Wall Street Shorts ETH: Vitalik Already Knew and Front-Ran, Tom Lee Remains Deluded

Azuma

Odaily资深作者

@azuma_eth

2026-03-06 04:42

This article is about 2141 words, reading the full article takes about 4 minutes

"The Ethereum token economic model has collapsed. Wake up and see this."

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Core Viewpoint: Wall Street short-selling firm Culper Research released a report arguing that Ethereum's Fusaka upgrade has severely damaged its token economic model, leading to network activity growth primarily driven by invalid transactions like dust attacks. The report also claims that Vitalik Buterin is selling ETH, and therefore announces a short position on ETH and related securities.
Key Elements:
1. The report states that after the Fusaka upgrade, over 95% of new wallet growth and over 50% of transaction growth stem from dust attacks and address poisoning activities, not genuine demand.
2. It accuses developers like Vitalik of miscalculating Layer 1 demand elasticity, resulting in an actual gas fee drop of about 90%, far exceeding the expected 10%-30%.
3. It points out that validator tip income has fallen by 40%-50% due to the gas limit increase, potentially weakening staking demand and institutional adoption.
4. It claims that Vitalik has sold over 19,300 ETH since January 30th, far exceeding his initially announced 16,384 ETH, implying his bearish outlook.
5. It lists competitive pressures facing the Ethereum ecosystem, such as Solana's annual developer growth rate being 29% (compared to Ethereum's 6%), and its DEX trading volume already exceeding Ethereum's by 2 times.

Source:Culper Research

Compiled by｜Odaily@OdailyChina); Translator｜Azuma (@azuma_eth)

Editor's Note: On March 6, Wall Street short-selling firm Culper Research suddenly published an article announcing it is shorting ETH and related securities like BMNR. Culper Research's logic is that Vitalik and other developers miscalculated Ethereum's demand elasticity before the Fusaka upgrade, leading to the upgrade damaging ETH's token economic model. Culper Research also mentioned that Vitalik is well aware of this and is acting to front-run the situation, while the stubborn Tom Lee is heading towards a dead end.

In response to the firm's aggressive short position, Vitalik himself and Tom Lee have not yet responded. However, Vitalik's father, Dmitry Buterin (dima.eth), responded by saying: "When you see the phrase 'Vitalik knows this and is selling,' you can stop reading. They are clowns craving attention, not researchers."

The following is the original content from Culper Research, compiled by Odaily. Compiling this article does not mean we agree with Culper Research's views; it is merely to present the perspective of some Wall Street institutions on ETH and their attempts to influence the market.

Latest disclosure: We are shorting ETH and ETH-related stocks, including Bitmine (BMNR).

We believe that following the Fusaka upgrade in December 2025, ETH's token economic model has been broken. Vitalik knows this and is selling; meanwhile, ETH's staunchest bull, Tom Lee, continues to make ineffective investments. ETH will continue to fall.

Tom Lee's Bitmine has consistently defended ETH, claiming that "due to increasing utility, ETH is not in a death spiral." He cites the surge in active Ethereum addresses and transaction counts after the Fusaka upgrade as evidence of so-called "fundamental improvement" and institutional adoption, but he is completely mistaken.

By Tom Lee's own logic, if on-chain activity on Ethereum does not reflect genuine usage growth and fundamental improvement, then ETH is indeed in a death spiral.

And our research indicates this is precisely what is happening.

Our comprehensive analysis of on-chain data from January 2025 to February 2026 shows that the "activity growth driven by institutional adoption" Lee refers to can actually be explained by a large volume of low-value address poisoning and wallet dusting activities. These activities were triggered by the excess block space following the Fusaka upgrade.

After the Fusaka upgrade:

95% of new wallet growth came from newly created dust addresses;
Address poisoning attacks increased by over 3 times;
Poisoning activities explain over 50% of Ethereum's transaction growth;
Poisoning transactions now account for 22.5% of all Ethereum transactions;

The Fusaka upgrade increased the gas limit from 45M to 60M, aiming to expand Ethereum Layer 1 capacity. Vitalik and the protocol team previously estimated gas fees would drop by 10%–30%, but the reality is gas fees dropped by approximately 90%.

Vitalik and the validators made a serious miscalculation regarding Layer 1 demand elasticity. They used outdated mathematical models (based on pre-EIP-1559 and pre-Layer 2 assumptions), thereby overestimating Layer 1 demand by 3 to 9 times. This is also why we believe Vitalik is selling large amounts of ETH. On January 30, Vitalik pre-announced he would sell 16,384 ETH to fund the Ethereum Foundation's "austerity period," but since then, he has sold over 19,300 ETH and continues to sell.

Vitalik understands something Tom Lee does not — ETH's token economic model has been broken.

We personally documented address poisoning on the Ethereum network. We created two new addresses and transferred funds between them. Within 5 minutes, we were subjected to an address poisoning attack. We encourage readers to verify this phenomenon themselves. Currently, the rate of losses due to poisoning attacks is over 8 times higher than before the Fusaka upgrade.

Furthermore, the increase in the gas limit has hit Ethereum's validator community, with validators now seeing a 40%–50% decline in tip revenue per unit of gas. Falling yields will weaken staking demand and high-value transaction activity, further undermining institutional adoption. This flywheel has now begun to spin in reverse.

Meanwhile, Ethereum continues to lose market share to Solana and its own Layer 2 networks.

Solana developer count grew by 29% in 2025;
Ethereum developer growth was only 6%;
Talent is leaving the Ethereum ecosystem;
Institutions like Visa and Citigroup have chosen Solana for DeFi applications;
Solana DEX trading volume already exceeds Ethereum's by more than 2 times.

During the dot-com bubble era, Netscape and Nokia dominated the market for over 10 years, but the real winners were Google and Apple. We believe Ethereum is in a similar situation — we think Ethereum's token economic model has broken down, Tom Lee is trapped in his own position, and ETH's price will continue to fall.