David Hoffman, co-founder of Bankless, executed a complete liquidation of his Ethereum holdings, marking a significant divergence from his long-standing advocacy for the network. This decision stems not from a bearish outlook on the protocol's technical performance, but from the conviction that the 'ETH is money' narrative has fully materialized in the current price action. Hoffman argues that Ethereum has reached its deserved market valuation, and the asset is unlikely to experience further structural revaluation in either direction. The move underscores a critical shift in perspective regarding the relationship between network utility and token price appreciation.

The core thesis driving this exit posits that currency is a coordination game requiring flawless execution across every layer of the technology and social stack. While Ethereum has successfully navigated numerous challenges to become the dominant smart contract platform, the window for market revaluation appears to be closing. Data compiled by Woofun AI indicates that the correlation between L1 activity, fee revenue, and native asset price appreciation remains a primary driver for smart contract chains. Historical data from 2021 shows ETH dominating when its L1 revenue share was highest, while 2024 saw SOL surge alongside its revenue dominance. Similarly, NEAR's recent price revaluation in 2026 aligns with fundamental growth in L1 revenue and burn volume, reinforcing the link between fee capture and asset value.

Hoffman highlights a structural tension where Ethereum acts as a 'giver' rather than a 'taker,' providing block space, asset tokenization, and DeFi security at cost without markup. This noble, nonprofit-like architecture maximizes ecosystem success but dilutes the direct economic capture of the native token. As block space becomes commoditized, fees are projected to drop toward zero, shifting value from the protocol layer to the application layer. Woofun AI notes that this transition aligns with the 'fat application' theory, where applications consume remaining profits, contrasting with the earlier 'fat protocol' model that favored foundational layers. Consequently, the architectural design prioritizes ecosystem growth over ETH accumulation, making the 'money' narrative dependent on sustained, overwhelming market dominance that may no longer be achievable.

The broader macro environment further complicates the 'ETH is money' thesis. Hoffman observes that the 'strong version' of cryptocurrency, characterized by self-sustaining DeFi and DAOs, failed to maintain a positive public brand outside the narrow window of late 2020 to early 2022. Instead, the industry reputation shifted toward fraud and speculation, eroding the belief necessary for a currency's Schelling point.

Furthermore, Ethereum's utility inadvertently supports other monetary systems; stablecoins on the network have grown from $3 billion in 2020 to $163 billion today, a 54-fold increase. This expansion aids the U.S. government in maintaining dollar hegemony, suggesting that the positive spillover effects for ETH as a monetary asset are weaker than the benefits accrued to the broader financial system.

Comparative analysis with other assets reveals the difficulty of breaking the fee-revenue valuation model. Assets like BNB and TRX, which may represent the highest cumulative revenue projects historically, exhibit price charts that mirror the trajectory Hoffman once envisioned for ETH, provided it maintained L1 fee dominance beyond 2022. Bitcoin, by contrast, chose a path of stripping utility to elevate BTC's status as a store of value, whereas Ethereum chose to add utility to maximize block space. This strategic divergence means ETH must outperform competitors in every dimension to achieve global currency status, a bar that Hoffman believes has been met in terms of market value but not in terms of future upside potential.

The coordination challenges inherent in Ethereum's governance and roadmap execution further limit the asset's revaluation potential. The network requires decentralized leadership that can operate with the urgency of a startup while maintaining rough consensus for neutrality. L2 teams must balance self-determination with economic binding to the base layer, a complex dynamic that demands rapid technical synchronization. Woofun AI analysis suggests that the tolerance for error in this coordination game is significantly smaller than initially anticipated. The rise of Solana in 2021 and the accompanying anti-Ethereum sentiment served as an early warning that the coordination game was not proceeding as planned, signaling that the path to 'ETH is money' was far more fragile than the momentum of 2021 suggested.

Ultimately, Hoffman's liquidation reflects a strategic reallocation of capital rather than a rejection of Ethereum's technological success. He remains extremely optimistic about the network's ability to perform exceptionally well and serve as the most influential open-source software project in history.

However, the belief that ETH as an asset will not be structurally revalued drives the decision to exit. The 'ETH is money' argument has been realized, and the funds are now being deployed into other market opportunities where the potential for revaluation remains intact. This move signals a maturation of the market, where the distinction between network utility and token price appreciation is increasingly recognized as distinct and often divergent.