Wrapping ETFs around BTCs encourages investment by CeFi and retail alike, but it also reduces on chain activity

Doesn't this damage the web3 network? Also, reckless monetary expansion is a bug, but inflation is a not. Without inflation everybody will be hoarding fiat and nobody will spend or invest unless necessary. I hold BTC so not a hater. I just want to get your view on this. What if hodling is bad for BTC in the long run as it stps the network from growing?