Etherealize Research Report: Bullish Ethereum New Oil in the Digital Age

Author: Etherealize Compilation: SNZ Capital

summary

The global financial system is on the eve of an epoch-making change, and assets around the world are gradually being digitalized and transferred to blockchain.Evolving from semi-digital, independent financial systems to fully digital, composable financial systems requires a secure, neutral and reliable global settlement layer to support the operation of global assets.Ethereum has become this foundation.

Ethereum’s institutional adoption is accelerating rapidly, with the US regulatory framework openly supporting blockchain innovation, and digital assets are becoming the mainstream component of traditional investment portfolios.

It took Bitcoin 15 years to be widely recognized as digital gold: a scarce currency asset that transcends sovereign control.Ethereum has supplemented it on the basis of Bitcoin: it can not only store value, but also promote the seamless transfer of value, trust establishment and global collaboration.ETH is the next generation of asymmetric investment opportunities and is expected to become the core of institutional digital asset portfoliosHolding a position.

Ethereum has become the default platform for stablecoins, high-value tokenized assets and institutional blockchain infrastructure.Currently, more than 80% of tokenized assets exist on Ethereum.With its strong architecture, Ethereum has won the trust of world-leading asset managers and infrastructure providers:It is the safest and most decentralized blockchain in the world, providing unparalleled reliability and zero downtime.

However, as an asset supporting this transformative system, ETH remains one of the severely undervalued opportunities in the global market.Although Ethereum has a clear dominance in the market and has undergone major technological upgrades, ETH is currently trading at a much lower price than its all-time high in 2021.We believe this price difference will not last and understanding ETH’s unique value proposition will bring one of the biggest upside opportunities in today’s asset classes.

ETH is not just a token, it is also a collateral for on-chain economy, computing fuel and interest-generating financial infrastructure.It is actively stockpiled, pledged, destroyed and used.Bitcoin is a commodity as a simple store of value, and Ethereum is also a commodity that can be used as a store of value, but at the same time has great practicality – which effectively makes it aA productive reserve asset: digital oil that powers the digital economy.

Report Overview

This report aims to illustrate why ETH should be viewed as a core configuration in institutional strategies, especially those that prioritize long-term value creation, technological exposure and future-oriented financial infrastructure.The report is divided into three core parts:

Learn about ETH: Digital Oil that Drives the Digital Economy

This section will explore the relationship between Ethereum and ETH, the practicality and unique characteristics of ETH, the appropriate valuation framework for evaluating ETH as asset value, and why it is currently undervalued and under-equipped in institutional investors’ portfolios seeking asymmetric opportunities and productive store of value.

Ethereum: The underlying infrastructure that drives the rise of ETH

This section will cover the structural, technical and economic drivers behind the growing momentum of the Ethereum network.It will elaborate on the possible position of Ethereum as the basic layer of the global digital financial system and how this position will support and amplify the economic importance of ETH.

Ethereum andAI: The economic engine of the independent economy

This section will look forward to assess the possible role and potential value of Ethereum — and through its derived ETH — in a financial system driven by autonomous agents and its potential value

Core points

ETH is digital oil:ETH powers the Ethereum economy and accumulates value through its utility, scarcity and benefits.

ETH is a store of value that resists censorship:ETH is a settlement, security and collateral asset for the digital economy.With the increase in the number of externally controlled tokenized assets on Ethereum (stablecoins, real-world assets and licensed financial instruments), it is crucial to the demand for global neutral, censorship-resistant reserve assets as the underlying store of value.

ETH is not a tech company:The valuation framework must evolve; ETH cannot be valued just like tech stocks based on expense revenue—Ethereum is a unique digital infrastructure that is encapsulated as a global reserve asset.

Programmatic Issuance + Destruction = Predictable Scarcity:ETH has a theoretical maximum annual total issuance of 1.51%¹, but the destruction of goods generated by platform use usually results in lower net issuances.ETH supply inflation has hovered around 0.09%² since September 2022, below fiat and Bitcoin.

