Home / Ethereum (August 2026)

Ethereum is one of the largest investments I've made. While my investment has slightly outperformed the market, it has underperformed Bitcoin and my other crypto holdings. I've been on the fence about whether I should sell a portion of my ETH next cycle, and I'm writing this blog post primarly to help myself think through what to do.

I believe in Ethereum the technology. The thesis is as simple as a public digital ledger being cheaper, better, and faster than the 30 year old servers held together by duck tape that Wall Street runs on today. I also spent a portion of my career working in development finance abroad, and saw how much most Americans underestimate the longtail of unmet demand for financial services globally.

My two big investment questions are 1) whether Ethereum becomes the largest platform for decentralized finance, and 2) whether ETH, the asset, captures enough of that value to be a good longterm investment. One big mistake I made when I initially started investing in Ethereum was only thinking about Ethereum the technology, not ETH the asset.

In terms of #1, I believe Ethereum is best-positioned to win as the primary platform for decentralized finance. In crypto, Ethereum is viewed as the stodgy, safer platform, whereas there have been endless competitors that are sexier but riskier. For a while, it looked like these competitors might win because their tech was evolving more rapidly and transactions were faster and cheaper, and this was mostly due to the fact that they were run by more nimble VC-backed teams vs Ethereum which is more of a community project.

However, those competing platforms proved to indeed be riskier in practice (hacks, down time, etc.), and they developed much more of a mercenary trader user base opposed to Ethereum's more missionary crypto-punk user base. As a result, the new platforms were mostly used for pump and dumps, whereas most of the groundbreaking new financial primitives were built on Ethereum first. And when the big institutions, which control distribution like Coinbase, Robinhood, Blackrock, and so on decided what blockchain to build on, they picked to build on top of Ethereum.

What a lot of people didn't see coming was that these centralized companies preferred to build their own layer two blockchains on top of Ethereum's layer one blockchain. So you essentially have two opposing strategies working together, a centralized corporate chain built on top of a trusted and decentralized settlement chain vs the Ethereum competitors which are trying to be both in one. Now it seems obvious that, of course corporations didn't want to build on some startup VC-backed chain that could eventually compete with them. This is similar to technology companies building on top of Linux, an open source project.

Simply in terms of how the incentives are playing out, I believe this is how things are going to continue to go, and I feel relatively confident that Ethereum is well-positioned to be the dominant blockchain for large-scale, long-term-oriented decentralized finance. I also believe a lot of the competitors could still see real growth, but I think their riskier tech will be better suited to different use cases, like gambling, gaming, memecoins, etc. which I'm not particularly interested in investing in myself.

The bigger question is whether Ethereum winning as a technology means ETH the asset will go up. This is where I'm not sure. The main concern I have is that after 10 years there is still not a simple, widely-accepted reason why ETH should go up. If you ask 10 different people you'll get 10 slightly different answers. It requires a miracle to build a winning technology but it requires two miracles to also design an entirely new type of asset from scratch.

Why might it go up? One argument is that anyone who uses Ethereum, including all of these new layer two corporate chains, have to pay transaction fees to use Ethereum. Right now, the fees are very low. If a layer two makes $1M in a day, they might pay a few thousand dollars to Ethereum. Many argue this is a terrible margin, but another way to look at it is that it's strategic to keep fees low while you acquire early customers, and if your platform has enough lock-in, you can always raise them later.

Another argument is that ETH will become the reserve asset for people transacting on Ethereum. Similar to how people need USD to pay taxes in America, they need ETH to pay transaction fees, trade tokens, etc. The theory goes that eventually people will view Ethereum as a store of value similar to how they view Bitcoin as a store of value.

My issue with this thesis is that Bitcoin is a better store of value, because Bitcoin's main job is to be a store of value, whereas Ethereum is also trying to be a technology that people build on, and ETH the token is used to pay for using that technology. If Ethereum is stodgy, Bitcoin is comatose, and you want digital gold to be comatose. If you hold a store of value because you worry humans are going to destroy the traditional financial system, you much prefer to hold Bitcoin, which never changes, than Ethereum which occasionally changes in a chaotic grassroots way.

Plus, it's impossible to compete with Bitcoin's story. It was first, no one knows the creator, the creator never sold their tokens, it was the fairest launch, and so on. And there's no reason you can't hold Bitcoin on Ethereum. Sure, it introduces more risk, but it's trivial to convert your Bitcoin to be used on Ethereum in the event you need to trade it or use it as collateral. This is like buying gold through a bank instead of storing physical gold in your basement. I think it's likely that Ethereum will act more like a medium of exchange than a store of value, and mediums of exchange aren't usually good investments.

I guess what I'm trying to get at is that it feels to me like either ETH has to be primarly a token that derives value from people paying to use Ethereum or from being a store of value, but it can't do both of those things best because there are some tradeoffs between them. And right now, the Ethereum community is not sure which it will be.
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My personal bet for why ETH could accrue value is that the Ethereum community holds a lot of ETH, and will thus be incentivized to make governance changes that cause ETH to increase in value. This is a meta argument, because the community could make changes to make ETH accrue more value via transaction fees or they could make changes to ETH to make it a better store of value. Either way, this would make ETH a bit like owning Bay Area real estate. Bay Area real estate doesn't directly derive value from technology companies but it does indirectly accrue value as a result of being a scarce resource where people want to be. Moreso, it's a thing a lot of powerful people in a popular place owned, who then lobbied for laws to protect its value.

I can see ETH performing like a digital version of real estate in the Ethereum univers, but unfortunately, real estate wasn't the best way to capture the value created by technology companies in the Bay Area. It has certainly not been a bad investment, especially on a risk-adjusted basis, but if you primarily wanted to invest in the thesis of software eating the world, it would have been much better to be an early investor in an index of tech companies.

Writing this out was incredibly helpful. It made me realize that I want to slowly sell up to half my ETH the next few times I feel euphoric (which I think is coming, since the decentralized finance narrative has still yet to enter the mainstream and ETH is the simplest way to get exposure) and I'm going to use the proceeds to invest in a diversified basket of promising applications built on top of Ethereum (or which follow a similar thesis, like Hyperliquid), but which have a clearer mechanism for value capture.

This strategy will allow me to keep this tranche of capital invested in Ethereum the technology and decentralized finance broadly, which I believe in, but will reduce my exposure to ETH the asset, which I'm confused about, but I still believe can find a way to capture a fair portion of the value it will help to create in the world. Not financial advice and please do your own research.