{"id":10392,"date":"2025-03-29T09:37:34","date_gmt":"2025-03-29T08:37:34","guid":{"rendered":"https:\/\/wsj-crypto.com\/?p=10392"},"modified":"2025-03-29T09:37:34","modified_gmt":"2025-03-29T08:37:34","slug":"the-impact-of-greedy-layer-2-solutions-on-ethereums-investment-viability","status":"publish","type":"post","link":"https:\/\/wsj-crypto.com\/index.php\/2025\/03\/29\/the-impact-of-greedy-layer-2-solutions-on-ethereums-investment-viability\/","title":{"rendered":"The Impact of Greedy Layer 2 Solutions on Ethereum’s Investment Viability"},"content":{"rendered":"

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The waning allure of Ether’s (ETH<\/a>) status as an investment is attributed to the value drain from the base network by layer-2 solutions and a deficiency in community resistance towards excessive token generation, according to a venture capitalist in the crypto space.<\/p>\n

\u201cThe primary reason for this is the avaricious Eth L2s extracting value from the L1 and the societal agreement that prodigious token creation was perfectly acceptable,\u201d remarked Nic Carter, a partner at Castle Island Ventures, in a post on X dated March 28.<\/p>\n

Ether \u201cperished by its own actions\u201d<\/h2>\n

\u201cETH has been overwhelmed by a flood of its own tokens. Perished by its own actions,\u201d Carter noted, in reply to Quinn Thompson, founder of Lekker Capital, who stated that Ether is \u201centirely dead\u201d as a viable investment.<\/p>\n

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Source: <\/em>Quinn Thompson<\/em><\/a><\/p>\n<\/figcaption><\/figure>\n

\u201cA network with a market cap of $225 billion that is experiencing downturns in transaction activity, user advancement, and fees\/revenues. There is no case for investment here. As a functional network? Indeed. As an asset for investment? Absolutely not,\u201d Thompson asserted in an X post dated March 28.<\/p>\n

The ETH\/BTC ratio \u2014 which indicates Ether\u2019s comparative strength against Bitcoin (BTC<\/a>) \u2014 stands at 0.02260, marking its lowest point in almost five years, per<\/a> TradingView metrics.\u00a0<\/p>\n

At the time of this report, Ether is valued at $1,894, a decrease of 5.34% over the past week, according<\/a> to CoinMarketCap metrics.<\/p>\n

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Ether has decreased by 17.94% over the last 30 days. Source: <\/em>CoinMarketCap<\/em><\/a><\/p>\n<\/figcaption><\/figure>\n

In parallel, Cointelegraph Magazine highlighted in September 2024 that revenue generated from fees<\/a> for Ethereum had \u201cplummeted\u201d by 99% in the preceding six months as \u201cextractive L2s\u201d claimed all users, transactions, and fee income without adding anything to the foundational layer.\u00a0<\/p>\n

Around that same period, Cinneamhain Ventures partner Adam Cochran suggested Based Rollups<\/a> could address the concern of Ethereum\u2019s layer-2 solutions diminishing liquidity and revenue from the blockchain’s core layer.<\/p>\n

Cochran stated that Based Rollups could \u201cdirectly influence the monetization of Ethereum by implementing a significant modification to incentive structures.\u201d<\/p>\n

Related: <\/strong><\/em>Ethereum futures premium hits 1+ year low \u2014 Is it time to buy the ETH bottom?<\/strong><\/em><\/a><\/p>\n

Notwithstanding the optimism observed at the conclusion of the previous year regarding Ether potentially attaining $10,000 in 2025<\/a> \u2014 particularly after hitting $4,000 in December, coinciding with Bitcoin reaching $100,000 for the first time \u2014 it has since experienced a steep drop along with the general downturn in the cryptocurrency market.<\/p>\n

Standard Chartered contributed to the pessimistic forecast in a client letter dated March 17<\/a>, lowering their end of 2025 ETH price prediction from $10,000 to $4,000, marking a 60% decline.\u00a0<\/p>\n

Nonetheless, numerous cryptocurrency traders, including pseudonymous operators Doctor Profit and Merlijn The Trader, remain \u201cincredibly optimistic\u201d and contend that Ether could<\/a> be the \u201cfinest opportunity in the market.\u201d<\/p>\n

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Source: <\/em>Merlijn The Trader<\/em><\/a><\/p>\n<\/figcaption><\/figure>\n

Magazine:<\/strong><\/em> Arbitrum co-founder skeptical of move to based and native rollups: Steven Goldfeder<\/strong><\/em><\/a><\/p>\n