ETH provides native benefits:Verifier pledge makes pledged ETH a productive, profitable digital commodity.

ETH is already a reserve asset:ETH is already a reserve asset for the Ethereum digital economy and will soon become a reserve asset for institutions and sovereign states.

ETH is underestimated:The fact that ETH lags behind BTC is a temporary mispricing rather than a structural weakness, creating a rare asymmetric investment opportunity.

ETH in the futureAIThe role in the economy has not been priced yet:As autonomous agents integrate into the financial world, a new type of economic infrastructure will be needed.Ethereum is the most suitable and most likely platform to support this future, and will serve as the operating layer of the human-machine hybrid economy—with ETH as its native currency and reserve asset.

ETH has trillion-dollar potential:The short-term target is $8,000; in the long run, it is conservatively estimated that ETH may reach more than $80,000 as a monetary reserve/commodity asset.

ETH: Digital Oil that Drives the Digital Economy

ETH is a native asset of the Ethereum network and the economic engine that drives its operation.

It is digital oil – an asset that powers, guarantees and reserves the new financial system of the Internet.

The traditional financial system is at the beginning of a structural transformation from analog infrastructure to digital native architecture.Ethereum is expected to become the basic software layer—similar to an operating system, such as Microsoft Windows—on it will be built on top of a new global financial system.

When all this is achieved, ETH will become the underlying asset of a comprehensive global platform that will cover the future of finance, tokenization, identity, computing, artificial intelligence and more.This inherent complexity makes ETH more difficult to define, especially relative to a simple store of value assets like Bitcoin – but it also makes ETH more strategically valuable and means ETH has greater long-term potential.

ETH is not just a cryptocurrency, it is a multi-functional asset whose functions include:

Calculate fuel:Each on-chain operation consumes (destroys) ETH.It is the underlying asset that drives computing, data storage, asset transfer and value settlement on Ethereum as fuel for:

o Every stablecoin transfer.

o Every tokenized real-world asset issuance.

o Every transaction executed on Ethereum.

o Every new application—DeFi, games, AI, identity—their operation destroys ETH.

Store of value assets with income:In addition to simply holding ETH as a store of value, ETH can also earn profits through staking.When someone pledged ETH, they agreed to lock it in the system and become a validator—a network participant whose role is similar to referees, checking and verifying transactions.The verification process is mainly automatic, so the person or entity that pledges the verifier usually does not need to do any additional work other than pledging their ETH.The network will randomly select a validator to propose or confirm a new transaction block.If the validators do the job correctly, they will receive a reward in the form of ETH.

Original settlement collateral:ETH provides security for billions of stablecoins, RWA (real-world assets) and financial applications.ETH is censorship-resistant, trustworthy and neutral, and not affected by depreciation. It is the basic collateral of the Ethereum ecosystem. Currently, about 32.6% of the total ETH supply is used for the collateral role, and another 3.5% is exported for other blockchains.As the number of externally controlled tokenized assets on Ethereum (such as stablecoins, RWA and licensed financial instruments) continues to grow, theNeutral reserve assetsThe demands become crucial.Tokenized assets may carry issuer, jurisdiction, and counterparty risks; by contrast, ETH anchors the entire system in a globally accessible, non-sovereign, neutral store of value, enabling settlement, collateral and liquidity routing without introducing systematic dependence on any single actor.

In a world increasingly filled with tokenized assets that rely on external counterparties, the value of truly neutral, native and non-sovereign collateral assets has increased significantly.ETH is the only smart contract economyOriginal collateral——Full be independent of external counterparty risks.ETH represents the highest level of trust on Earth, which will make an increasingly important contribution to its future monetary premium.

Deflationassets:As network activity increases, ETH becomes deflated.About 80.4% of transaction fees will be destroyed, reducing the total supply of ETH.At an annual cap issuance rate of 1.51%⁷ (which is only achieved in the extreme case where 100% ETH is pledged and no transaction fee is destroyed), ETH will turn into a deflation commodity when the demand for network resources is strong.Unlike traditional commodities, an increase in ETH demand does not trigger an increase in output, resulting in demand that may exceed supply dynamics over a longer period of time.

