Ethereum mission capitalists (VCs) are “no longer silly” and know that making an investment on this planet’s greatest sensible contract platform gained’t consequence within the “multiples” they need, in line with a crypto person. Going via the care for R89Capital, claims that VCs are actually taking a look at Ethereum layer-2 property as cars to go out the marketplace, dumping “Ponzi tokens.”

Ethereum VCs Exiting ETH For “Ponzi” Tokens?

The person opines that the main reason ETH costs won’t surge in multiples like rising tokens, together with meme cash like PEPE, for example, is as a result of the somewhat massive marketplace cap. 

In step with trackers on October 31, ETH has a marketplace cap of over $215.8 billion and is the second one greatest after Bitcoin (BTC). Usually, cash with upper marketplace caps are tougher to govern and typically have discovered extra institutional adoption than rising tokens. 

It’s because initiatives with upper marketplace cap are extra liquid, have extra title reputation, and feature noticed extra adoption. Even so, whilst they’re more uncomplicated to shop for in the second one marketplace because of the upper ranges of liquidity, they have a tendency to be much less risky than low marketplace cap tokens. 

Those low-market tokens can be held for speculative causes essentially because of their upside doable, particularly in trending markets. Because of this low-market tokens, without reference to the issuing platform, enchantment to profit-seeking speculators, no longer because of underlying basics.

R89Capital aligns with this preview to allege that VCs, taking a look to recoup their funding, are launching Ponzi tokens on general-purpose layer-2 platforms earlier than dumping them for ETH and in the end exiting for USD. 

On this case, Ponzi tokens, as claimed, are low-market cash that may be meme cash or different well-marketed initiatives. Those tokens have upper upsides, are liquid sufficient, and will also be offered for ETH in layer-2 decentralized exchanges or fashionable ramps like Binance or Coinbase. 

The Ethereum Technical Debt: Scaling Stays A Large Factor

Nonetheless, R89Capital didn’t point out which layer-2 initiatives are “Ponzis” however mentioned the main reason why ETH is capped is because of Ethereum’s technical debt.

Through the years, Ethereum builders were launching new merchandise and scaling answers, of which the transition from a proof-of-work to a proof-of-stake machine and adoption of layer-2 answers stand out. Even so, scaling stays a problem impacting person enjoy, particularly when token costs start rallying. 

It’s not bizarre for gasoline charges on Ethereum to spike to double-digits in a bull marketplace, discouraging deployment whilst catalyzing migration of a few transactions to competing platforms like Solana or layer-2 scaling answers like Base or Optimism.

Function symbol from Canva, chart from TradingView