money' has largely played out. He hopes to reallocate his capital to other opportunities he sees in the market. At the same time, he expressed that he remains extremely optimistic about the Ethereum network and its entire ecosystem.
Below is the original text by David Hoffman, compiled by Odaily Planet Daily.
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Money is a coordination game, and coordination is never easy.
The Ethereum project itself is a collection of coordination problems stacked layer upon layer across multiple levels, and the claim "ETH is Money" requires success at all these layers, and success with confidence.
ETH can only become money if, and only if, every layer of Ethereum's techno-social stack performs better than its competitors.
Given the ambitious scope of the Ethereum project, achieving its maximally successful version was always a monumental challenge. Despite shortcomings, the Ethereum project has performed admirably, and its current market capitalization is well-deserved.
Nonetheless, the window of opportunity for the market to re-evaluate Ethereum appears to be closing.
To some extent, ETH *is* money. But it is not the maximally successful version we collectively sought from the beginning.
Ethereum is a Coordination Game
A Turing-complete blockchain is such a powerful concept that Ethereum's maximum potential is to become the entire crypto world—all-encompassing and omnipresent. The only obstacle preventing Ethereum from achieving 100% absolute dominance is coordination.
Ethereum's leadership needs to be sufficiently decentralized; its governance requires "rough consensus" to create credible neutrality, thereby maximizing Ethereum's adoption at the highest level.
Simultaneously, Ethereum's leadership also needs to respond swiftly to market dynamics and operate like a startup facing an existential threat of being obsolete.
Meanwhile, Ethereum's Layer 2s (L2s) need to be able to act independently from the base layer, making their own market choices, yet they need to be economically tethered to, and constrained by, the broader Ethereum economy and the Ethereum brand.
Furthermore, Ethereum's roadmap needs to be executed in a specific order to maximize and maintain its development momentum and market dominance, thereby effectively quelling competition and maximizing confidence in Ethereum and ETH. Those mission-critical technologies need to be researched and engineered fast enough so that Ethereum can both prove its utility to the outside world and demonstrate its ability to stay ahead of competitors.
In summary, the core of the "ETH is Money" thesis is creating a revolutionary and powerful financial asset that, by virtue of its unique properties as the premier global store of value, attracts those who were previously indifferent.
Ethereum's brand and ETH's strength must be so powerful that traditional investors (baby boomers) not only feel safe but feel compelled to include ETH as a significant part of their retirement portfolios because the Ethereum project is so dominant.
Thus, to achieve the goal of "ETH is Money," everything upstream of ETH must operate with highly effective synergy.
Ethereum is not Bitcoin. It chose the hard path.
Bitcoin chose to strip everything off its blockchain to elevate BTC. Ethereum chose to add everything to its blockchain to maximize the utility of its block space. Only by doing this optimally and before competitors can ETH attain its status as a global currency.
We made some progress, and Ethereum has earned the share of its maximum potential market cap it deserves. But I fear the window for playing this game has closed.
The Environment Perhaps Never Allowed It to Succeed
Looking back over the past few years, I see a host of environmental challenges Ethereum would have needed to overcome.
(1) L1 Assets are Inextricably Linked to Revenue
No matter how you view the difficulty of evaluating smart contract chains based on fees and revenue... fees and revenue are clearly the way smart contract L1 assets enhance their pricing power.
By 2026, we have ample data showing that all these factors are closely correlated: L1 activity, L1 fees, and the price appreciation of the L1 native asset.
In 2021, ETH's dominance occurred when its L1 revenue market share was highest.
In 2024, SOL's dominance occurred when its L1 revenue market share was uniquely growing relative to the rest of the industry.
In 2026, NEAR is experiencing a price revaluation concurrently with a fundamental increase in its L1 revenue and NEAR token burn.
You can also look at assets like BNB and TRX, which are perhaps the highest cumulative revenue projects in history. Their price charts look like what I would have expected ETH's to look like—if ETH could have maintained its higher market share in L1 fees longer than it did in 2022.
(2) The Strong Version of the Crypto Vision Failed to Materialize
0xMakesy made an excellent post on Twitter:
"The failure of Fantasy Top, FriendTech, and consumer crypto apps to cross the chasm absolutely kills me. The most ambitious form of crypto (ushering in a new era of user-owned software and infrastructure) has failed.
We optimistically tried to merge the roles of investors (people who allocate capital to production expecting more in return) and consumers (people willing to pay above operational cost for a product), and found we satisfied neither side's needs.
Where the strong version of crypto failed, the weak version of crypto (commoditized ledger/database technology for financial transactions) has succeeded beyond anyone's wildest expectations. The result is that crypto has been relegated to an adjunct of traditional finance—this is both more impactful than any normie expected, while simultaneously structurally disappointing for crypto OGs. As commoditized ledger/database tech, reducing global transaction costs reduces leakage from global GDP, but this is a marginal improvement on the status quo, and much of its value flows to existing intermediaries, lowering their overhead and increasing their margins.
Crypto was supposed to be the most egalitarian thing ever. Its ambition was insanely high. Had it succeeded, it could have genuinely changed the fabric of society.
But it didn't. Game over. We didn't find the right primitives, and more importantly, the right culture to realize the most ambitious version of crypto. Time to question everything again."
Ethereum represents the strong version of crypto—crypto for crypto's sake, self-sustaining, self-perpetuating. DeFi, NFTs, DAOs, etc. We are rebels building an alternative financial system by the people, for the people, injecting imagination into money.
