Why ETH Is Not an “Obsolete Coin”: The Involution Effect and Reasons for Optimism

GM,
I'm excited to be back at work. Over the Lunar New Year holiday, I had two things worth sharing. First, I started transferring my personal assets to a Safe multisig wallet. I'll write an article later explaining why it offers better peace of mind than a cold wallet. Second, I read Long-Term Buy-In by Professor Zhou Guannan from National Chengchi University. Before buying the book, I already knew he wasn’t optimistic about Bitcoin, but one of his perspectives happens to relate to today's article—predicting short-term price fluctuations is gambling, while predicting long-term trends is true skill.
Right before the holiday, DeepSeek burst onto the scene, making it a stressful time for many. Yesterday, both stock and crypto markets were hit hard—ETH plummeted by as much as 30% at one point. Looking at price trends, BTC has risen 118% over the past year, while ETH has only gained 8%. Many people's confidence in blockchain is tied to token prices, and some jokingly say ETH has become an "already obsolete coin." This article discusses where they got it wrong.

Executive Order
On his first day in office, U.S. President Donald Trump signed an executive order with far-reaching implications for cryptocurrencies, particularly Ethereum. Titled Enhancing America’s Leadership in Digital Financial Technology, the order focuses on three key points:
- Protecting people’s rights to mine and self-custody cryptocurrencies
- Supporting stablecoins while halting the development of a central bank digital currency (CBDC)
- Ensuring crypto businesses have equal access to financial services
This executive order immediately dispels the uncertainties surrounding cryptocurrencies over the past three years. Looking back to 2023, after the collapse of the FTX exchange, the U.S. Securities and Exchange Commission (SEC) launched a wave of aggressive enforcement actions. The SEC classified the vast majority of cryptocurrencies as unregistered “securities” and even cracked down on Kraken’s ETH staking service, imposing a $30 million fine.
At the time, there were concerns that the SEC might classify ETH as a security. If ETH issuers failed to register with the U.S. government, not only would ETH be barred from trading in the U.S., but mining and holding it could also carry legal risks. Trump’s executive order restores clarity and legitimacy to these activities.
Additionally, the U.S. government had long maintained an ambiguous stance on stablecoins. On one hand, it welcomed the extension of the U.S. dollar’s influence into the digital realm. On the other, it feared that privately issued stablecoins could undermine future monetary policy. As a result, the government tacitly allowed stablecoin development while simultaneously exploring CBDCs as a backup plan. This indecision left financial institutions hesitant to issue stablecoins. The new executive order sets a clear direction for the future. Since over half of the stablecoins in circulation are issued on Ethereum, this policy shift makes Ethereum the biggest beneficiary.

Finally, from the United States to Taiwan, financial institutions have generally been unfriendly toward cryptocurrencies, with only a few banks willing to work with crypto exchanges. Even financial conglomerates that research blockchain technology often refuse to serve customers whose transactions involve crypto. Trump's executive order mandates equal treatment, prohibiting financial institutions from discriminating against crypto businesses and individuals. While this may seem like a basic principle, the fact that a presidential order is needed to enforce it highlights the deep-seated hostility of the financial industry toward crypto.
For Ethereum, this executive order is like rain after a long drought. However, in some areas, the “drought” has lasted so long that internal conflicts have already begun.
The Involution Effect
During the Lunar New Year, the Ethereum Foundation underwent an organizational restructuring to address three major concerns raised by the community: token sales timing, technical direction, and operational leadership.
The Ethereum Foundation has a reputation for being a "master of selling tokens." In November 2021, it made headlines by selling 20,000 ETH near its all-time high of $4,800. Since the foundation has no regular revenue stream, it periodically sells ETH to pay salaries and replenish its treasury. However, when ETH's price struggles, continued token sales by the foundation often spark controversy among holders.

Additionally, some critics argue that Ethereum has taken the wrong technical path, claiming that Layer 2 (L2) solutions are "draining" Ethereum. Their reasoning is that, originally, users had to hold ETH and pay high gas fees to use applications on Ethereum. However, L2 solutions have drastically reduced costs and even allow users to pay gas fees with their own tokens—for example, Starknet uses STRK. In other words, users can now navigate the Ethereum ecosystem without ever needing ETH, which some view as "raising rats that bite the grain sack."
Finally, there are those who question whether Ethereum Foundation Executive Director Aya Miyaguchi has the necessary technical background. Some even speculate that she has never used Ethereum herself, arguing that the foundation should be led by someone more familiar with "crypto culture."
When it comes to these debates, I agree most with Chris Dixon, author of Read Write Own. He points out that there are currently only 50 million blockchain users worldwide, compared to 5 billion internet users—just the tip of the iceberg. The priority should be onboarding the remaining 4.9 billion potential users, rather than engaging in infighting within the existing market.
Chris Dixon is describing the concept of involution. The term "involution" was introduced by American anthropologist Alexander Goldenweiser and refers to a system that, when constrained in its development, becomes trapped in an endless loop of over-optimization without achieving real breakthroughs. In everyday life, this is like staying late at work just because your colleagues haven’t left yet. If the company happens to be struggling, no one dares to leave on time, fearing that the boss will ask, “Do you really have nothing left to do?”
Why has the Ethereum Foundation’s token sales suddenly become a problem? Why is L2’s development path only now being questioned? Why has the technical background of foundation members suddenly become a crucial issue? The core reason is that regulatory constraints have stalled industry growth. In this situation, refusing to engage in pointless busywork is equivalent to “leaving work on time.”
Trump’s executive order symbolizes a new government breaking old conventions. This is the best way to counter involution—and the reason I remain optimistic about Ethereum.
A Reason for Optimism
In my article Trump’s Token Surge: The Final Chapter of the Meme Coin Frenzy, I pointed out that while Trump himself may not be entirely reliable, the new U.S. administration’s approach to crypto regulation is fundamentally different from the previous one. This executive order lifts the existing constraints on Ethereum, giving it more room to grow.
Ethereum has historically faced more restrictions than Bitcoin due to its more complex mechanisms. But as regulations ease, innovation can finally flourish. Those who judge Ethereum’s future solely by ETH’s weak price performance are mistaking cause and effect. Price is a lagging indicator—Ethereum’s future is not determined by its current price but by how many developers and users it attracts. Once regulation is no longer a barrier and Ethereum becomes more useful, the price will eventually follow. The biggest irrationality in investing is that people love buying high and hate buying low.
Blocktrend is an independent media platform sustained by reader subscription fees. If you find Blocktrend's articles valuable, we welcome you to share this piece. You can also join discussions on our member-created Discord or collect the Writing NFT to include this article in your Web3 records.
Furthermore, please consider recommending Blocktrend to your friends and family. If you successfully refer a friend who subscribes, you'll receive a complimentary one-month extension of your membership. You can find past issues in the article list. As readers often inquire about referral codes, I have compiled them on a dedicated page for your convenience. Feel free to make use of them.