November 11, 2025
Tom Lee’s Ethereum Dream Has a Few Missing Pages
Tom Lee is having a moment.
In a recent MarketWatch feature, As chair of BitMine, he’s now the steward of 3.5 million ETH—nearly 3% of all ether in existence. He calls Ethereum “undervalued,” “the base layer for tokenization,” and even suggests it will outperform bitcoin in the years ahead.
It’s a compelling story.
Too bad it skips over the fine print.
Because while Lee paints Ethereum as the unstoppable engine of finance’s future, he says nothing about its unresolved structural flaws:
- The unsustainable tokenomics
- The centralization risks
- The lack of real organic demand beyond speculative narratives
- And the fact that most “use cases” still rely on subsidized activity
Let’s fix that.
Ethereum’s “Utility” Is Built on Vapor
Lee touts stablecoins, DeFi, and tokenized assets as proof of Ethereum’s dominance. And yes—most USDT and USDC are issued on Ethereum. But that doesn’t mean Ethereum is essential. It just means it was first.
Now, those same stablecoins are rapidly expanding to Solana, Base, Avalanche, and even Bitcoin Layer 2s—because Ethereum is slow and expensive.
In Q3 2025, over 40% of new stablecoin supply was minted off Ethereum, according to Chainalysis. The “base layer” is becoming just one option among many.
And DeFi? Much of it runs on incentive-driven yield farming, not real economic activity. Remove the token emissions, and volume evaporates. That’s not a network effect—it’s a subsidy trap.
The Tokenomics Problem No One Talks About
Ethereum switched to proof-of-stake in 2022—but it never capped its supply.
Unlike bitcoin (21 million hard cap), Ethereum has no maximum supply. Issuance is dynamic, but in practice, it’s inflationary during high network use and only deflationary during fee spikes (thanks to EIP-1559 burns).
In 2025, with lower gas fees and reduced L1 activity, ETH issuance has turned net positive again. That means new coins are being created, not destroyed.
So while Lee calls ETH “undervalued,” he ignores a basic truth: bitcoin is scarce by design; Ethereum is scarce only when the market is euphoric.
Centralization Isn’t a Bug—It’s the Default
Lee praises Ethereum’s “decentralized ecosystem.” But the reality is stark:
- Top 3 staking pools control over 60% of all staked ETH (Lido, Coinbase, Rocket Pool)
- Over 80% of validators run centralized client software (Geth)
- Most “decentralized” apps rely on centralized oracles and RPC providers
Compare that to bitcoin:
- No staking pools
- No slashing
- No validator committees
- Just miners competing openly, with no identity required
Ethereum’s PoS model traded energy for institutional control. That’s fine if you’re building a corporate settlement layer—but it’s the opposite of cypherpunk money.
Wall Street Doesn’t Care About Ethereum—It Cares About Control
Yes, Wall Street is exploring tokenization. But they don’t need open, permissionless Ethereum. They need private, compliant, censorable chains—like those built on Polygon CDK or Ethereum Enterprise forks.
In fact, the very institutions Lee celebrates avoid mainnet Ethereum for real asset tokenization. Why? Because they can’t freeze, reverse, or whitelist transactions on public ETH.
So when Lee says “Ethereum is the base layer,” he’s really saying: “The brand is strong—but the actual chain? Maybe not.”
What If the Narrative Fails?
Here’s the risk Lee won’t acknowledge: Ethereum’s value is almost entirely narrative-driven.
- No hard cap → no scarcity guarantee
- No real fee pressure → no deflation
- No true decentralization → regulatory vulnerability
- No monopoly on use cases → multi-chain future
If the “tokenization wave” slows—or if regulators crack down on staking—what’s left?
Bitcoin, by contrast, needs no narrative. It just needs to keep working. And it has—for 16 years.
Final Thought: Bullish ≠ Blind
Tom Lee isn’t wrong that Ethereum has built something impressive.
But being bullish doesn’t mean ignoring reality.
If Ethereum is to truly outperform bitcoin, it must solve its supply ambiguity, centralization drift, and artificial demand—not just bet on Wall Street hype.
Until then, calling it “undervalued” feels less like analysis…
and more like hopium wrapped in a balance sheet.
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