There also exists a weak version of crypto: efficient ledger infrastructure for financial institution backends. The weak version was supposed to fuel the strong version, turning demand for an internet ledger into a torrent flowing into crypto, into Ethereum, and finally aggregating into ETH.
Perhaps, if Ethereum had executed better, faster, stronger, if crypto hadn't attracted so many grifters and looters, the industry would have earned the influence and respect I always thought it deserved. But the only period the public has held a positive view of crypto was from late 2020 to early 2022.
Outside that brief window, crypto's reputation is scams, fraud, get-rich-quick schemes, and uselessness to the average person.
(3) ETH as Money Relied on the Strong Version of Crypto
The times when ETH performed well as internet money coincided precisely when everyone was forced online. The world discovered crypto for the first time, and for that brief window, it was cool.
Money is a coordination game; a currency's Schelling point is held together by belief. In 2021, more people believed in ETH: it was cool, disruptive, and represented populism. Bitcoin possessed the same qualities and has retained them better post-2021 than ETH has.
This reality points to an uncomfortable possibility: the strong version of crypto may have never reached a stable equilibrium. COVID was an incredibly distorted monetary era, and ETH as money may have only been sustained because of that distortion. If so, then ETH becoming money always relied on the strong version of crypto performing better than it actually did.
(4) Ethereum's Utility Also Helps Other Currencies
Is Bitcoin money? Is the US dollar money? Is gold money? Irrelevant! Anything perceived as money will be tokenized on Ethereum.
In 2020, Nic Carter proposed on the Bankless podcast that stablecoins might be parasitic to ETH as Ethereum's native unit. At the time, the stablecoin supply on Ethereum was $3B. Today, that number is $163B, a 54x increase.
The utility Ethereum provides is helping anything that *is* money expand its monetary network. This is why the US is so bullish on crypto for stablecoin applications. Ethereum is helping America maintain dollar hegemony, and leveraging this fact is explicit government policy.
The positive spillover effect of this utility for $ETH as money is clearly not as strong as what the US government sees from Ethereum's stablecoin ecosystem.
Ethereum is a Giver, Not a Taker
At its core, Ethereum is a giver, not a taker.
- It provides the world's most secure block space to L2s at cost.
- It tokenizes the world's assets at cost.
- It secures billions of dollars in DeFi at cost.
Ethereum does not charge any markup for anything it does. This is the nature of open-source software, and this is Ethereum's strength. Ethereum offers its full suite of incredibly valuable services to the world at cost.
Ethereum is virtuous. Ethereum is good. Ethereum is the world's most successful non-profit.
Of course, a massive amount of application usage will occur on Ethereum. It is, and will continue to be, one of the most impactful open-source software projects ever built by humanity, and being a "non-profit protocol" is a core characteristic.
This is why the path for ETH to become money relied on a very high and sustained market dominance.
Ultimately, as block space commoditizes, fees will trend towards zero. As long as it's Ethereum commoditizing and not a competitor, then Ethereum can maintain its margin and dominance.
Ultimately, the Fat Protocol Theory gives way to the Fat Application Theory, and applications consume the remaining profit margins. As long as they are applications on Ethereum and not on a competitor, this is fine for ETH.
"ETH is Money" and "Ethereum is a giver, not a taker" are difficult to reconcile. Ethereum's architecture is intentionally designed to return all value to its ecosystem, charging only the minimum necessary to sustain the network.
Architecturally, ETH is not prioritized within Ethereum, and this is a feature, not a bug. ETH can only become money if Ethereum wins a war it is architecturally refusing to fight.
This vision could have been realized if Ethereum could have maintained an incredibly dominant market position.
The "ETH is Money" Thesis Makes Extremely High Demands of Ethereum
"ETH is Money" demands perfection across the board from Ethereum. Its margin for error was smaller than I originally thought. Ethereum's momentum in 2021 and 2022 made ETH becoming money seem like the default path.
In hindsight, Solana's rise in 2021, accompanied by rising anti-Ethereum sentiment, was the first major sign that this coordination game for Ethereum and ETH was not proceeding as planned.
The Ethereum Foundation (EF) needed to decentralize and allow alternative power structures to emerge. But it also needed to respond to market forces with the urgency and drive of a startup facing an existential threat.
L2 teams needed the freedom for autonomous decision-making but also needed to operate under the larger brand umbrella of Ethereum and ETH. The technical synchronization integration between Ethereum and its L2s needed to be executed more swiftly.
The value of smart contract chains is determined by fees, and to escape this paradigm, Ethereum needed to rewrite the rules through the sheer power of its success.
However, the "ETH is Money" thesis has not failed.
It just hasn't realized its full potential.
Ethereum did the noble thing, choosing for its future the hardest, most ambitious, most ideologically pure path. It won some incredible victories and also failed to pass some challenges. It has earned the market capitalization it deserves.
I am extremely bullish on the Ethereum network and its ecosystem: Ethereum is architecturally designed to maximize the success of its applications, L2s, and ecosystem. The Fat Application Theory means Ethereum's apps will capture all the fees, and the Rollup-centric roadmap means L2s will take 97% of the profit margin.
As for the ETH asset itself, I find it increasingly difficult to see a structural case for an upward or downward revaluation of ETH.
The reason I sold my ETH is not that I am bearish on ETH per se, but that I believe the "ETH is Money" thesis has played out, and I want to reallocate my capital today to other opportunities I see in the market.
