Ethereum VCs Look to Exit Market with Layer-2 Assets
A crypto user, known as R89Capital, suggests that Ethereum venture capitalists (VCs) are aware that investing in the largest smart contract platform will not yield the desired returns. Instead, they are now turning to Ethereum layer-2 assets as a means to exit the market. According to R89Capital, VCs are selling off “Ponzi tokens,” which are low-market coins that can be meme coins or well-marketed projects.
ETH’s Market Cap Hinders Price Surge
R89Capital argues that one of the reasons why ETH prices may not experience significant growth like emerging tokens is due to its large market cap. As of October 31, Ethereum has a market cap of over $215.8 billion, making it the second-largest cryptocurrency after Bitcoin. Coins with higher market caps are generally harder to manipulate and have greater institutional adoption.
Low Market Cap Tokens Appeal to Speculators
Low-market tokens, regardless of the platform they are issued on, tend to attract profit-seeking speculators due to their upside potential in trending markets. These tokens are more volatile and can be sold for ETH on decentralized exchanges or popular ramps such as Binance or Coinbase.
Ethereum’s Technical Debt Impacts Growth
R89Capital points out that Ethereum’s technical debt is another factor limiting its growth. While developers have been working on scaling solutions and transitioning from proof-of-work to proof-of-stake, scaling remains a challenge. High gas fees during bull markets discourage deployment and lead some transactions to migrate to competing platforms like Solana or layer-2 solutions.
Hot Take: VCs Seek Exit Strategy with Layer-2 Assets
As Ethereum venture capitalists realize that investing in the platform may not yield the desired returns, they are turning to layer-2 assets as an exit strategy. By launching and selling off “Ponzi tokens,” these VCs aim to recoup their investments and eventually cash out in USD. This shift is driven by the appeal of low-market tokens, which offer higher upsides and liquidity. However, Ethereum’s technical debt and scaling challenges continue to hinder its growth potential.
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