AI Summary
5 min read“ETH has to prove itself to me,” Michael Nadeau says early in this episode, and that sentence captures the tension at the heart of the conversation. Ether, the second-largest crypto asset by market cap, is trading around $2,000 — roughly where it was four or five years ago. After a cycle where it barely eked out a new all-time high and delivered a 5.6x gain (compared to 175x in 2017 and 61x in 2021), the question is whether this was a skipped cycle or a new normal. Nadeau, founder of The DeFi Report and a long-time cycle investor, walks through the data to assess where ETH stands and what it needs to prove.
The L2 Roadmap: Ethereum Disrupted Itself
The central explanation for ETH’s underperformance in the last cycle, according to Nadeau, is the L2 scaling roadmap. Ethereum essentially disrupted itself. By making it cheap for L2s to anchor data onto the L1 — especially after the introduction of blobs in early 2025 — Ethereum slashed its own fee revenue. The chart of Ethereum’s L1 revenue drops off a cliff at that point. The L2s were supposed to pay rent back to the L1, but that rent has been minimal. Meanwhile, the promised seamless user experience across L2s never fully materialized, and no breakout new application emerged on the L2s to drive demand.
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What you'll learn
- 1 (00:03) **Episode Introduction** - Ryan sets up the episode: checking in on Ether's position in the cycle with Michael Nadeau of the DeFi Report.
- 2 (03:51) **Three Cycles of ETH Performance** - Ryan reviews ETH's price action across its three cycles: 175x, 61x, and only 5.6x in the most recent cycle.
- 3 (06:07) **Why ETH Underperformed: The L2 Roadmap** - Mike explains that the L2 roadmap caused Ethereum to "disrupt itself," diminishing value capture at the L1 level.
- 4 (11:28) **The Roadmap Pivot** - The Ethereum roadmap is now pivoting back toward scaling the L1, acknowledging the L2 roadmap's shortcomings.
- 5 (15:26) **The Valuation Problem: Three Frameworks for ETH** - Ryan outlines three conflicting valuation frameworks for Ether: store of value, cash flow/tech stock, and network economy.
- 6 (20:15) **Mike's Valuation Framework** - Mike views L1s as nation states and the token as the currency, focusing on token economics, TVL/GDP, and capital flows.
- 7 (27:34) **Ethereum Revenue & Staking Yields** - Mike shows how the L2 roadmap collapsed L1 fee revenue, especially after the blob upgrade in early 2025.
+ Full timestamped outline available in the app
Show Notes
Ethereum underperformed this cycle, and investors are asking the big question: did ETH just skip a cycle, or is something deeper going on? Michael Nadeau joins Ryan to break down where Ethereum sits in the market cycle today, why several of his key indicators suggest ETH is entering a fair value zone, and whether the true macro bottom could still lie ahead.
They also unpack why ETH struggled despite improving fundamentals. Mike explains how Ethereum’s L2 roadmap may have improved the network while weakening short-term value capture for the asset itself, and what signals he’s watching (MVRV, supply in profit, the 200-week moving average) as he looks for the next expansion phase.
Michael Nadeau & The DeFi Report:
https://x.com/JustDeauIt
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TIMESTAMPS
0:00 Intro
3:50 The History of ETH Cycles
5:41 Analyzing Performance Trends
8:32 The Impact of L2 Roadmap
10:24 Roadmap Decisions & Market Perception
15:50 Valuation Metrics Explained
20:08 Disparities in Valuation Methods
23:22 Navigating Market Conditions
26:14 Nation-State Metaphor & Valuation
27:45 Revenue and Economic Impact
33:42 DEX Volumes & Their Implications
37:25 Stablecoin Supply on Ethereum
38:09 Cycle Metrics & Analysis
44:22 Fair Market Value Insights
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