David Hoffman, co-founder of Bankless and a long-time Ethereum advocate, sold his entire ETH position on May 20, 2026, describing the move as a deliberate capital-allocation decision. The sale drew attention because Hoffman remains bullish on Ethereum’s technology, even as he doubts ETH will be rerated to a higher valuation.
His argument focuses on value capture rather than network usefulness. Hoffman says Ethereum continues to provide secure blockspace and tokenization at cost, while Layer-2 networks and applications retain much of the economic value created above the base layer.
Ethereum Utility Does Not Guarantee ETH Upside
Hoffman framed Ethereum as a “giver” that strengthens the ecosystem built on top of it without extracting a meaningful markup. That structure, in his view, limits ETH’s upside as a monetary asset, even if the network remains critical infrastructure.
— David Hoffman (@TrustlessState) May 26, 2026
He also pointed to the rise of tokenized dollars on Ethereum as evidence that the network’s growth has benefited other forms of money. Stablecoin supply on Ethereum has reportedly grown from about $3 billion in 2020 to roughly $163 billion today, a nearly 54x increase.
For Hoffman, that expansion shows value flowing into dollar-linked instruments rather than sustained ETH demand. His conclusion is not that Ethereum failed, but that ETH may already reflect the valuation it deserves under the current economic model.
“The ETH is Money thesis didn’t fail; it played out,” Hoffman wrote, adding that he does not see ETH being rerated higher or lower as an asset. That statement turned a long-running debate into a clear investment stance.
Markets Reassess Where Crypto Value Accrues
Hoffman’s sale made the thesis tangible. If Ethereum keeps growing while ETH captures only limited direct value, his exit could be read as an early signal of changing capital allocation within the ecosystem.
Market commentators have split on the move. Some viewed it as a possible capitulation signal, while others saw it as evidence of a broader reassessment of whether protocol value is moving toward applications and Layer-2s.
The key question is whether ETH demand begins to reflect Ethereum’s usage more directly. On-chain activity, Layer-2 revenue capture and ETH flow data will matter more than broad network-growth narratives.
Crypto treasuries and institutional allocators may also need to revisit exposure models. If the “fat-app” thesis holds, capital could rotate toward application tokens or revenue-bearing Layer-2 assets instead of base-layer ETH.
Hoffman’s exit is not a rejection of Ethereum’s technical relevance. It is a recalibration of the investment case for ETH, and the market will now watch whether the token can capture more of the economic activity its network enables.
