The Deepest Bear Case I've Seen for Ethereum
Ethereum has a very difficult future in front of it, especially if you're hoping the price is going to go up. If you're holding Ethereum, and if I were you, I would look at this information. This is the deepest bear case I've seen laid out, with issues that I don't see how Ethereum is going to navigate while the price somehow consistently goes up over time. I have based all of this on a massive document I prepared by prompting ChatGPT's pro model and having it do extensive research through actual Ethereum documentation, and I'm going to go through all of it in great detail. If you want access to the whole document, it would probably take you at least an hour to read through everything, and it's fantastic research information on Ethereum. It's available in the Jerry Banfield Family, where you also get to DM me and have calls with me. I just had a guy text me today, he's got me in his contacts list now, and we had a very nice phone call earlier. I would love to get to know you in there. If you're in crypto, being in my Family is one of the best things you can do to have logical, sober research into the future of crypto.
Now, this is not financial advice. I don't hold any Ethereum. I'm all in on ICP because of what you'll see later in this post.
Ethereum's Core Risk: The Ecosystem Succeeds While Ethereum Declines
Here's the key problem I see with Ethereum that I just don't see any way of getting around. Ethereum's core risk is that its ecosystem can succeed while Ethereum's relevance declines, and that's what we're seeing right now, with a ton of data behind it. There are so many ways that things don't go well for Ethereum that I have a hard time seeing how they do go well given what we're already seeing. Right now, this is what's happening: users create apps, execution goes to layer twos, the layer twos retain the fees and order flow, and only a fraction of that actually comes back to Ethereum. Then this feedback loop just continues over and over again. While the Ethereum branding seems bullish in some areas to people who aren't diving deep, what's actually happening on chain and behind the scenes continues to look more and more bearish. I've followed Ethereum since 2016, when I started accumulating it at under $10, and things have continued this way. There were some periods, with 2021 probably the high in the bull market, but things are not looking good for the future.
The research laid out ten bearish conclusions, and what's amazing is that ChatGPT's research is able to look at all the things I know off the top of my head and also pull out some things I didn't see either. The first one: Ethereum solved high fees by making its own block space cheap. The median Ethereum fees fell from around two dollars down to below two cents, which is great for users. But the ultrasound money idea that I was hyped up about a few years ago is now out the door. The idea was that Ethereum was just going to burn and deflate, and that's not going so well. The layer two roadmap is a huge problem. If you look at the reported layer two revenue in 2025, it was about $129 million, while only $10 million was paid to the Ethereum layer one and $119 million went to the layer twos. That's a huge problem if you're hoping the price of Ethereum is going to go up, because a whole bunch of the actual business and money is happening outside the layer one itself. On top of that, the largest layer twos all have liabilities because none of them right now are at a stage two level of trust. They all have big centralization issues, which means big potential points of failure, control, and/or censorship.
The Complexity Problem I've Experienced Firsthand
To me, out of all these issues, the number one worst is that Ethereum is so complex to use. I had a call with a woman in the ICP ecosystem who said she couldn't find her Ethereum in her MetaMask wallet, and my thought was, what are you doing with an Ethereum MetaMask wallet? That's dangerous. I don't use MetaMask anymore. It's just too easy to have one thing or another go wrong and end up losing all your crypto.
I've experienced the complexity of using Ethereum firsthand, like when I played Gods Unchained. I had to sign up for an account via email, play a game that's off chain, create a MetaMask wallet, use it with Gods Unchained, and connect all that together. Then I had to bridge Ethereum or Gods tokens, paying fees, over to Gods Unchained's Immutable X layer two, and only from there could I buy some of the tokens and actually use them in game. The amount of prompts you have to sign, the number of places things can go wrong when sending all those transactions, the amount of research it took for somebody like me who is pretty technically savvy to even do all of that — you can see why a game like Gods Unchained that depended on all of that happening has gone toward zero, because almost nobody is going to deal with it. It's almost impossible to onboard regular people and say, deal with all this complexity: this MetaMask wallet, the seed phrase, these pop-ups, going to this website and that website, switching networks. It's an absolute nightmare trying to navigate all of that.
