Selling all his ETH, the Bankless founder made a killing in three months
- Core Thesis: After liquidating his ETH position, Bankless co-founder David Hoffman deployed his capital into five non-Ethereum L1 assets (ZEC, HYPE, LIT, NEAR, VVV), achieving a portfolio return of roughly 90%-120% over three months—significantly outperforming ETH's 17% gain during the same period. This indicates that the market's center of value is shifting from L1 narrative-based valuations toward verifiable revenue at the application layer.
- Key Elements:
- Hoffman's rotation strategy: Approximately 50% of his capital was allocated equally across VVV, NEAR, ZEC, and HYPE, while the remaining 50% was used to dollar-cost average into LIT. His investment framework spans four narrative tracks: privacy, on-chain derivatives, cross-chain infrastructure, and decentralized AI.
- Performance breakdown: ZEC surged over 120% (driven by Grayscale's spot ETF listing and short squeezes), LIT rose approximately 135%-210% (representing the largest position in the portfolio), HYPE gained roughly 55%, NEAR climbed about 69%, while VVV remained largely flat.
- Clear catalyst for ZEC: Grayscale's ZEC spot ETF (ZCSH) launched on August 25, with AUM expanding from $300 million to $460 million within two weeks. Combined with $46 million in short liquidations fueling a squeeze, this was the core driver behind the price doubling.
- LIT purchase rationale: Hoffman views it as a higher-beta play on HYPE, citing reasons including a buyback speed roughly twice that of HYPE, a verifiable transparency premium provided by zk-circuits, lower fees, and support for the pre-IPO market. The asset's ~500% rise from its bottom validates this thesis.
- Hidden positive feedback loop in the portfolio: NEAR and ZEC form a self-reinforcing cycle—ZEC's price appreciation drove NEAR Intents-related trading pairs to account for nearly 40% of its total trading volume, boosting fee revenue and intensifying NEAR's buyback efforts.
- Core framework shift: All five assets' valuations are anchored to independently verifiable on-chain activity data (protocol revenue, buybacks, ETF demand, actual call volumes), rather than L1 network effects or promises of future narratives—reflecting a clear preference for deterministic cash flow in an environment of scarce liquidity.
Original Author: Xiaobing
On May 21, David Hoffman, co-founder of Bankless and the most vocal evangelist of the Ethereum ecosystem for six years, posted a tweet in the early hours saying, "The vibe on crypto Twitter has really changed lately, so I sold my last bit of ETH."
Three and a half months later, he's the big winner.
What exactly did Hoffman buy?
In early June, Hoffman fully disclosed his reallocation path on X, stating that the funds from his ETH liquidation were deployed in two batches:
The first batch, roughly 50% of the funds, was immediately allocated to four assets after selling ETH: VVV (Venice AI's governance token), NEAR, ZEC, and HYPE. He explicitly mentioned in his tweet that he bought NEAR at approximately $1.40.
The second batch, also roughly 50% of his funds, was reserved for DCA (dollar-cost averaging) purposes. His exact words were "keeping it to slowly buy something that hasn't pumped yet." This capital ultimately all went into LIT (Lighter, a perpetual contract exchange token built on zkRollup).
His investment thesis for LIT was exceptionally clear: exchanges are always the best business model in crypto; Lighter's buyback speed is roughly twice that of HYPE; zk circuits allow users to permissionlessly verify whether the exchange adheres to its own rules; the product offers lower latency, a better fee structure, and supports more assets, including the Pre-IPO market.
When asked, "LIT or HYPE?", his response was that LIT is both the Beta and the Alpha to HYPE. He even posted a dedicated tweet in late June expressing regret over not buying more LIT.
This is a very clear investment framework: betting on the privacy narrative with ZEC, betting on the structural growth of the on-chain derivatives sector with HYPE and LIT, betting on cross-chain infrastructure and the AI Agent narrative with NEAR, and betting on decentralized AI inference with VVV.
Five assets spanning four narrative tracks, none of which relates to Ethereum L1 valuation.
The Report Card
Let's compare the prices before and after Hoffman disclosed his holdings. His ETH sell-off occurred in late May, the first batch of positions was established between late May and early June, and his DCA into LIT continued until mid-June. Using approximate prices from early June as the cost basis for each asset, and comparing them to latest prices in early September:
ETH: Sell price ~$2,100 → Current ~$2,450, up approximately 17%.
ZEC: Entry price ~$540 → Current breakout above $1,200, up over 120%.