The reflection of tokenized economic growth:Just as global demand for oil grows with the economic expansion, ETH also draws value from the growth of the on-chain economy—but due to its issuance cap, its supply elasticity is much less than oil:

– Ethereum’s Total Value Secured:Ethereum currently carries more than $767 billion in assets.This represents the highest TVS of all blockchains, consolidating Ethereum’s position as the foundation of tokenized economics.

– Exponential growth:The paradigm shift is moving towards an increasingly decentralized global economy.Ethereum’s economic throughput is expected to achieve exponential growth as business, trade and asset ownership transfers to the chain.This will significantly increase the demand for ETH, both as trading fuel and as the core monetary reserves supporting the new global financial system.

Reserve trading pairs:ETH is the main reserve trading pair in decentralized exchanges. On Ethereum, 70.6% of trading pairs⁹ are denominated in ETH.Similar to the fact that most currencies in traditional finance are traded with the US dollar, in order to efficiently trade most digital assets, they must be traded with ETH or US dollar stablecoins.

Strategic reserve assets:More and more applications, DeFi protocols and institutional fund managers are accumulating ETH as strategic reserve assets.This trend is accelerating as more institutions and sovereign entities turn to Ethereum’s financial infrastructure.Unlike inert reserve assets, ETH is fully programmable, enabling automation of the fund bank and complex financial management.The reserved ETH can be pledged programmatically and deployed as collateral for lending, used to automate market makers (AMMs), or directly integrated into custodial agreements, attribution plans, payment systems, bridging mechanisms, etc.Although BTC is mainly idle as a fund bank asset, ETH actively improves the productivity and operational efficiency of the fund bank.As a neutral reserve asset, ETH is unique in ensuring and driving the global tokenized financial system.

• This is not a theory, the competition for hoarding ETH has begun.Strategic ETH reserves are expanding rapidly, and the publicly disclosed institutional ETH holdings have reached nearly US$2 billion.As institutions increasingly recognize ETH’s multifaceted value proposition, the opportunities for pioneers become clear and compelling.ETH is not only becoming a strategic reserve asset, but also an indispensable part of institutional fund management.

Source: strategythreserve.xyz by Fabrice Cheng

Because of all these unique features and features, we cannot evaluate ETH as a tech stock.ETH is a completely new category of assets.

Therefore, ETH cannot accurately value through the discounted cash flow method.Instead, ETH must be viewed from the perspective of strategic value storage and utility-driven scarcity.Only this perspective can capture the real upward potential of ETH and may even surpass Bitcoin’s “digital gold” narrative.

Oil is a consumable commodity asset that is stored as a reserve and consumed as fuel.Oil has shaped the country, promoted industrial development, and driven global trade.The inherent utility, inherent scarcity and strategic importance of oil make it one of the most valuable commodities in history—shaping the country, driving industry and driving global trade.Therefore, the total market value of global proven oil reserves is approximately US$85 trillion.

Considering that ETH is on a similar development trajectory, but aiming at the digital realm, this is a meaningful reference point for ETH:

ETH provides power to the digital economy.

ETH ensures the security of the digital economy.

ETH takes value from the growth of the digital economy.

ETH has inherent scarcity due to its supply dynamics and issuance cap.

As the global economy transforms into tokenized infrastructure, ETH will become indispensable, not only as fuel, but also asNative assets of the future financial system currency and settlement layer.