How Decentralized Is Ethereum, Really?
Those are some of the big things up front, so we'll slow down here and then breeze through a bit more. A lot of people point to Ethereum as this pillar of decentralization — they'll point to the validator count and say Ethereum is so decentralized. It's like, eh. There are a lot of points of failure in Ethereum that don't look very decentralized. You have the block building, the client software, the staking providers, the cloud infrastructure, the relays, the oracles, and the layer two sequencing, and it all comes down to this: the top three block builders supplied 86% of the blocks. Three single builders, 86% of the blocks. I wouldn't call that decentralized.
Liquid Staking: A Potential Collapse Point
Another huge liability that I would personally rate higher than ChatGPT did is liquid staking. Liquid staking, to me, is a huge potential collapse point for all of Ethereum. Right now it centralizes the governance and the staking. Lido alone has 20% of all staked ETH. Then there are liquid staking tokens that people are rehypothecating through DeFi, and that adds more opportunities for slashing and more withdrawal dependencies. You could have a domino effect where one of these things has a failure and then brings down a whole bunch of other things with it. All this stuff is so tied together that we recently saw a hacker exploit where one DeFi protocol — I think it was Aave — had to put in something like $300 million to stop things from falling apart completely. There's no way that stops happening. That is going to keep happening until the system fundamentally changes how it's built, and realistically, it's only going to fundamentally change after it happens several more times with bigger failures.
That is a huge risk to the Ethereum price. If one of these liquid staking pieces collapses, the price could go down 50 or 60 percent in a day or two. Everybody could just panic-dump their Ethereum, especially since so many people are holding it on exchanges. You see a liquid staking protocol go down and take another DeFi protocol down with it, and then another part of the ecosystem, and you could easily have Ethereum dump a massive amount in a single day. People would call it DeFi Armageddon and everyone would seem so surprised — like, how did this happen? Well, it's all tied together and it all depends on nothing going wrong to keep the whole bubble from bursting.
No Real Governance for Ethereum Holders
On top of that, holding Ethereum, unlike holding ICP, does not get you any formal protocol votes. You have no real governance. On ICP, if you hold ICP and stake it, you can vote and your vote is immediately applied on chain, and DFINITY has shown — like with Mission 70 — that they'll actually listen to it. Holding Ethereum on an exchange gives you no participation in governance. In fact, Ethereum's governance is explicitly off chain and social, which means there's less utility to holding the token. Why would I hold the Ethereum token when it's fundamentally a staking-based blockchain, but just holding the token doesn't automatically give me any staking or any yield? That's the attraction of the liquid staking pools, which then introduce those huge layers of risk because of both their centralization and their dependency on all the other parts of the Ethereum ecosystem. Right now Ethereum's governance is just what people think — what this person said and that person said and who's going to do it. That sets up scenarios where there could be a big problem if there's ever a huge disagreement in the community over something important in the future. And if, say, a liquid staking protocol collapsed, the governance being off chain and social means you'd just have people shouting about what should be done without anything formal in place.
Revenue Reality and Rising Competition
Number eight on the list: the application layer is way larger than the base layer, and this is exactly what we're getting at with the layer twos. Ethereum apps generated about $1.56 million a day in revenue, but the chain itself only generated about $55,000. Do you see why that's such a huge problem for a token valued at close to a hundred billion dollars, when the actual chain revenue for Ethereum is only about $55,000 a day? That's a massive, massive difference between the market valuation and the actual revenue flowing through the token. It puts a serious question into the idea that Ethereum's token price is going to go up, because chain revenue is a key part of the price-goes-up thesis.
