Joseph Chalom: Ethereum Is Extremely Oversold Here (New Catalysts)

Transcript

This is probably one of the best entry points as we've seen. It's very hard to explain when tokenization, stable coins, DeFi and a gen ticker are coming. And every day there's another announcement from an institution that 2 years ago would have moved the price of ETH. I think there is so much positivity before you even talk about the Clarity Act. We just need the decks to clear out a little bit for to let it run. But I'm I'm not in the business of making price predictions. Sorry about that. >> Yeah, and so I I Joseph, I think we all agree and we see the potential in the Ethereum ecosystem in leading these categories, tokenization, RWAs, stable coins. I think this inevitably leads to the rise

of activity on the Ethereum blockchain, but there is this cohort of people out there where it's it's like Ethereum not ETH, right? Just like it was blockchain not Bitcoin in in 2018. Obviously, we know how that played out in 2018, Bitcoin ran to 100, you know, thousand plus. Again, not asking for price predictions. There are people that say that there's something wrong with the ETH value mechanism, right? It is the thesis here that you know, we increase the the the transactions and the activity on the Ethereum blockchain to such an extent that the burn is triggered and the ETH monetary mechanism kicks in.

This ultimately, you know, is going to reduce the supply, demand is going to increase, we know what happens. Or is the ETH is money thesis, is that still the driving thesis here? What is the thesis for ETH the asset and why is you know, Ethereum not ETH? Why is that the incorrect take here? >> Yeah, I think the it's the former, which is let's just be clear. When you see what the Ethereum Foundation is building and I'm talking about Ethereum mainnet right now. I'm not talking about the L2s who who are built on top of Ethereum.

When you they're basically reducing gas fees significantly, they're doing 3x increases in capabilities and throughput because mainnet needs to be built to support the volume that's coming from tokenization, stablecoins, and agentic micropayments. I think if it grows incrementally, you won't trigger the burn in a way that's going to drive the price of ether up, but we generally believe we're going to see step function increases from stablecoins, tokenization, and agentic that will create that demand that will trigger the burn. And when that happens, and you start seeing 10x, 20x, 50x, or more transactions

on Ethereum and the L2s, you're going to end up needing ether as that trust where to secure the transactions. That is the thesis, but I gave the Jeff Bezos I gave the Jeff Bezos analogy, which was he was criticized for selling books at a low cost, uh driving throughput and volume. I would make an argument taking losses for a long period because he was trying to build for the future of e-commerce, and then you saw what happened. I I believe the ether Ethereum thesis is very it's very similar. So, um I I don't think it's the Bitcoin store of value. I think the network is going to end up having transaction volumes that are going to be so high that you'll

trigger the burn, and that will lead to higher ether prices. That would be the conviction I have. >> You know, I just I I agree with you because I think we are able to reach these levels of scale, but I have this internal Jevons paradox. I And And it's that, you know, the EF and the developers and all of this work with really, really intelligent developers is going into scaling the chain, which is driving gas fees lower on a per transaction basis. On the other side, you have greater activity. And but it feels like these things are at you know, at odds with one another. If we're really going to scale the chain, we're going to make transactions very very cheap, then you know, we we wouldn't create as much uh congestion on the network and

therefore we wouldn't require as much, you know, fees in order to charge on a per transaction basis. Again, this might just be, you know, compensated by the enormous amount of scale of this activity. I Is that Is that the case where it's just going to out-compete as intelligent these developers are, as much as they can reduce the fee overhead and scale the chain? That is just nominal when it's relative to the amount of demand that we're we're looking to create here with this activity. >> That is the answer and that is the belief and they're trying to be prescient, which is they and when you see what's coming out in Glamsterdam, it's going to be able to handle volumes like we haven't seen, but also be able to handle periods of low volume and handle periods of peak

volume. Um because the system can't uh fail over and uh I think you're going to end up seeing that and I think it's some combination of stablecoin growth, um but I think tokenization people are wildly underestimating. And when that happens and you start seeing 24/7 trading on Nasdaq and NYSE and you see the DTCC leveraging a series of chain to dematerialize collateral and allow wallet movements, you know, you would have seen the Brian Armstrong tweet a few weeks back saying there were 160 million agent-to-agent payments in Q1.

Very small dollar amounts, but we're This is the tip of the iceberg. And when that demand comes, you're going to need uh Ether the token and there's going to be a lot more burn and that should be really positive for Ether. But they're not taking short-term decisions and I think it's actually very smart. How this is all being communicated, I don't think is great and I think, as I said earlier, private sector stakeholders uh need to have a much bigger voice in terms of organizing uh that thesis and how we tell the story better. It It's a marketing problem. It's not a protocol problem.