David Hoffman, a prominent figure in the Ethereum community and founder of the information platform Bankless, has shared his reasons for selling his ETH holdings and weighed in on the growing debate over whether “ETH is still money.” While Hoffman does not see the thesis as entirely invalid, he stressed that it can no longer be defended as strongly as before.
Token or infrastructure? Rethinking ETH’s role
Hoffman stated that while he maintains a long-term optimistic outlook on the Ethereum network itself, his views regarding the ETH token have shifted. He contends that although Ethereum has succeeded as a public infrastructure project, value appreciation has not been fully captured by the token. As a result, he now adopts what he calls a “structurally neutral” stance.
Ethereum has moved away from a strategy that maximizes economic benefit in order to prioritize high utility, decentralization, and ecosystem growth. Unlike Bitcoin’s singular focus on its core product, Ethereum has aimed to expand through applications, rollup systems, stablecoins, and overall network reach. This broader value distribution has, in Hoffman’s view, prevented the ETH token from achieving the price surge many expected.
The path chosen by Ethereum has resulted in significant wins for the network, but failed to meet expectations for rapid financial gains in ETH. The infrastructure is robust, but the token has lagged behind.
Layer-1 revenue and the advantage of rival blockchains
David Hoffman believes that revenue models play a critical role for Layer-1 blockchains. Transaction fees, network activity, and token burn rates all have a direct impact on token price performance. He points to cases like Solana, BNB, TRX, and NEAR, where strong revenue growth has correlated with sharp price increases in their respective tokens.
Glossary: Layer-1 (L1) refers to a blockchain’s base protocol and main infrastructure, where smart contracts and transactions are processed directly. Layer-2 (L2) describes networks built on top of the main chain to increase speed and scalability. L2s carry out transactions faster and cheaper, while relying on L1 for security.
| Network/Token | Revenue Model | 2024 Performance |
|---|---|---|
| Ethereum | Mainly transaction fees plus ETH burning; shift to L2 | L2 effect on revenue, weak price |
| Solana | Higher L1 fee income, centralized apps | Noticeable price surge |
| BNB | Transaction fees and coin burning | Strong price performance |
Today, the Ethereum community largely focuses on a rollup-based scalability model. In this approach, a significant portion of network revenue now accumulates within Layer-2 structures. While this has led to cheaper transaction fees, the rate at which ETH is burned has slowed compared to previous bull markets, resulting in less upward price pressure at the base layer.
“Internet money” status and the rise of stablecoins
Hoffman further argued that ETH has lost its role as the central digital currency, largely due to the explosive growth of stablecoins. At present, the Ethereum network hosts over $160 billion in stablecoins, yet this activity strengthens the US dollar on chain, rather than driving direct demand for ETH.
In other words, while Ethereum plays a pivotal role as financial infrastructure, most assets circulating on the network are not directly tied to ETH. Dollar-based stablecoins now dominate as the main units for settlement and exchange.
Debating ETH’s core use cases
Despite Hoffman’s criticisms, ETH continues to serve as essential collateral in decentralized finance (DeFi) applications, for staking to earn rewards, and as the base token for network transaction fees. Some industry experts argue that the slower appreciation of ETH’s value reflects the token’s maturation as infrastructure, shifting from a boom phase toward widespread usage.
A key insight from the discussion is that, as Ethereum prioritizes ecosystem development and long-term growth, it has left ETH’s financial progress to unfold over time. Thus far, the network itself has outpaced its token in terms of overall success.