Another huge problem for Ethereum is that Solana and other blockchains like Tron have already taken huge market share. Ethereum does not have uncontested ownership of trading or stablecoin payments. Tron has around $90 billion in stablecoins and about a million dollars a day in chain revenue — compare that with Ethereum. Solana's 24-hour DEX volume exceeded Ethereum's layer one volume. You've got these competitors putting up serious competition now. To be clear about the whole thesis here: I'm not saying this is all going to go to zero, like I did in some of my other videos. The key failure mode is slow repricing, further and further down, as more and more people start to wonder what they're really getting.
What Exactly Am I Getting by Holding Ethereum?
That's the question: what exactly am I getting by holding Ethereum? The only base case is to hope the price goes up, and why would the price go up if the fundamentals in some of these key areas are very weak and there are huge potential risks? You could see drastic repricing if there were something like a liquid staking collapse. But what's more likely is what you've already seen against Bitcoin: Ethereum has just slipped against Bitcoin consistently, and to me that's what's going to keep happening. Ethereum just continues to get less and less of the gains and more and more of the losses, and at some point it slips out of the number two position and starts to trend further and further down the chart, based on all this activity in the so-called ecosystem not bringing real value back to the token.
Here are some key points people are not understanding. What's nice is that the presentation available in the Jerry Banfield Family has all of this data, and everything in it is cited. And if you want to learn how to get better with AI — this is amazing what AI can do, and I know how to make it do this. This was a single prompt. It was a pretty detailed prompt that I gave it, but a single prompt produced this entire long presentation.
A lot of people are so bullish on Ethereum because they're thinking of the ecosystem, but Base, Arbitrum, and these other layer twos are extracting a huge amount of value from the ecosystem without bringing much value back to the token. And more staked ETH is not pure safety either — again, there's liquid staking, and all the ETH staking could unravel fairly quickly. You could have, at least in the short term, a price collapse if something went wrong, like a slashing war or a liquid staking failure. We've seen little signs that something like that could happen. With the rise of AI, it's getting easier and easier: if ChatGPT Pro can crank this research out for me, imagine what AI programs analyzing the Ethereum blockchain can do to find a weakness to exploit and get something to crash. That's almost inevitable given how complicated everything is and how relatively difficult it is to actually make changes to all of it. The Ethereum layer twos like Base are certainly promoting the Ethereum brand, but that's not accruing very well to Ethereum itself.
The Headline Facts
Let me give you some headline facts to make sure they're all in one place — I've stated most of these already. Here's a good one: Base is actually capturing more chain revenue than Ethereum right now, and if that continues, it puts the whole Ethereum bull case into serious question. Meanwhile, the layer two rent paid to Ethereum actually fell 10x from 2024 to 2025. All this layer two scaling is not bringing much back to Ethereum, and if that continues, where's the future for Ethereum? Almost a year and a half ago I was talking about Base processing more transactions in a day versus Ethereum, and this just continues to look more and more problematic as you dig into the data. You look at Solana's DEX volume exceeding Ethereum's. You look at stablecoins — Ethereum does hold more stablecoins than Tron, but Tron has better price action right now and it's catching up to Ethereum in stablecoins. And there's the builder concentration I mentioned, which is a serious issue.
If you're just looking for revenue and trying to pick a coin to buy based on chain revenue, Tron's price action is increasing, and if you're an investor just looking at the business scenario for each of these in terms of revenue, right now Tron looks like a much stronger buy than Ethereum. It's cranking out a bunch of daily revenue — something like 20 times as much daily revenue as Ethereum right now. If you were an investor looking only at revenue, you might think you'd buy Tron over anything else. And with Base, you can see how that value is being lost from Ethereum right there. The charts make it plain: you can see how the rent paid to Ethereum collapsed — all the rent paid to Ethereum in 2024 versus hardly anything in 2025 — and meanwhile the layer twos' own revenue dropped a whole bunch as well. That's not looking very good. The narratives about the Ethereum burn being this positive force are looking very questionable at this point, and I was really hyped up about that.