ETH’s currency design: simple, transparent, and sustainable

The economic principles of ETH are elegant and concise, but their importance is often overlooked.Unlike traditional commodities, Ethereum’s supply and demand dynamically transparently encoded in its protocol, enabling predictable issuance and sustainable cybersecurity.Ethereum has developed the best issuance plan for ETH, combining strong security (about $88 billion ¹¹ staking ETH, compared to about $10 billion ¹² that guarantees Bitcoin security) with extremely low inflation rates, with an average annual inflation rate of only 0.09%¹³ since the merger in September 2022 (the network switches from proof of work to proof of stake consensus).The more ETH staked, the more expensive and impractical it is to attack Ethereum, because the attacker needs to obtain at least 51% of the existing ETH to successfully destroy or change the network.This structure also provides protection against cartel-style, price-manipulating entities that appear around traditional commodities like OPEC.

issued

Issuing mechanism

The issuance of ETH is programmed and transparent.Similar to Bitcoin’s halving mechanism, newly minted ETH is allocated as a reward to the validator (i.e., the individual or entity group that has been pledged to help protect the network and verify transactions; this is the “earnings” component of ETH mentioned earlier and will be discussed further below).However, unlike Bitcoin, Ethereum issuance is dynamically adjusted to network security needs rather than fixed plans.The calculation method is very simple:

Maximum ETH issuance per year = 166.3×PledgeETH

This formula establishes a natural balance: as more ETH is pledged to protect the network, the circulation will increase, but the growth rate will decrease.This structure while motivating validators, ensures that the upper limit of inflation is very low.

The key is that this mechanismETH issuance sets a clear upper limit.Even in extreme assumption scenarios—that is, all ETH supplies in circulation (currently about 120.8 million¹⁴ETH) are pledged and network usage does not destroy any ETH—The most likelyInflation rateAlso limited to 1.51%¹⁵.In fact, the issuance of ETH will always be below this theoretical upper limit.Currently, only about 28%¹⁶ of ETH is pledged, which means that the inflation rate before destruction is about 0.8%¹⁷.

In practice, since Ethereum converted to Proof-of-Stake consensus mechanism, the issuance of ETH is much lower than the theoretical maximum.Since the merger (Merge) on September 15, 2022, the average annual issuance of ETH has been only 0.09%¹⁸, while the current annualisation issuance is about 0.68%¹⁹.As network activity increases—especially driven by institutional adoption and tokenized asset deployment—the issuance of ETH may turn into net deflation, further enhancing ETH’s monetary dynamics.The impact of the improved development trend after the Ethereum merger is still seriously underestimated by mainstream investors.

Over the past decade, ETH’s issuance rate has been continuously declining following the principle of “minimum viable issuance”.Between 2015 and 2017, an average of about 30,000 ETH was issued to miners every day.By 2019, this ratio dropped to about 13,000 ETH per day.Since the merger in 2022, the ETH issued to validators daily now ranges from slightly negative values ​​to about 2,500 pieces per day.

How can this achieve sustainability?Unlike miners, validators have minimal operating expenses—i.e. no high electricity bills or significant hardware depreciation costs—this allows them to maintain network security with significantly lower token issuances.Verifiers sell their operating margins due to much higherPledgeTokens have a marginal tendency to cover overheads than proof-of-work miners,This further enhances the price stability and currency robustness of ETH.

destroy

In addition to predictable issuances, Ethereum also incorporates a unique and powerful currency feature:Programmatic cost destruction mechanism.This mechanism directly links the money supply of ETH with network activities, closely combining token economics with actual economic demand.

On average, 80.4% of all transaction fees paid to validators are permanently destroyed, thereby creating a deflation pressure on the circulation supply of ETH.As Ethereum economic activity grows, increasing demand increases total expenses, strengthening this deflation effect and reducing the net issuance of ETH.

This creates a self-regulating balance:

IssuesAdjusts based on the amount of ETH staked to protect the network.

DestructionVaries according to the need for Ethereum block space and transaction execution.

Together, these forces create a dynamic monetary framework that allows ETH’s net inflation to fluctuate between slightly positive and complete deflation, all driven by transparent protocol-level rules.This is a monetary system designed not only for scarcity, but also for sustainability, security and alignment with real-world needs.

Source: dashboard.etherealize.com

Therefore, modeling the net ETH issuance comes down to two core variables:

PledgeThe number of ETHIt determines the basic issuance volume that ensures network security.

