The second-largest cryptocurrency by market capitalization, Ether (ETH), is encountering significant scrutiny from various investors and analysts regarding its future investment potential.
Nic Carter, a crypto venture capitalist at Castle Island Ventures, highlighted two principal challenges that are detracting from Ether’s value: the emergence of layer-2 (L2) scaling networks and rampant token issuance.
In a post on X dated March 28, Carter claimed that “greedy Eth L2s” are extracting value from Ethereum’s foundational layer with minimal returns.
Criticism of Ethereum’s Token Overproduction
Additionally, Carter criticized the Ethereum community’s tolerance for excessive token generation, asserting that “ETH was buried in an avalanche of its own tokens. Died by its own hand.”
His remarks echoed a bleak outlook from Quinn Thompson, founder of Lekker Capital, who stated that Ethereum is “completely dead” as a viable investment option.
Thompson pointed to declining transaction volumes, stagnant user growth, and diminishing network revenues as indicators that ETH lacks a compelling investment proposition, despite its utility as a blockchain framework.
The #1 cause of this is greedy eth L2s siphoning value from the L1 and the social consensus that excess token creation was A-OK. Eth was buried in an avalanche of its own tokens. Died by its own hand.
— nic carter (@nic__carter) March 28, 2025
Recent market trends appear to back their assessments, with Ether trading at approximately $1,894, reflecting a more than 5% decrease over the past week, according to CoinMarketCap.
Furthermore, the ETH/BTC ratio has dropped to 0.02260, a level not seen in nearly five years, based on data from TradingView.
In September 2024, Carter cautioned that Ethereum’s fee revenues had plummeted by 99% over a six-month span as L2s claimed user activity and earnings without benefitting Ethereum’s primary layer.
Meanwhile, some experts like Adam Cochran of Cinneamhain Ventures have suggested modifications like Based Rollups to restructure incentives that support Ethereum’s core protocol.
Once predicted to reach a value of $10,000 by 2025, Ether’s outlook has dimmed significantly.
Standard Chartered has recently adjusted its forecast, lowering the 2025 target from $10,000 to $4,000.
Geoffrey Kendrick, the bank’s global head of digital assets research, indicated that platforms such as Base are now generating considerable profits within the Ethereum ecosystem, influencing the updated projections.
Record Low for Ethereum Burn Rate
On March 23, Ethereum’s network activity reached a new low with only 53.07 ETH (approximately $106,000) burned, marking the least daily burn since the launch of its fee-burning mechanism under EIP-1559.
Implemented in 2021, the EIP-1559 upgrade aimed to simplify transaction fees and lower ETH supply by incinerating the base fee for each transaction.
While the EIP-1559 mechanism can make Ethereum deflationary during high-usage periods, recent network conditions suggest otherwise.
Recent analyses from Ultrasound.money predict that Ethereum’s supply is now likely to grow by 0.76% annually.
This low burn rate corresponds with a decline in on-chain activity.
Metrics including active addresses, new address creation, transaction volume, and daily trading figures have all experienced notable decreases in recent weeks.
These developments raise alarms about dwindling user engagement on Ethereum, particularly in the face of rising competition from Layer 2 networks and alternative blockchains offering lower fees and expedited transactions.
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