Holders Take the Risks, Everyone Else Takes the Money
Now let's look at the token holdings — all the things you're bearing when you're holding Ethereum. You're bearing risk from the protocol itself, plus market, regulatory, and systemic risks. Yet the fees accrue to all these layer twos, applications, builders, searchers, wallets, exchanges, liquid staking providers, restaking operators, and stablecoin issuers. All of those people are making money off of Ethereum, but the Ethereum holders are taking all the big risks while these other third parties make the majority of the money.
By going this route, Ethereum has scaled, but it has scaled into rollups, which come with all these trust surfaces. I remember when I was using an app on Base a few years ago — Friend.tech or something like that — and what garbage that was. I got sold on it for a little while. I remember thinking while I was using it that when you deposit to use that app, the app developer is sitting there with everybody's Ethereum in their wallet. On top of that, you have Base or whatever layer two you're using, and whoever's in charge of each of those is sitting with the keys to everybody's Ethereum on all of them. ChatGPT laid out the stage zero, one, and two framework. Ideally you want stage two, where the system is substantially governed by code, permissionless proofs, and strong user exits. None of the layer twos are at stage two. The largest ones are at stage one, where functional proofs and user exits exist, but a small council or governance can intervene and there are training wheels. The security has improved, but it's not permissionless or immutable. These are all very much centralized at this point, which eliminates any real claim of decentralization or censorship resistance, and it presents centralized points of failure where something could go wrong.
Fragmentation Everywhere
And the issues keep coming — we were only a third of the way through the presentation at the twenty-minute mark. Some of these get a bit more technical, but I'll zoom in on the fragmentation, because it's one huge problem. So many things are fragmented. You've got liquidity all over the place and bridge dependence, and all of these are security problems where any one of them having an issue could lead to cascading failures and people losing money again and again. There's liquidity fragmentation. There's state fragmentation — contracts on one layer two cannot synchronously call state on another, so if something is on Base and it needs to connect over to Arbitrum, there are issues. There's security fragmentation, where each layer two has its own proofs. There's UX fragmentation, which is the most miserable to deal with if you're a regular person: is it on Base? Is it on Arbitrum? Sometimes that thing is on Base and this thing is on Arbitrum, and you have to get all of it right or you can lose all your crypto. And then the governance fragmentation is nuts. This is so complicated, and when you compare it to the drastic simplicity of ICP, that to me is a huge threat to Ethereum as well — which is why I would imagine Vitalik is quiet about ICP, even though he talked about DFINITY in 2019 as a sister network to Ethereum. At this point, the huge problem is that when there's a much better solution than dealing with all this stuff — and there is now, with ICP — then why deal with it? And right now, all these layer twos are essentially competitors to Ethereum more than they are cooperative partners.
The Staking System and Censorship
On the liquid staking side, there are 40 million ETH liquid staked, and we already talked about how Lido has 20% of it. In theory, a healthy network wants solo staking, where individuals can participate. But right now running a solo validator is quite impractical and hardly anybody does it, even though the network would be a lot better with more solo validators. One third of ETH is now inside the staking system, and most of that is inside liquid staking protocols or with some centralized entity like Coinbase. So the staking side of the blockchain — which isn't even real governance of Ethereum, but at least the staking part — has become pretty centralized. And there are just so many more problems with all the liquid staking protocols. This is worth diving into, looking at all these issues and seeing whether one key failure in one spot could bring it all down or cause a huge price drop in a fairly short period of time as people panic. ChatGPT doesn't want me to say "house of cards" too harshly. But if there's a contract exploit, an erroneous AVS slashing event, a governance compromise, operator correlation, or a loss of confidence, the transmission channels would be discounting, liquidations, withdrawal queues, forced sales, and emergency governance. That could be a serious problem at some point, and right now there are still issues with the staking.