Transaction fees denominated in ETHDrives programmatic destruction mechanism

Together, these two factors create a dynamic, self-regulated monetary balance.Under the theoretical limit, if 100% of ETH is pledged and no fees are incurred,Annual issuance will be limited to 1.51%²¹.But in practice, activity on Ethereum offsets issuance through cost destruction, often pushing net issuance to zero or even negative values.As institutional adoption and the continued acceleration of demand for Ethereum block space, ETH’s generation dynamics may shift structurally to sustained deflation.

Source: dashboard.etherealize.com

The supply and demand dynamics of ETH are simple and sustainable: ETH is digital oil with predictable and programmatic issuance formulas supplemented by a destruction mechanism directly linked to the actual usage of Ethereum.

supply

Unlike Bitcoin, ETH has no hard supply cap.Instead, Ethereum adopts a predictable, formula-based issuance strategy designed to achieve long-term sustainability and security.Bitcoin’s fixed cap of 21 million, although attractive as a narrative, can pose security risks.The entity that secures the Bitcoin network—i.e., miners—is compensated for newly minted Bitcoins and transaction fees.When Bitcoin reaches the supply cap and stops issuing new bitcoins as a reward, securing the network will become much less attractive to miners, potentially causing them to leave the network to find more profitable activities, making the Bitcoin network less secure.Ethereum will not face this problem.

The current supply of ETH is approximately 120.8 million pieces, with a theoretical maximum annual issuance cap of 1.51%²³.In fact, net supply growth is expected to be significantly lower and even deflation may occur as the increase in Ethereum network usage drives higher transaction fee destruction (as mentioned above).

Bitcoin has a supply cap.ETH has an issuance limit.

income

As mentioned earlier,ETH ownsPledgeincome.Verifiers who stake ETH to ensure Ethereum network security will be compensated for the newly issued ETH.This benefit directly inspires cybersecurity, much like Bitcoin miners receive rewards by investing in hardware and consuming energy to ensure Bitcoin cybersecurity.

The underlying income earned by the validator is determined by Ethereum’s programmatic issuance (detailed above) and is supplemented by a portion of the transaction fees incurred by network activities.Therefore, as Ethereum economic activity expands, the benefits of validators will also increase.ETH is a unique asset: an increase in economic usage leads to more expenses, which can also reduce net issuances below the issuance ceiling (by expense destruction) and increase validator earnings.No other asset can combine these dynamics, making ETH a structurally attractive, collateral income digital asset.

Summarize

ETH’s “digital oil” has economic characteristics complementary to BTC’s “digital gold” and is more attractive in multiple dimensions: As the blockchain ecosystem flourishes, there will be multiple institutional-level digital assets.In a diversified crypto portfolio, ETH uniquely provides exposure to the growth of the entire digital economy.

Why does ETH lag behind BTC?

From September 2022 to the present, the ETH/BTC ratio has dropped from 0.085 to 0.024 – a drop of more than 70%.As measured by BTC, ETH currently trades at a low of 2018 – a level before the emergence of DeFi, massive adoption of stablecoins, and many of Ethereum’s proven use cases.At those lows in 2018, many investors had abandoned Ethereum altogether.However, today, Ethereum is the dominant institutional smart contract blockchain.So, how to explain this disconnection?

The answer is simple:Bitcoin’s narrative has been accepted by institutions, while Ethereum’s narrative has not yet.

After 15 years of market existence, Bitcoin has firmly established its position as an institutional-level asset.Its roleDigital Gold, A narrative of a scarce reserve currency that resists the depreciation of fiat currencies has now been widely understood, mainstreamed and available for investment.This narrative clarity drives substantial revaluation and massive adoption of Bitcoin.

By contrast, Ethereum’s value proposition is harder to define—not because it is weaker, but because it is broader.Bitcoin is aA single-purpose store of value asset, while Ethereum is the programmable foundation that supports the entire tokenized economy.

Based on the core innovation of Bitcoin, Ethereum has expanded through adding smart contract functions, thus enabling coverageFinance, tokenization, identity, infrastructure, gaming and artificial intelligence fieldsUse cases.Over the past decade, Ethereum has grown toDominateThe world ledger carries most of the tokenized assets, institutional activities and on-chain value.

