Well-regarded Bitcoin analyst PlanB, originator of the Stock-to-Flow (S2F) valuation model, has articulated significant concerns regarding Ethereum.
This commentary surfaces as Ethereum has experienced considerable declines in both its market price and overall cryptocurrency market share since the beginning of the year.
PlanB’s critique casts doubt on the foundational elements of Ethereum, the second-largest digital currency by market value, emphasizing its consensus mechanism change from Proof of Work (PoW) to Proof of Stake (PoS).
Basis for “Centralized” and “Pre-Mined” Labels
PlanB specifically referenced a 2022 statement by Ethereum co-founder Vitalik Buterin, where Buterin had taken issue with the S2F model’s claimed predictive power for Bitcoin’s price.
PlanB leveraged this previous exchange to level criticism at Ethereum, noting its value relative to Bitcoin (ETH/BTC pair) had recently fallen to a nine-year low.
He described Ethereum negatively, citing characteristics such as perceived centralization, a substantial initial allocation of tokens before public launch (pre-mine), the use of PoS over PoW, and an adaptable token issuance policy.
“I think shitcoins like ETH, that are centralized & premined, have PoS instead of PoW, switch supply schedule at will, are harmful and deserve all the mockery they get,” PlanB explicitly stated, underscoring his position.
Shared Concerns and the Impact of “The Merge”
Furthermore, PlanB specifically addressed the controversy surrounding Ethereum’s initial distribution.
The network’s foundational token details show over 72 million ETH, equating to approximately 60% of the current circulating amount, were distributed to developers and early insiders before public availability.
This large pre-mine raises concerns about potentially excessive influence concentrated within a small group, an issue possibly exacerbated by the PoS system, where substantial token holdings generally grant greater control over transaction validation processes.
PlanB described the pre-mine as a significant warning sign (“big red flag”) that he believes is not adequately considered by some market participants.
These critical points have gained prominence alongside Ethereum’s market share dropping to a five-year low and its price receding nearly 60% from its peak late in the previous year.
Counterarguments: Ethereum’s Real-World Adoption and Growth
Despite the criticisms, proponents point to Ethereum’s increasing real-world applications.
Analyst Danny Marques emphasized this growing relevance, highlighting that the Ethereum network processed a higher volume of stablecoin transactions in 2024 than the payment processing network Visa.
A report from Bitwise indicated nearly $14 trillion in stablecoin transaction volume across blockchains, surpassing Visa’s $13 trillion, with Ethereum-based stablecoins making up over half the total supply.
Investor Wise added that Ethereum currently hosts 56% of the value tracked as tokenized real-world assets (RWAs), which includes stablecoins.
Decentralization Debates and Future Prospects
Investor AllThingsEVM.eth presented a counter-narrative regarding decentralization, arguing that Ethereum is progressively becoming less centralized over time, unlike Bitcoin, which they see trending towards more centralization due to accumulation by nation-states and institutions.
This viewpoint questions the long-term decentralization of Bitcoin as mining rewards decrease and large entities might exert greater network control.
Also Read: Market Veteran Peter Brandt Warns of Ethereum $800 Price Descent