Then there are the censorship issues with the block builders. With the majority of blocks coming out, you could argue there are very clear opportunities for censorship, if not actual censorship. There's hardly any competition among builders, as I mentioned before. And here's the thing: censorship can emerge without a protocol-level censor. According to MEV Watch's report, 39% of the blocks were delivered through relays it classified as censoring. Maybe that's slightly less than the majority, but that's a lot of blocks classified as coming from censoring relays. That's a big problem, because the whole point of having crypto is that you can't be censored — and in this environment, that's not realistic with Ethereum.
Then, going deeper, there's user security, which is an absolute nightmare. The browser wallet model is nuts.
All the Ways You Can Lose Everything
Here are some of the ways you can lose everything on Ethereum: seed phrase compromise, malicious approvals, blind or ambiguous signatures, front-end compromise, RPC manipulation, wrong network tokens, clipboard address poisoning, and support impersonation. I've personally seen people who have talked to me experience almost all of these, and it's just getting worse and worse. For example, in 2022 there were only 33,000 personal wallet compromises reported, versus a likely 158,000 in 2025. The reality is that mass adoption is blocked by all of this irreversible ambiguity. It's simply too much for a regular person to deal with. And as soon as a regular person loses everything in their MetaMask wallet, more than likely they're done — they're out, and they're not coming back after that. Even if that never happens, there's the complexity and the odds of simply losing access to your own wallet, without anyone else ever getting in. How many of you have something like 50 different wallets? Maybe not 50, but 10 or 20? I remember having at least 10, if not 20, and if you count exchanges, at least 30 different places where my crypto could be. Imagine having 30 different couches you could lose your cash in. That sounds like a big house, doesn't it?
Meanwhile, a big point of strength people cite for Ethereum is its stablecoins, but that's also an external dependency, and those could have a serious issue. Between the balances in wallets and all the bridges, there could be serious problems there in the future. And as I talked about before, there's more data on how Solana has challenged Ethereum's trading franchise, which is a huge loss. Base right now is both one of Ethereum's biggest successes and one of the biggest strategic threats to the whole ecosystem. Across the board — Solana, Tron, Base, alternative DA layers, Bitcoin layer twos, asset layers, and ICP — there's pressure coming at Ethereum from every single angle. The main scenario is all these competitors abstracting everything away from Ethereum. It's like all these vampires feeding off of Ethereum, drinking it slowly over time, until at some point there's hardly anything left. And the Ethereum holders are probably going to be the last to realize it.
The ICP Factor Almost No One Sees Coming
What may really take this to the next level is ICP getting more adopted and offering an approach that is so vastly simple compared to Ethereum. Developers start to see it: why am I going to deal with the complexity of Ethereum and all these Ethereum layer twos and trust assumptions, and then have to put the websites on centralized tech and use oracles, when you can just build all of it with AI straight on ICP? This is something almost no one in the Ethereum community sees coming yet, but to me, when you combine this with everything else, it becomes something very, very difficult to overcome. That's why I'm very skeptical at this point when you look at what ICP can do and all the problems it solves and removes from the entire equation compared to Ethereum.
ICP is even the best Ethereum layer two, because the ICP blockchain itself can directly interact with the Ethereum blockchain. You don't have to put a third-party provider, centralized bridge, or point of failure in the middle of it. That means the best experience right now for building on Ethereum is actually to use ICP: with Chain-Key Ethereum, you can build an entire app all with AI, all with Claude, and put all of it straight on the ICP blockchain. A regular solopreneur like me could build something like that right now with a voice prompt and have it all sitting there. So if you wanted to build something with Ethereum, actually building it with ICP is the easiest way to do that, and developers are figuring this out. Meanwhile, the full-stack canisters on ICP are very attractive to governments wanting sovereignty and enterprises wanting to make their architecture better for AI. When you already have ICP potentially being used by governments and enterprises for everything else it can do, things like crypto payments just make so much more sense there than fooling around with all these other blockchains.
