Ethereum's identity crisis: Between Wall Street and cypherpunk

​Ethereum stands out among non-Bitcoin crypto networks for its repeated ability to adapt and remain relevant through successive market cycles. The network has often been at the center of the industry's most influential trends, whether that meant powering the initial coin offering (ICO) boom in 2017 or fueling decentralized finance (DeFi) protocols and non-fungible token (NFT) activity in 2021. The latest cycle, however, looked different. Much of the momentum flowed toward Solana-based memecoins and alternative trading venues such as the perpetual futures exchange Hyperliquid, while Bitcoin continued to strengthen its position as a trusted reserve asset among institutional investors.

While talk surfaced of an iPhone-style breakthrough for Ethereum centered on stablecoins and institutional rollouts of layer-two networks that peg back into the base chain, ETH has generally lagged behind other crypto assets. And this is despite strong endorsements from Ethereum treasury company advocates such as BitMine Immersion Technologies’s Tom Lee.

ETH’s underperformance has come in the form of a barbell dynamic. Bitcoin sits on one end as the dominant store of value, while more centralized smart-contract platforms occupy the other. Ethereum effectively operates in a no man’s land between the two extremes.

In response, attention has turned back toward the cypherpunk-inspired use cases that shaped crypto at its outset. The Ethereum Foundation recently formalized this direction in its CROPS mandate, which establishes censorship resistance, open source principles, privacy, and security as non-negotiable, indivisible requirements for all protocol decisions. Ethereum creator Vitalik Buterin framed the approach around the “walkaway test,” the notion that Ethereum should continue operating seamlessly even if the foundation and its current developers disappeared tomorrow.

To be clear, the vision is not to abandon Wall Street. Instead, the intention is to make Ethereum the home for both Wall Street and the philosophical cypherpunk. MetaLex Labs co-founder and CEO Gabriel Shapiro described the concept as closer to “cyberpunk money” than “cypherpunk money” in a recent X post. However, the reality is Ethereum has only made it this far by largely abandoning cypherpunk ideals, and there is clearly not much demand for this sort of “cypherpunk finance” anyway.

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What has worked for Ethereum so far

Stablecoins, especially Circle’s USDC and Tether’s USDT, have supplied the primary fuel for Ethereum’s expansion over the past decade. Proponents frequently cite the success of DeFi applications such as Uniswap and Aave as validation of the network’s tokenization model, but the bulk of trading volume and liquidity in those protocols revolves around these centrally-issued stablecoins. Notably, these assets include built-in backdoors that allow issuers to freeze funds and could easily face outright bans or crackdowns through regulatory action, as was the case with early gold-backed digital currencies like Liberty Reserve and e-gold.

In other words, Ethereum made a trade-off when it moved away from some of the original cypherpunk ideals in favor of broader adoption and regulatory compatibility. While there is no question this strategy worked over the short term, it has also opened the door to questions regarding the viability of the Ethereum economy over the long term, as network effects have been built around USDC and USDT rather than ETH as the go-to currencies of the Ethereum network. Additionally more centralized competitors to Ethereum such as Hyperliquid, BNB Chain, Tron, and Solana look more viable when everything is built around centralized stablecoins anyway.

Cypherpunk finance remains a niche market

At first glance, it may seem logical for Ethereum to differentiate itself from centralized stablecoins and more centralized smart contract platforms by leaning harder into cypherpunk use cases. However, for better or worse, demand for a truly cypherpunk financial economy remains limited.

Monero is a useful example. It is still widely regarded as the leading privacy-focused cryptocurrency, with features that have held up under real pressure, including darknet market use and ransomware-related payments. Yet its market capitalization remains near $7 billion as of this writing, less than half of Dogecoin’s valuation.

Ethereum’s own history shows similar limited uptake in demand for cypherpunk money. Markets for decentralized stablecoins designed to resist issuer or government control remain tiny compared with USDC and USDT. As of recent data, USDT commands a market cap exceeding $188 billion while USDC sits above $76 billion. In contrast, leading decentralized alternatives like FRAX and LUSD amount to just a few hundred million dollars of value. This gap makes it clear that centralized stables dominate liquidity and user preference, and it should also be remembered that the original decentralized stablecoin, DAI, effectively abandoned decentralization in order to scale to more users some years ago.

At the same time, Bitcoin continues to serve as the most widely trusted store of value in the crypto sector. ETH has lost substantial ground against it, declining roughly 60% in Bitcoin terms over the past five years. Recent events have reinforced Bitcoin's role in this area. For example, when Iranian-linked USDT balances totaling $344 million were frozen by U.S. authorities in April, some reports pointed to increased interest in Bitcoin as a censorship-resistant vehicle for preserving funds. Similar patterns have been observed among cybercriminal groups, including North Korean-linked actors, which have used protocols such as THORChain to convert stolen crypto assets into Bitcoin.

Bitcoin itself is also developing multiple privacy-focused payment options, including Shielded CSV, ecash mints running inside secure enclaves, and other solutions on secondary layers. Pairing Bitcoin’s established properties as sound money with robust privacy tools may represent the most practical path forward for cypherpunk-aligned finance. Of course, this does not guarantee mass adoption of the cypherpunk philosophy.

Most Bitcoin users simply treat the asset as savings, but that choice itself does carry cypherpunk weight by enabling self-custody outside traditional financial systems. In reality, speculation and store of value remains the dominant force drawing people into Bitcoin and crypto, as even interest in privacy-focused projects such as Zcash tends to come from traders rather than a philosophical search for transaction anonymity.

This assessment may read as a harsh blackpill for those optimistic about Ethereum’s renewed emphasis on cypherpunk applications, but it is more productive to stay grounded about the financial tools people actually choose to use. When it comes to ETH, the reality is the non-cypherpunk use cases are the only thing propping the crypto asset up right now, as competing with Bitcoin more directly always would have been far too big of an ask.