On September 6, it briefly touched $1,200, doubling in three months. The catalyst behind this was Grayscale's ZEC spot ETF (ZCSH) listing on NYSE Arca on August 25. Within two weeks of listing, its AUM expanded from $300 million to $460 million, compounded by a short squeeze with $46 million in short liquidations.
HYPE: Entry price ~$56 → Current ~$87, up approximately 55%.
On September 6, it hit a new all-time high of $89.54. Hyperliquid's token buybacks have now exceeded $4 billion cumulatively, with average daily protocol revenue maintaining around $2.26 million. The earning power of this on-chain cash machine continues to accelerate.
LIT: Entry price range ~$1.50-$2.00 (DCA average) → Current ~$4.70, up approximately 135%-210%.
On September 5, it set a new all-time high of $4.95. As Hoffman's largest single position (accounting for 50% of his total capital), LIT contributed the largest absolute returns to the entire portfolio.
NEAR: Entry price ~$1.40 (confirmed by Hoffman himself) → Current ~$2.37, up approximately 69%.
VVV: Entry price ~$16-$18 (in early June, VVV was trading near its ATH, hitting an all-time high of $21.32 on June 3) → Current ~$17, roughly flat.
This is the weakest performer among the five holdings and the only position Hoffman never publicly added to or expressed regret about.
For a rough portfolio return estimate: Assuming 50% of the capital was equally weighted across VVV, NEAR, ZEC, and HYPE (12.5% each), and 50% was allocated to LIT, using median estimates, the overall portfolio return falls between approximately 90%-120%. During the same period, ETH gained about 17%.
Hoffman's portfolio outperformed ETH by at least 70 percentage points.
Where did he win?
Looking closely at this report card, the most noteworthy aspect isn't how much any single asset gained—it's the way Hoffman's selection logic was repeatedly validated by the market over three and a half months.
ZEC's surge was foreseeable. Grayscale's ETF application had been going through the SEC process since last November, and the August 25 listing simply converted a long-brewing institutional catalyst into price. When Hoffman bought in May, ZEC had already risen from the low $30s at the start of the year to over $500. His decision to enter during the window of "already up significantly but ETF not yet approved" was essentially a bet that the catalyst's certainty outweighed the short-term price risk.
LIT's logic deserves deeper analysis. While everyone was talking about how HYPE would become the on-chain Chicago Mercantile Exchange, Hoffman chose an earlier-stage, smaller-market-cap competitor with potentially more aggressive product features. His framework was "finding higher-beta exposure on the same track," layered with structural reasons like "faster buyback speed, the transparency premium from zk verification, and user migration potential from lower fees." In hindsight, LIT's approximate 500% gain from its bottom validates this approach.
NEAR's 69% return, ranking fourth in the portfolio, doesn't look spectacular at first glance. But considering NEAR Intents' current role as a "toll booth" in the ZEC rally (ZEC-related trading pairs account for nearly 40% of NEAR Intents' total trading volume), Hoffman may have unintentionally constructed a self-reinforcing portfolio: the more ZEC rises, the greater the trading flow through the Zashi wallet and NEAR Intents, the higher NEAR Intents' fee revenue, and the stronger the buyback pressure on NEAR. There's an implicit positive feedback loop between two of his assets.
VVV is the only position that hasn't paid off. Venice AI's narrative as a decentralized AI inference platform briefly spiked in early June but then lost its ongoing catalysts, and Hoffman hasn't publicly added to the position either.
The Real Question
Hoffman's report card offers a signal more worth examining than "who went up how much": The center of gravity in crypto markets is shifting from L1 valuations to application-layer revenue.
The ETH he sold is an L1 asset whose valuation logic is built on network effects, developer ecosystem, and the gas burn mechanism. Among the five assets he bought, HYPE and LIT are valued on verifiable protocol revenue and buybacks; ZEC is valued on institutional demand (ETF) and observable on-chain privacy usage data (shielded supply ratio); NEAR is valued on trading volume and fees from its cross-chain settlement layer; and VVV is valued on actual call volume for AI inference services.
The common characteristic across these five assets: their valuations derive from independently verifiable on-chain activity data, not from narrative promises about the future.
Hoffman's decision to sell ETH has nothing to do with whether Ethereum's technology is good or bad—he himself said, "I still believe Ethereum will win." He simply recognized something earlier than most: In a market with scarce liquidity, faith doesn't generate returns; only verifiable cash flows and quantifiable demand do.
