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Ethereum enterprise capitalists (VCs) are “not stupid” and know that investing on this planet’s largest sensible contract platform received’t consequence within the “multiples” they want, in line with a crypto consumer. Going by the deal with R89Capital, claims that VCs are actually Ethereum layer-2 property as automobiles to exit the market, dumping “Ponzi tokens.”

Ethereum VCs Exiting ETH For “Ponzi” Tokens?

The consumer opines that the first cause why ETH costs might not surge in multiples like rising tokens, together with meme cash like PEPE, as an example, is due to the comparatively giant market cap. 

According to trackers on October 31, ETH has a market cap of over $215.8 billion and is the second largest after Bitcoin (BTC). Typically, cash with increased market caps are more durable to govern and often have discovered extra institutional adoption than rising tokens. 

This is as a result of tasks with increased market cap are extra liquid, have extra identify recognition, and have seen extra adoption. Even so, whereas they’re simpler to purchase within the second market as a result of increased ranges of liquidity, they are usually much less risky than low market cap tokens. 

These low-market tokens may also be held for speculative causes primarily as a result of their upside potential, particularly in trending markets. This signifies that low-market tokens, whatever the issuing platform, attraction to profit-seeking speculators, not as a result of underlying fundamentals.

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

In this case, Ponzi tokens, as claimed, are low-market cash that may be meme cash or different well-marketed tasks. These tokens have increased upsides, are liquid sufficient, and will be offered for ETH in layer-2 decentralized exchanges or standard ramps like Binance or Coinbase. 

The Ethereum Technical Debt: Scaling Remains A Big Issue

Still, R89Capital didn’t point out which layer-2 tasks are “Ponzis” however stated the first cause ETH is capped is because of Ethereum’s technical debt.

Over the years, Ethereum builders have been launching new merchandise and scaling options, of which the transition from a proof-of-work to a proof-of-stake system and adoption of layer-2 options stand out. Even so, scaling stays a problem impacting consumer expertise, particularly when token costs start rallying. 

It isn’t uncommon for fuel charges on Ethereum to spike to double-digits in a bull market, discouraging deployment whereas catalyzing migration of some transactions to competing platforms like Solana or layer-2 scaling options like Base or Optimism.

Feature picture from Canva, chart from TradingView