There's a lot of detail in the research about how vastly superior ICP is to Ethereum and everything else. When Vitalik was asked about Ethereum competitors in 2019, the only one he mentioned was DFINITY — and that was two years before ICP even launched, seven years ago now. The technical capabilities are so far past what they were then that you'd wonder why Vitalik isn't mentioning ICP right now. Is it just the price? ChatGPT told me not to use lines like "Vitalik is pretending ICP doesn't exist," but he certainly isn't talking much about ICP. I'd say "ICP is better" and "ICP replacing Ethereum as the real world computer" are reasonable statements, even though ChatGPT says not to use those either.
Here's where ICP could inflict a ton of damage on Ethereum: consumer apps — like my website jerrybanfield.com, which is built on ICP directly on the blockchain, something you can't do with Ethereum — and AI agents, where ICP has the best infrastructure. Then the cross-chain front ends — like I said, it works as an Ethereum layer two, but combine that with it also being a Bitcoin layer two, and you can build your own platform with AI that combines Ethereum, Bitcoin, ICP, and stablecoins all in the same thing. Enterprises and governments can get their infrastructure off of big tech. At this point, ICP is the most attractive platform for developers who want something simple and secure without having to deal with a thousand points of complexity and potential problems. So watch the canister compute cycles burned and the blocks per second — watch the ICP dashboard, because that's going to pump before the price does. When you see the metrics pumping on there, like blocks per second up to around 200, something's coming. And the more you have consumer applications where users never acquire ICP or manage gas — my own website is a consumer application where nobody has to use ICP or manage gas — plus more Ethereum and Bitcoin being used on ICP, and more people simply getting educated in crypto, the more ICP adds itself as a risk factor for Ethereum. Right now, Ethereum can't afford for ICP, on top of all these other competitors, to take a big chunk out of its market share. There are just too many issues at this point.
Where an Ethereum Collapse Is Most Likely to Happen
Right now the market appears to be pricing Ethereum more like infrastructure. Bitcoin's value proposition is pretty narrow, but the way Ethereum is looked at, it's treated as crypto infrastructure — yet it's very replaceable at this point, and the value coming back to it is tiny. So one last thing to check: where is an Ethereum collapse most likely to happen? The idea is to be prepared ahead of time and not be surprised. The number one case ChatGPT came up with is a slow value-capture bleed, rated five out of five for probability. The most plausible scenario is that Ethereum continues to bleed value to all these layer twos, new infrastructure like ICP, and other competitors. The ETH impact would be pretty high, but the speed is slow — it's likely to take a while, so it's not going to just go to zero overnight. The probability looks very high and the impact very high or high. Then you can see all the other scenarios: layer two sovereignty, competitor abstraction, fragmentation, and bridge failure are all pretty likely, all with pretty high impact on Ethereum, and while the speed may not be instantaneous, they could come decently faster than the slow value-capture bleed.
Then there are the scenarios that are less likely but rapid if triggered. Liquid staking contagion: less likely to happen, but maximum impact on Ethereum, and it could happen very rapidly. Client or operator correlated failure: less likely, huge impact, very fast if it happens. MEV censorship legitimacy crisis: less likely, but pretty significant impact. Layer two governance or bridge mega-failure: less likely, but very serious impact that could happen very quickly. Stablecoin issuer shock: less likely, but huge impact and almost immediate if it happens. And finally, a cryptographic emergency is the least likely — that's what people often point to, saying the cryptography is fine, and fair enough. But look at all this other stuff. We've got a lot of warning indicators at this point. There are a ton of warning signs that these scenarios are playing out, some of them are going to come to fruition, and it's just very unlikely that Ethereum is going to have a bright future given all these serious issues.
Test Your Own Investment Thesis
So that's what I've presented, and it's why I don't hold any Ethereum. This is a deep, deep explanation of all of it. If I had any Ethereum, I would want to read over this research, because I've been given this much criticism — this many problems and explanations for why ICP won't make it — constantly in the comments by other people. I think it's important to really test your investment thesis. If you can read through all of that and still want to hold Ethereum, then you've got a pretty solid conviction about it. Now, this is not financial advice, this is clearly a case intended to point in one direction, and it's just what I'm doing personally.
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