ethereum venture capitalists (VCs) are “not stupid” and know that investing in the world’s largest smart contract platform will not result in the “multiples” they want, according to one crypto user. Following the identifier R89Capital, claims that venture capitalists are now considering ethereum layer 2 assets as vehicles to exit the market, dumping “Ponzi tokens.”
Are ethereum VCs Exiting eth for “Ponzi” Tokens?
The user is of the opinion that the main reason why eth prices may not increase in multiples like emerging tokens, including meme coins like PEPE, for example, is due to the relatively large market capitalization.
According to trackers on October 31, eth has a ethereum” target=”_blank” rel=”noopener nofollow”>Market cover of over $215.8 billion and is the second largest after bitcoin (btc). Coins with larger market caps are generally harder to manipulate and have typically found greater institutional adoption than emerging tokens.
This is because projects with higher market capitalization are more liquid, have more name recognition, and have seen greater adoption. Still, while they are easier to purchase on the second market due to higher levels of liquidity, they tend to be less volatile than low market cap tokens.
These down market tokens can also be held for speculative reasons, mainly due to their upside potential, especially in trending markets. This means that down market tokens, regardless of the issuance platform, attract profit-seeking speculators, not because of the underlying fundamentals.
R89Capital aligns itself with this preview to allege that venture capitalists, looking to recoup their investment, are launching Ponzi tokens on general-purpose layer 2 platforms before dumping them for eth and eventually exiting for USD.
In this case, Ponzi tokens, as claimed, are low-market coins that can be meme coins or other well-marketed projects. These tokens have greater advantages, are liquid enough and can be sold for eth on layer 2 decentralized exchanges or popular ramps like Binance or Coinbase.
ethereum Technical Debt: Scaling Is Still a Big Problem
Still, R89Capital did not mention which layer 2 projects are “Ponzis”, but said that the main reason why eth is limited is because of ethereum‘s technical debt.
Over the years, ethereum developers have launched new products and scaling solutions, most notably the transition from a proof-of-work to a proof-of-stake system and the adoption of layer 2 solutions. Still, scaling remains a challenge that impacts user experience, especially as token prices begin to rise.
It is not unusual for gas fees on ethereum to rise by double digits in a bull market, discouraging deployment while also catalyzing the migration of some transactions to competing platforms like Solana or layer 2 scaling solutions like Base or Optimism. .
Featured image from Canva, TradingView chart
