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Mechanism Capital co-founder Andrew Kang escalated his critique of Tom Lees latest Ethereum investment case with an unusually blunt tirade on X, interlacing his rebuttal with a series of sharply worded assertions and data-driven claims. Tom Lees ETH thesis is one of the most retarded combinations of financially illiterate arguments Ive seen from a well known analyst in a while, Kang wrote, before listing five pillars he says underpin Lees view: (1) Stablecoin & RWA adoption; (2) Digital oil comparison; (3) Institutions will buy and stake ETH; (4) ETH will be equal to all financial infrastructure companies; (5) Technical analysis.
Kangs central attack targets the idea that rising tokenization and stablecoin activity should translate into outsized fee capture for Ethereum. Since 2020, tokenized asset value and stablecoin transaction volumes have increased 1001000x [but] fees are practically at the same level as in 2020, he argued. He attributed the disconnect to Ethereum network upgrades making txs more efficient, activity moving to other chains, and the reality that tokenizing low-velocity assets doesnt drive much fees. He distilled the point with a stark comparison: Someone could tokenize a $100m bond and if it trades once every 2 years A single USDT would generate more fees.
The Mechanism Capital partner pushed the competitive angle further. Most of the fees will be captured by other blockchains with stronger business development teams, he wrote, naming Solana, Arbitrum, and Tempo as seeing most of the early big wins, and adding that Tether is supporting two new Tether chains, Plasma and Stable, explicitly intended to route USDT volume to Tether-controlled rails.
Kang also dismissed Lees digital oil framing as analytically hollow. Oil is a commodity real oil prices adjusted for inflation have been trading in the same range for over a century with periodic spikes that revert I agree ETH could be viewed as a commodity, but thats not bullish, he wrote.
He extended the range analogy directly to Ethers chart: Looking at this chart objectively, the strongest observation is that Ethereum is in a multi-year range we recently tapped the top of the range, failing to break resistance I would not discount the possibility of a much longer $1,000$4,800 range. On relative performance, he added: Long-term ETH/BTC is indeed in a multi-year range, but the last few years have mostly been dictated by a downtrend The ethereum narrative is saturated and fundamentals do not justify valuation growth.
On institutions, Kang argued that Lees premisethat banks and large corporates will accumulate and stake ETH to secure tokenization networks or as operating capitalmisunderstands treasury behavior and value accrual. Have large banks bought ETH on their balance sheet yet? No. Have any of them announced plans to? Also no Do banks stock up on barrels of gasoline because they continually pay for energy? No Do banks buy stocks of asset custodians they use? No, he wrote, calling the idea that staking demand from incumbents would underpin valuation a category error.
Kangs thread culminated in a withering assessment of Ethereums pricing dynamics: Ethereums valuation comes primarily from financial illiteracy [which] can create a decently large market cap But the valuation that can be derived from financial illiteracy is not infinite Unless there is major organizational change it is likely destined to indefinite underperformance.
Lees latest outlook, by contrast, has emphasized Ethereums suitability for Wall Street tokenization and its role as a neutral chain, with public targets clustered around $10,000$12,000 by end-2025 and up to $62,500 in a favorable super-cycle.
At publication time, ETH traded near $4,000.