As mentioned earlier, this makes ETH inherently more complex than BTC.This multi-dimensional practicality makes it harder to clearly classify ETH, so the market also priced it slower and less accurate.However, this complexityIt is a feature, not a defect.ETH represents a completely new asset class that uniquely combines the monetary premium of gold, the productive returns of bonds, and the strategic practicality of oil.

Ethereum draws on Amazon’s strategy to self-subvert through its Layer-2 Network (L2) roadmap in 2021-2022.Ethereum L1—the basic, initial Ethereum blockchain—has reached a bottleneck in popularity, with transaction speed limits leading to network congestion and high fees during peak hours.To improve scalability, the L2 chain is launched on top of L1, used to bundle and process multiple transactions off-chain, and then submit the summary of these transactions back to L1 for final settlement.You can think of L1 as the foundation layer of a highway system, while L2 is a fast lane or shared lane, helping to divert traffic faster without building a brand new highway.

L2s greatly improves Ethereum’s throughput and customizability, although initially at the expense of liquidity fragmentation and user experience complexity (these challenges are being solved quickly today).

Critics who narrowly evaluate crypto assets through discounted cash flow perspectives believe that L2s have siphoned the value of ETH.However, this view fundamentally misunderstands the true nature of the ETH value proposition.

ETH: Valuation Framework

Before quantifying the potential valuation scenario of ETH, we must first correct a generally misused valuation method: the discounted cash flow (DCF) model, which fundamentally misunderstands the true nature and value drivers of ETH.

ETH is not oneTechnology stocks;It is a multifunctional commodity asset that is comparable to physical oil, but has less elastic supply and is programmed to control through issuance caps.The valuation of oil, gold and Bitcoin is not based on cash flow, soETH should not be evaluated based solely on income multiples..While DCF models based on future Layer-1 and Layer-2 fees can provide some insight, they ignore a bigger picture—these fees are driving demand for commodities like ETH.Since ETH issuance is capped by design, the growing ecosystem usage makes its price highly sensitive to supply and demand dynamics.in other words,Fees alone represent only a small part of ETH’s valuation and significantly underestimates its wider commodity and currency characteristics.

Thinking of Ethereum’s fees as traditional “income” fundamentally misunderstands their role.The ETH-denominated fee is primarily a basic industrial input—providing fuel and incentivizing validators for online transactions—rather than a profit stream denominated in USD.The true value of ETH stems from its unique productivity, robust store of value economics, and its key position as a neutral, original collateral in the Ethereum ecosystem.

This is not intended to downplay Ethereum’s expense decline over the 2021-2022 period – although this decline is important for another reason.Although institutional adoption and tokenization reached record levels, revenue declines were precisely because ofEthereum strategically disrupts itself to achieve mass popularity.Just as Amazon, Tesla and Uber deliberately sacrificed short-term profits to achieve global scale, Ethereum has also entered its own growth phase transformation, significantly reducing transaction fees through Layer-2 expansion.This strategy, while temporarily suppresses expense income, is structurally bullish: it ensures

The long-term popularity of Ethereum has expanded its total potential market on a large scale, and will ultimately amplify the cost destruction and pledge income of ETH.

Source: https://l2beat.com/scaling/activity

Ethereum’s throughput has increased by more than an order of magnitude since its market high in 2021, while its transaction costs have dropped significantly.The largest expansion breakthrough will be achieved in the next year, with some L2s expected to reach 100,000+ transactions per second.

If ETH is analyzed like tech stocks, these strategic expansion measures will be translated into orders of magnitude higher expected revenue, resulting in significantly higher intrinsic valuations.Adoption of Ethereum (and the broader blockchain) is still in its early stages, historically primarily restricted by regulatory uncertainty, which limits entry to institutions and consumers across the board.These barriers are rapidly eliminating today, paving the way for accelerated global adoption.

