Lost in the Narrative: On Ethereum's "Identity Crisis"

Author: Prathik Desai; Translation: BitpushNews

Introduction

For the past two weeks, almost everything in the crypto community has focused on two things: the decline in Bitcoin prices, and the macroeconomic environment driving that decline—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 things.

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

The volatility of Ethereum's price is enough to convince someone outside the crypto world how mundane life can be for someone holding a large Ethereum portfolio.

Many crypto Twitter (CT) users share similar views on this Layer-1 blockchain, which has garnered numerous nicknames: world computer, the future of internet 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. To this end, I will draw upon an interview between Mika Honkasalo, investment partner at Equilibrium Labs, and Saurabh Deshpande.

The following is what impressed me.

Ethereum's "Identity Crisis": Misunderstood Value

In this cycle, discussions about ETH have often been dominated by emotions. 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.

Nothing in Ethereum's design promises a "currency premium."

Nothing in Ethereum's design promises a "currency premium."

But I understand why the market has misplaced expectations of Ethereum. Bitcoin has only one mission and one expectation: to become digital gold, a store of value whose dollar value appreciates as its inherently finite supply increases. Ethereum's value, on the other hand, is 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, some calling it an identity crisis stemming from marketing mishaps. Brand Differentiation: Ethereum vs. Solana Mika compares this to Solana's branding efforts. Despite the various jokes and memes surrounding Solana, the chain has marketed only one message over two years: it's building a "decentralized Nasdaq running at near-light speed." You might disagree, but it has stuck to a consistent message; it hasn't pretended to be ten things or a monetary equivalent. Meanwhile, Ethereum's narrative has consistently lacked coherence—sometimes calling itself Web3 internet infrastructure, sometimes touting itself as "ultra-sound money," and sometimes packaging itself as "digital oil." While these labels are all based on evidence, they fail to form a prominent core objective or a unified grand vision. Although the ideas themselves are not objectionable, they may pose a disadvantage from a business perspective. This leads the market to tend to simply categorize ETH 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 mere 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 occurring on cheaper and more efficient Layer 2 networks. Therefore, when the market attempts to anchor ETH's value through fee burning mechanisms, efficiency improvements become embarrassing data—the more on-chain activity migrates to L2, the weaker the deflationary effect of the mainnet becomes. Ethereum's Unique Advantage: The Performance of Digital Asset Treasuries (DATs) There's another perspective. Some might argue that it's unnecessary for Ethereum or its community members to market their intentions or purposes. Ethereum's uniqueness is particularly evident in certain areas. Consider how Digital Asset Treasuries (DATs) behave. Ethereum-weighted DATs outperform Bitcoin-weighted DATs because staked ETH yields returns, while Bitcoin does not. This characteristic alters how these entities survive market cycles. Bitcoin treasuries are like rollercoasters, fluctuating with market cycles. When the underlying asset rises, their balance sheets look like gold mines, but once liquidity dries up (as it is 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 yield component, no internal engine, and no way to make the asset work harder than the charts suggest. Ethereum DATs are more than just holding ETH. They can be staked, re-staking, and earn native yields. A treasury denominated in ETH can participate in the economy in which it exists. 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. But if you peel back all that and look at ETH's actual performance from the perspective of treasury capital, you'll see its true asset attributes. Its value grows continuously and compounded through actual 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 mentions that Base, leveraging Coinbase's distribution channels, has become the most successful L2. 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, allowing them to reach the mainstream market. As long as various applications, consumer products, and L2 continue to choose Ethereum as their settlement platform, the network will triumph through the sustained demand for block space, generating a continuous 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.