Ethereum’s “Identity Crisis”: Its Misunderstood Value

PassOver the past two weeks, almost all the content in the crypto community has focused on two things: the decline in Bitcoin prices and the macroeconomic environment that drove the decline in Bitcoin prices—CPI data, government stimulus measures, the AI ​​bubble, liquidity, Treasury yields, ETF outflows, the US Supreme Court’s ruling on US tariffs, and other miscellaneous topics.

But I want to talk about Ethereum’s chart and its journey over the past few years.

Ethereum’s price volatility is enough to convince someone outside the crypto world that life is incredibly mundane for someone holding a large Ethereum portfolio.

Many crypto Twitter (CT) users share similar views on this Layer-1 blockchain, which has acquired numerous nicknames: the world computer, the future of network infrastructure, the financial layer of the internet, and so on.

In today’s article, I will reflect on how Ethereum’s marketing problems have led to mispricing and misunderstanding of its potential in the market.

To that end, I will draw on an interview program between Mika Honkasalo, an investment partner at Equilibrium Labs, and Saurabh Deshpande.

Here are the parts that impressed me the most.

Ethereum’s “Identity Crisis”: Its Misunderstood Value

In this cycle, discussions about ETH have often been driven by emotion. Whenever Bitcoin hits a new all-time high, the crypto community is filled with cynicism about Ethereum’s poor performance, as if the second-largest network is obligated to follow Bitcoin’s lead.

Ethereum’s design makes no promise of a “currency premium”.

But I understand why the market has the wrong expectations for Ethereum.

Bitcoin has only one mission and one expectation: to become digital gold, a store of value whose value in the dollar will appreciate as its inherently limited supply increases.

Ethereum’s value is being pulled in multiple directions, balancing its core principles such as transparency, security, immutability, and programmability through smart contracts.

In this context, the Ethereum Foundation’s efforts (or lack thereof) to communicate its true intentions have led people to misunderstand Ethereum as a currency, just as they view Bitcoin.

There are two perspectives here, with some calling it an identity crisis stemming from marketing mishaps.

Brand Differences: A Comparison of Ethereum and Solana

Mika compared this to Solana’s branding efforts.

Despite the various jokes and memes surrounding Solana, the chain has only marketed one message over the past two years: it is building a “decentralized Nasdaq that runs at near the speed of light.”

You may disagree, but it sticks to the consistent message that it doesn’t pretend to be ten things or monetary equivalents.

At the same time, Ethereum’s narrative has always lacked consistency—sometimes it calls itself a Web3 network infrastructure, sometimes it touts itself as a “super sound currency,” and sometimes it is packaged as “digital oil.”

While these labels are all based on evidence, they fail to form a prominent core objective or a unified grand vision.

While these ideas are not inherently wrong, they may pose a disadvantage on a business level. This leads the market to tend to categorize ETH simply as a currency, when in reality the blockchain has already evolved into the infrastructure supporting Web3 decentralized finance protocols.

I appreciate Mika’s perspective of viewing crypto projects as cash flow generating entities rather than simply currencies, but there is a paradox: Ethereum currently plays more of a settlement layer role, with a large amount of transactions, fees, and user activity actually taking place on cheaper and more efficient Layer 2 networks.

Therefore, when the market tries to anchor the value of ETH through the fee burning mechanism, the efficiency improvement becomes an embarrassing statistic—the more on-chain activities migrate to L2, the weaker the deflationary effect of the mainnet becomes.

Ethereum’s unique advantage: the performance of Digital Asset Treasuries (DATs)

There is another perspective. Some people might argue that it is unnecessary for Ethereum or its community members to market their intentions or purposes.

Ethereum’s uniqueness is particularly evident in certain areas.

Examine how digital asset treasuries (DATs) behave. Ethereum-weighted DATs outperform Bitcoin-weighted DATs because staked ETH generates yield, while Bitcoin does not.

This characteristic has changed how these companies survive in market cycles.

Bitcoin’s treasury is like a rollercoaster, fluctuating with market cycles. When the underlying assets rise, their balance sheets look like gold mines, but once liquidity dries up (like now), the cracks hidden beneath the surface become apparent.

In the worst-case scenario, when DATs rely solely on their Bitcoin treasury and have virtually no other operating revenue, they typically pay their monthly bills by issuing new equity, as I’ve explained here. They have no revenue component, no internal engine, and no way to make the assets work harder than the charts suggest.

Ethereum DATs are more than just holding ETH. They can be staked, re-staking, and earn native yields. ETH-denominated treasuries can participate in the economy in which they exist. Staking ETH can protect investors from market cycles.

This part of the story rarely gets into Ethereum’s marketing, partly because the community refuses to market itself.

However, if you peel back all these appearances and observe ETH’s actual performance from the perspective of national treasury capital, you will see its true asset attributes. Its value achieves continuous compound growth through practical use, on-chain activity, and ecosystem composability.

Mika envisions Ethereum’s fate hinges on its ability to “build products that a billion users truly need.” He also mentioned that Base, leveraging Coinbase’s distribution channels, has become the most successful L2 blockchain. I believe Ethereum’s future trajectory also depends on this core element.

Even if Ethereum itself isn’t good at marketing, it doesn’t matter—as long as it continues to serve as the underlying foundation for DeFi projects, enabling these projects to reach the mainstream market. As long as various applications, consumer products, and L2 continue to choose Ethereum as their settlement basis, the network can win through the continuous demand for block space, thereby generating a steady stream of transaction fee revenue.

Its development path can be traced back to AWS: from a slow-growing, low-profit experimental project within Amazon, it eventually transformed into the company’s most important business pillar.

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