Ethereum faces scrutiny as TVL sits idle amid TradFi tilt

Crypto has drifted from cypherpunk ideals, here’s why

news/has-crypto-lost-its-original-purpose-wintermute-ceo-raises-alarm/?utm_source=openai” target=”_blank” rel=”nofollow noopener”>As reported by CoinPedia, the founder of Wintermute argues crypto has shifted from cypherpunk priorities, privacy, decentralization, and resistance to centralized control, toward speculative “number-go-up” narratives. That critique extends to how success is counted, with headline metrics favored over real utility.

CoinPedia’s coverage also notes his view that stablecoins, while useful, reinforce U.S. dollar dominance and that decentralized applications still show limited real-world penetration. These are interpretations of industry direction rather than settled facts, but they frame a clear tension between ideals and institutionalization.

Is Ethereum’s TVL mostly dormant capital? What activity shows

TVL tracks how much value is parked in smart contracts, not how often that value moves or serves end users. By construction, it is a stock measure of collateral and deposits, not a flow measure of economic throughput.

As reported by Fortune, Ethereum’s ecosystem holds more than $120 billion in TVL, yet a large share may sit in staking, liquidity pools, or collateral configurations that generate little downstream usage. “Most of [Ethereum TVL] is ‘stuck money,’” said Evgeny Gaevoy, founder and CEO of Wintermute.

If activity, not balances, is the goal, better lenses focus on turnover and usage: exchange volumes relative to TVL, stablecoin velocity, on-chain fees as a proxy for paid demand, and persistence in active addresses. These measures help distinguish parked capital from working capital.

According to Phemex News, the same Wintermute perspective sees stablecoins as crypto’s standout product but one that strengthens dollar rails rather than builds a separate monetary system. The broader integration with traditional finance could improve access and compliance while diluting censorship-resistance and permissionless design.

The long-run direction likely depends on whether infrastructure choices optimize for institutional interoperability or for open, credibly neutral settlement. A balanced path may seek regulatory clarity without abandoning decentralization where it matters most.

At the time of this writing, Ethereum (ETH) is $1,964.56 with measured volatility of 17.37%, an RSI near 35.46, and sentiment flagged as bearish. These snapshot figures provide context and do not imply an investment view.

How to assess real activity beyond headline TVL

Practical gauges: DEX turnover, stablecoin velocity, on-chain fees, active addresses

Turnover-adjusted views compare decentralized exchange volumes to the TVL supporting them, highlighting capital efficiency instead of balances alone. Stablecoin velocity, transfer value relative to supply, helps reveal transactional use rather than passive holding.

On-chain fees reflect users willing to pay for blockspace, a direct signal of demand. Active addresses and retention patterns, taken with caution against spam and airdrop noise, indicate whether usage is consistent and organic over time.

Builder takeaways amid number-go-up narratives and increasing TradFi integration

Prioritize flow metrics and user retention over vanity TVL. Design for real jobs-to-be-done where fees, velocity, and turnover justify themselves without incentives. Where integrating with TradFi, keep core settlement paths permissionless and minimize trusted chokepoints.

Is TVL the same as activity? No. It measures balances, not flows. Throughput metrics like DEX turnover and fees better signal usage.

Do stablecoins undermine cypherpunk goals? They can, if they entrench dollar rails. Design alternatives that preserve permissionless access and censorship resistance.