Please read the below article beforehand for context!
@thedessertlinux/stop-hoarding-gas-tokens-crypto-investing-for-the-modern-age-8ga
First let's break down the token types:
Gas: Ethereum, or Ether, is the gas token of the Ethereum ecosystem, and is used to power both transfer of the coin itself, and various smart contract operations.
Investment: Same as gas, Ether is the token. You need it in order to run validators, which get paid when people use the network. Additionally, the coin's burn mechanism makes the token more scarce with transaction volume, compounding its investment characteristics.
You could say that some of the liquid restaking versions (like Lido) of ETH are a more direct and appropriate investment token. Could be true, but their value and demand are tied to ETH so... potato, patahto.
Product: Ethereum has a bunch of different product tokens: NFTs, stablecoins, wrapped Bitcoin, and endless DeFi products, all of which historically have been in high demand.
Ethereum HAD a strong investment thesis!
Ethereum formerly had one of the best investment theses in all of crypto. It positioned itself as the dominant industry leader in allowing people to basically do whatever they wanted: everything built on Ethereum, everything paying gas fees (which builds buy pressure on ETH both to use, and to run validators to collect those fees).
This is still valid (although less so for reasons I'll go into), and Ethereum's network is among the highest revenue generators in all of crypto.
L2 scaling roadmap caused great harm
Unfortunately, Ethereum decided to limit scaling on the main layer and instead pushed scaling, and therefore fees, to other layers. Yes, some fees do still end up on the base layer, but as a percentage of total revenue generated from usage, the ETH-specific part is shrinking.
Infinite demand doesn't exist. The ETH+L2 ecosystem can only grow so much before it captures all global demand, and so while demand for ETH can continue to grow under the L2 roadmap, its growth is significantly slowed, as it must share that revenue with an increasingly sprawling number of L2s.
Remember: with on-chain scaling, 100% of that revenue and demand for gas tokens would end up with ETH. Not so anymore.
EIP1559 hurt the gas token use case
This is a controversial take! ⚠️
EIP1559, which implemented Ethereum's fee burning mechanism (inflation is slow but infinite, but half of all transaction fees are burned, making ETH more scarce with high usage).
This was meant to serve the investment use case for ETH, however, it also harms the gas token use case (upon which everything is built).
Think about it: in periods of high demand, buy pressure on ETH for gas purposes will drive up the price, and therefore the cost of gas. But the burn mechanism additionally makes it more scarce, further driving up the price. This is great for investors, but not for users, who see crazy fee spikes in times of mania.
Of course, this is compounded by the limited layer-one capacity: bottlenecks are hit, fees spike, ETH burn/scarcity spikes, fees spike even more, usage grinds to a halt. This happens enough times, and it teaches users a valuable lesson: don't use ETH.
So yes, Ethereum is one of the most useful projects with a core business model that works great. But it has made a few design choices in recent years which caused great harm to its investment thesis, and this is probably why you see its price performance continue to falter in recent times.