3-Point Summary

• Ethereum continues to grow in the AI era, yet ETH struggles to capture that value.
• The core debate centers on three perspectives: Hoffman, Reidhead, and a hypothetical Vitalik response.
• The future of Ethereum depends on evolving mechanisms that allow ETH to absorb economic value as the network expands.

Ethereum is expanding rapidly in the AI era — yet ETH itself struggles to capture the value created by the network.

20-Second Shorts Video

Why Is Ethereum Growing in the AI Era While ETH Fails to Rise?

As AI becomes the core of the global economy, an important question is resurfacing within the Ethereum ecosystem: “Why is Ethereum growing while ETH fails to capture that value?”

This topic was previously explored in The Financial Infrastructure War of the AI Era: Builders vs Investors vs Traditional Finance , and this article continues that discussion by examining the structural issues inside Ethereum more deeply.

Recently, this question has become clearer through the perspectives of three key figures.

• David Hoffman — ETH has not failed; it has simply reached the upper limit of its narrative.
• Kyle Reidhead — Agrees in the short term, but believes ETH is the strongest long‑term bet.
• Vitalik Buterin (assumed) — If he accepts Hoffman’s critique, Ethereum must evolve so that ETH captures value as the network grows.

This article organizes these three perspectives into a single narrative and examines how Ethereum must evolve in the AI era. However, Vitalik’s perspective here is not based on actual statements but is a hypothetical analytical assumption.

1) Hoffman’s View — “ETH is Money” Has Not Failed, but It Has Reached Its Limit

David Hoffman, after selling his ETH, made a critical observation: the narrative of “ETH is Money” has not failed, but it has already reached its ceiling.

① Ethereum’s public‑good structure prevents ETH from capturing value

Ethereum is designed as an open‑source, public‑good, ecosystem‑centric network. This is excellent for innovation, but it creates a structural issue: the network’s success does not directly translate into ETH price appreciation.

② Most on‑chain activity strengthens assets other than ETH

The most used assets on Ethereum are not ETH but USDC, tokenized T‑bills, and RWAs. Ethereum becomes a “giving network,” while ETH becomes a token that “does not receive.”

③ ETH’s market cap already reflects future expectations

ETH’s current market cap (~$250B) carries a premium far beyond what current on‑chain activity justifies.

Conclusion: ETH has not failed — it has simply reached the upper bound of its narrative.

2) Kyle Reidhead’s Counterargument — “Short‑Term Agreement, Long‑Term Opposition”

Kyle agrees with Hoffman’s short‑term assessment.

• ETH is expensive relative to current usage.
• In the short term, hype‑driven assets outperform ETH.

But in the long term, he argues the exact opposite.

① AI‑driven payments and settlement will likely run on Ethereum

As AI agents autonomously execute payments, settlements, and contracts, Ethereum’s smart‑contract architecture becomes the most suitable foundation.

② Tokenization (Treasuries, MMFs, stocks) is centered on Ethereum

Most RWAs already live on Ethereum. As this trend accelerates, ETH’s role becomes increasingly important.

③ Ethereum is positioned to become the largest on‑chain economy

With L2 scalability, developer dominance, and regulatory alignment, Ethereum has the strongest long‑term economic foundation.

Conclusion: Hoffman is right in the short term, but long term, ETH is the strongest bet.

3) Strategies for Making ETH Capture Value Even as Ethereum Remains a Public Good
— Assuming Vitalik Accepts Hoffman’s Critique

Hoffman’s critique highlights the tension between Ethereum’s philosophy and its economic model. If Vitalik were to take this critique seriously, Ethereum must remain a public good while ensuring that ETH captures value as the network grows.

Below are strategic directions Vitalik could realistically pursue.

① Redefine ETH as the “Reserve Asset” of the Ethereum economy

• Unify L2 rollup security collateral around ETH
• Set data availability (DA) fees to settle in ETH
• Standardize ETH as the gas asset for AI agent payments
• Make ETH the default collateral for on‑chain finance

→ As the network grows, ETH demand increases automatically.

② Strengthen ETH as the “Yield‑Bearing Base Asset” (Staking + EIP expansion)

• Convert a portion of L2 fees into ETH
• Standardize ETH‑based yields across on‑chain finance
• Set stablecoin and RWA settlement fees in ETH
• Use ETH as the base unit for AI‑to‑AI payments

→ More activity → more ETH burned + more ETH demand → higher ETH value.

③ Prevent stablecoin‑ and RWA‑driven economies from bypassing ETH

• Unify stablecoin settlement fees in ETH
• Require ETH collateral for RWA issuance and settlement
• Standardize L2 fees in ETH
• Set ETH as the protocol‑level default asset

→ As the on‑chain economy grows, ETH becomes unavoidable.

Conclusion — Ethereum’s Future Depends on Whether ETH Can Capture Value

The AI era demands speed, automation, global settlement, and trust. Ethereum is the strongest platform to meet these demands.

But if Ethereum’s success does not translate into ETH’s success, the ecosystem will continue to face structural limitations.

Hoffman identified the problem,
Kyle argued for ETH’s long‑term strength,
and Vitalik — if he accepts this critique — must bridge the gap with a new strategy.

If Ethereum evolves from a network that “gives” to one where ETH captures value, it will secure a dominant position in the financial infrastructure war of the AI era.

Younchan Jung
Researcher exploring structural shifts in AI, blockchain, and the on‑chain economy.

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