This article comes from:Culper Research
Compiled by Odaily Planet Daily (@OdailyChina); Translator: Azuma (@azuma_eth)
Editor’s Note: On March 6, Wall Street short-seller Culper Research unexpectedly published a report announcing its short position on ETH and related securities such as BMNR. Culper Research argues that Vitalik and other developers miscalculated Ethereum’s demand elasticity prior to the Fusaka upgrade, thereby undermining ETH’s tokenomics. The firm also claims that Vitalik is fully aware of this issue and is acting to exit early, while Tom Lee, stubbornly clinging to his position, is heading toward ruin.
In response to this institution's massive short position, Vitalik himself and Tom Lee have not yet commented, but Vitalik’s father, Dmitry Buterin (dima.eth), responded: “Once you see the phrase ‘Vitalik knows about this and is selling,’ you don’t need to read further. They are clowns seeking attention, not researchers.”
The following is the original content from Culper Research, translated by Odaily Planet Daily. Translating this article does not imply our endorsement of Culper Research’s views; it is provided solely to present certain perspectives from Wall Street institutions on ETH and market sentiment.
Latest disclosure: We are shorting ETH and ETH-related stocks, including Bitmine (BMNR).
We believe that after the Fusaka upgrade in December 2025, ETH’s tokenomics have been compromised. Vitalik is well aware and is selling; meanwhile, ETH’s most ardent bull, Tom Lee, continues to pour in ineffective investments. ETH will continue to decline.
Tom Lee’s Bitmine has consistently defended ETH, claiming that “ETH is not in a death spiral as utility is increasing.” He cited the surge in Ethereum’s active addresses and transaction volume following the Fusaka upgrade as evidence of so-called “fundamental improvements” and institutional adoption—but he is completely mistaken.
According to Tom Lee’s own logic, if Ethereum’s on-chain activity does not reflect genuine usage growth and fundamental improvements, then ETH is indeed in a death spiral.
And our research shows that this is exactly what is happening.
We conducted a comprehensive analysis of on-chain data from January 2025 to February 2026, revealing that Lee’s claim of “institutional adoption driving Ethereum activity growth” can actually be explained by widespread address poisoning and wallet dusting activities involving low-value addresses. These activities were triggered by excess block space following the Fusaka upgrade.
After the Fusaka upgrade:
- 95% of new wallet growth came from newly created dust addresses;
- The number of poisoning attacks has increased by more than threefold;
- Spoofing accounts for over 50% of the growth in Ethereum transactions;
- Currently, poison transactions account for 22.5% of all Ethereum transactions;
The Fusaka upgrade increased the gas limit from 45M to 60M to expand Ethereum Layer1 capacity. Vitalik and the protocol team previously anticipated a 10%–30% reduction in gas fees, but in reality, gas fees dropped by approximately 90%.
Vitalik and validators severely misjudged the demand elasticity of Layer 1, using outdated mathematical models based on assumptions from before EIP-1559 and the emergence of Layer 2, 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 announced in advance that 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 what Tom Lee does not — the tokenomics of ETH have been broken.
We personally documented Ethereum network address poisoning incidents. We created two new addresses and conducted transfers between them. Within five 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 has increased more than eightfold compared to before the Fusaka upgrade.
In addition, the increase in gas limit has negatively impacted Ethereum’s validator community, as validators now earn 40%–50% less in tips per unit of gas. Lower yields will weaken demand for staking and high-value transaction activity, further undermining institutional adoption. This flywheel has now begun to reverse.
Meanwhile, Ethereum continues to lose market share to Solana and its own Layer 2 networks.
- The number of Solana developers increased by 29% in 2025;
- Ethereum developer growth was only 6%;
- Talent is leaving the Ethereum ecosystem;
- Institutions such as Visa and Citigroup have chosen Solana for DeFi applications;
- Solana DEX trading volume has surpassed that of Ethereum by more than double.
During the dot-com bubble, Netscape and Nokia dominated the market for over a decade, but ultimately, Google and Apple reaped the greatest rewards. We believe Ethereum is in a similar position—we think Ethereum’s tokenomics have broken down, Tom Lee is trapped in his own stance, and the price of ETH will continue to fall.