Bitcoin proponent Fred Krueger recently expressed concerns about the underlying trends of Ethereum (ETH) and potential regulatory hurdles. Krueger’s remarks, shared in X’s post, highlighted notable statistics regarding Ethereum’s network activity and transaction utility.
Ethereum’s Declining Utility Causes Alarm Alarm
Krueger’s criticism highlighted Ethereum’s soaring price, particularly the two-year high it recently achieved, and the decline in network usage. Despite ETH reaching $3,000, Krueger noted a significant decline in daily active users (DAU), from 120,000 in 2021 to 66,000 last year.
Bitcoin Maxi also highlighted the decline in user activity on Uniswap V3, the blockchain’s ‘best app’, Ethereum’s flagship decentralized exchange protocol, as a notable concern.
Kruger noted:
The best app, Uniswap V3, has just 16,000 DAU. I remember this number being over 60K in 2020. It is certainly true that ETH as a chain is no longer used directly.
Kruger also made a sobering comparison between the current state of Ethereum and ‘meme coins’, noting their similarities to assets such as Shiba Inu (SHIB).
Despite Ethereum’s price-performance ratio, Krueger emphasized that he has noticed an erosion of its utility, especially when compared to alternative blockchain networks such as Solana, Avalanche, and Near.
Bitcoin Maxi went on to note:
Of course, this doesn’t stop investors from bidding up to the $361 billion market cap. It has actually become a kind of meme coin similar to the Shiba Inu. It’s not particularly cheap ($1.50 per transaction) or fast. If you’re only interested in reward points for games or casino-style DeFi apps (Solana, Avalanche, Near, etc.), you’ll be happy.
Regulatory uncertainty and community response
Krueger’s criticism extends beyond Ethereum’s utility to its regulatory outlook. He expressed doubts about the possibility of approving a spot Ethereum exchange-traded fund (ETF), citing his concerns about regulatory scrutiny.
Lastly, I don’t think Gensler will allow an ETH ETF. If you believe in the Tooth Fairy, have fun. I don’t think Gary wants to make his second ETF massively pre-mined. He set a very bad precedent.
“Avoid ETH at all costs,” Bitcoin Maxi concluded. Despite Krueger’s assessment, the ETH community’s faith in ETH remains unwavering. Kruger’s post was met with many posts refuting Kruger’s remarks.
An X user named “noka” who commented on Krueger’s post pointed out that Ethereum has a roadmap that focuses on scalability through a modular and rollup-centric approach. They argue that considering only the daily active users (DAU) of the mainnet is just as misleading as assessing the value of Bitcoin based solely on mainnet usage.
They agreed that portraying Ethereum as sound money “was a farce,” but said, “But you (Fred Krueger) have discredited yourself here.”
Even L2s like Arbitrum have seen declines over the past 12 months.
Not all is well in ETH-land. pic.twitter.com/oOIPwyCrj2
— Fred Krueger (@dotkrueger) February 21, 2024
Another user, “John Doe,” claims that there has been a significant decline in total value locked (TVL) across the DeFi space, indicating a trend among decentralized finance (DeFi) users to reduce their risk exposure before potentially reinvesting in the future. .
Sir, you are well respected in the ETF space, but you probably don’t know how Defi Cycles work. Check out Defillama and see the TVL chart for today’s last bullish v/s. There was a sharp decline across the space. It’s about taking risks, before we fall back into the Ape
— John Doe (@h0dlboi) February 21, 2024
Featured image by Unsplash, chart by TradingView