Crypto analyst: “Ethereum is dying”

• “AJC,” research manager at crypto analysis firm Messari, sparked a heated debate on X over the weekend after declaring that Ethereum is “dying.”
• In his post, he stated that “Ethereum's fundamentals are collapsing,” as network fees in August totaled only $39.2 million, a drop of over 40 percent year-on-year and about 20 percent month-on-month.
• ETH bulls pointed to rising metrics such as app revenue, the number of active addresses and transactions, and improved Layer 2 scaling.
• Henrik Andersson, Chief Investment Officer of investment firm Apollo Crypto, also believes Ethereum is unlikely to be doomed. He argues that it is still “a vibrant ecosystem, with stablecoin supply, throughput, and active addresses at or near all-time highs.”
• “AJC” counters: The app revenue is driven solely by Circle and Tether, the other KPIs do not directly impact the value of ETH and are therefore irrelevant in this context.
• The crypto expert defended his use of revenue to value the Layer 1 blockchain, saying that it is the biggest driver of ETH demand and that it is “tends towards zero.”
• Its opponents, however, argue that Ethereum, like Bitcoin, should be valued as a commodity and not as a tech stock – and thus not based on revenue.
• The discussion surrounding the “monetary premium” of Layer 1 tokens such as ETH and SOL is an ongoing point of contention in the crypto community.
• The narrative in favor of high valuation is currently being undermined by corporate chains from Google, Stripe, and others. Circles Arc, for example, will use USDC instead of ETH for transaction fees.
• A large part of Ethereum's decline in revenue can be attributed to the Dencun upgrade in March 2024, which massively reduced transaction fees for Layer 2 networks.

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@AvgJoesCrypto | X