bitcoin supporter Fred Krueger has recently expressed concerns about ethereum (eth) fundamental trends and potential regulatory hurdles. Krueger's comments, shared in a mail at X, he highlighted notable statistics about network activity and ethereum's transactional utility.
ethereum's declining utility raises alarms
Krueger's critique highlighted ethereum's skyrocketing price, especially its two-year peak recently reached and juxtaposed with declining network usage. Even though eth hit $3,000, Krueger noted a significant drop in daily active users (DAU) from 120,000 in 2021 to just 66,000 last year.
bitcoin Maxi also highlighted the decline in user activity on the blockchain's “main application,” Uniswap V3, ethereum's main decentralized exchange protocol, and highlighted it as a notable concern.
Krueger noted:
The main app, Uniswap V3, only gets 16K DAU. I remember that in 2020 this number was 60,000 or more. It is definitely the case that eth as a chain is no longer used directly.
Krueger also clearly compared the current state of ethereum and a “meme coin,” citing similarities to assets like Shiba Inu (SHIB).
Despite ethereum's price performance, Krueger highlighted a perceived erosion in its usefulness, especially compared to alternative blockchain networks such as Solana, Avalanche and Near.
The bitcoin Maxi continued, noting:
Of course, that doesn't stop investors from bidding up to a market capitalization of $361 billion. It has really become a type of meme currency, similar to Shiba Inu. It's not particularly cheap ($1.50 per transaction) or fast. If you are only interested in reward points for games or casino-style DeFi applications (Solana, Avalanche, Near, etc.), everything is ideal.
Regulatory uncertainty and community reaction
Krueger's criticism extended beyond ethereum's utility to its regulatory perspective. He expressed doubts about the possibility of a spot approval of an ethereum Exchange Traded Fund (ETF), citing concerns about regulatory scrutiny:
Finally, I don't think Gensler is going to allow an eth ETF. If you believe in the Tooth Fairy, have fun. I just don't think Gary wants to make his second ETF a massive pre-mine. He set a very bad precedent.
The bitcoin Maxi concluded: “Avoid eth at all costs.” Despite Krueger's assessment, the eth community's belief in eth remains unwavering. Under Krueger's post, many were found to contradict Krueger's comment.
An They argue that considering only daily active users (DAU) on the mainnet is misleading, similar to evaluating bitcoin's value based solely on its mainnet usage.
While they agree that describing ethereum as sound money “was/is a fool's errand,” they noted, “but you (Fred Krueger) discredit yourself here.”
Even L2s like Arbitrum have been in decline in the last 12 months.
This is not the case that all is well in eth-land pic.twitter.com/oOIPwyCrj2
—Fred Krueger (@dotkrueger) February 21, 2024
Another user, “John Doe,” maintains that there has been a significant decline in total value locked (TVL) across the DeFi space, indicating a trend of decentralized finance (DeFi) users reducing their risk exposure sooner. to potentially reinvest in the future.
Sir, as much as you are highly respected in the ETF space, you don't really know how Defi Cycles work, just check out Defillama and see the TVL charts of the last bull run vs today. There has been a sharp drop across the space. This is Degens de-risking, before we go back to monkeys.
—John Doe (@h0dlboi) February 21, 2024
Featured image from Unsplash, chart from TradingView
