Kyle Samani, managing partner at Multicoin Capital, offered a candid assessment of Ethereum’s ETH/USD recent price underperformance relative to competitors like Solana SOL/USD.

What Happened: In an interview with crypto podcast Bankless, Samani attributed the underperformance largely to two key factors:

Broken Layer-2 interoperability : Users face a frustrating experience when trying to move assets between Ethereum's various Layer-2 blockchains like Arbitrum ARB/USD and Optimism OP/USD . Thus, many prefer the simpler, unified experience on chains like Solana. Samani is skeptical that Ethereum can fully solve this problem given the diverging incentives of different Layer-2 projects.

: Users face a frustrating experience when trying to move assets between Ethereum's various Layer-2 blockchains like and . Thus, many prefer the simpler, unified experience on chains like Solana. Samani is skeptical that Ethereum can fully solve this problem given the diverging incentives of different Layer-2 projects. Value capture shifting to Layer-2s: Samani argues that by outsourcing execution to Layer-2s, Ethereum has given up its primary source of value capture—miner extractable value, the amount miners get paid for ordering transactions. He believes transaction fees will trend toward zero, leaving MEV as the only real source of value for blockchains.

Samani rejects the notion that Ethereum can become "money" or a store of value, arguing that its volatility makes it unsuitable for everyday transactions or long-term contracts.

He sees no place for non-productive assets in investment portfolios, viewing both Bitcoin BTC/USD and Ethereum’s monetary premium narratives skeptically.

Why It Matters: Overall, Samani paints a challenging picture of Ethereum’s future, suggesting its current $300 billion valuation may be difficult to justify given these structural issues.

While acknowledging Ethereum’s strong network effects, he believes competitors like Solana offer a superior user experience that will continue to attract capital over time.

What’s Next: The influence of Ethereum as an institutional asset class is expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.

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