Why did Culper Research target ETH and short Ethereum after the Fusaka upgrade?

2026-03-09 16:07:59

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Culper Research disclosed its short positions on Ethereum and its related securities, believing that the Fusaka upgrade scheduled for December 2025 fundamentally damages its token economic model. The company claims that this upgrade has led to an increase in gas limits, a roughly 90% reduction in transaction fees—much higher than the expected 10-30%—a 40-50% cut in validator tips, and a reversal of staking incentives. The firm also pointed out that recent on-chain activity growth is mainly driven by low-value “dump” wallets and address poisoning behaviors, rather than natural utility, linking this to co-founder Vitalik Buterin’s recent sale of over 19,300 ETH. Culper believes this puts Ethereum at a disadvantage in competition with rivals like Solana and its own Layer 2 networks.

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