However, ETH is worth much more than fees and current and future revenue streams.ETH is digital oil that powers the world’s ledger of assets, currencies and transactions.Like Bitcoin, ETH also has a significant store of value characteristics, with a currency premium far exceeding the valuation multiple based on income.

Instead of adopting the DCF model, we provide a comparable overall valuation framework for the long-term potential of ETH:

Oil reserve benchmark:Oil is a consumable commodity asset that is stored as a reserve and consumed as fuel.The total market value of proven oil reserves worldwide is approximately US$85 trillion³³²—which provides a meaningful reference point for ETH, given the scarcity of ETH, its capped dynamics and its key utility in the digital economy.

Asset tokenization benchmark:The global wealth totals approximately US$500 trillion³³.Even if conservatively assumes that Ethereum only tokenize 10% of global assets, Ethereum will carry more than $50 trillion in assets.In this scenario, ETH, which is a key asset in cybersecurity and settlement, will not stay at a valuation of US$300 billion.

Neutral, original collateral:ETH uniquely acts as a neutral, non-sovereign original collateral asset, independent of external counterparties.It is essentially the safest and “risk-free” asset in the Ethereum economy, similar to the role U.S. Treasury bonds play in the U.S. economy—but with significantly greater upside potential.

Store of Value Economics:ETH reflects the core monetary characteristics of gold: low inflation, institutional reserve assets and non-sovereign currency premiums.

ETH Valuation Comparison: Compared with other global reserve assets

ETH represents a completely new asset class whose value drivers far exceed traditional equity-based cash flow.To accurately reflect the valuation potential of ETH as a global reserve asset, we must consider comparable global reserve assets as a benchmark.

Ethereum is the most tested and widely adopted ledger worldwide for tokenized assets, stablecoins and digital economic activities.Among digital assets, ETH uniquely provides investors with the highest upward opportunity to capture blockchain-driven finance, tokenization and global business growth.

As ETH is repriced as a global digital commodity and reserve asset, its valuation potential has become nearly unlimited.While long-term valuations of $85 trillion (approximately $706,000 per ETH) are possible worldwide, some medium-term valuation targets are as follows:

Short-term potential:$8,000 per ETH (approximately $1 trillion market capitalization)

Medium-term potential:Each ETH is $80,000 (approximately $10 trillion in market value)

Catalysts that drive ETH repricing

1.Demand surges:The institutional level has begun to adopt and deploy tokenized assets and financial infrastructure on Ethereum on a large scale.

2.Native crypto revenue demand accelerates:The pledged ETH ETF is about to be launched, and the emergence of the physical subscription/redemption model of institutions will greatly increase institutions’ interest in ETH pledge income.

3.Strategic hoarding of ETH:A competition is taking place within the Ethereum ecosystem to hoard ETH as a monetary premium value store asset, as evident from the growing strategic ETH reserves (about $2.5 billion has been publicly disclosed).

4.ETH as an institutional funding asset:The unique characteristics of ETH—primitive collateral, neutrality, earnings and global utility—make it the preferred reserve asset of funds both institutional and globally.

Ethereum: The infrastructure that drives ETH up

The first part of this report focuses on ETH as a unique digital commodity (combining scarcity, utility and benefits), but its long-term value cannot be fully understood without examining the infrastructure it empowers.Ethereum is not just the background of ETH; it is the basic platform that makes ETH’s utility indispensable and its monetary design structure sustainable.

Ethereum has become the most important infrastructure layer in the digital economy.It is the location of tokenized assets, the location of decentralized financial applications, and the location of increasingly occurring institutional settlements.Ethereum has become the default platform for stablecoins, high-value tokenized assets and institutional blockchain infrastructure.Today, more than 81% of tokenized assets exist within the Ethereum ecosystem.Its resilience, trustworthiness neutrality and programmability make it the only platform that supports the future complex, programmable and globally scalable financial services and a broad economic base.

This section explores why Ethereum is uniquely suited to support the next era of financial and digital economy.We examine its architectural advantages, latest breakthroughs in scalability, improvements in user experience, and accelerated migration of institutions to their Layer-2 ecosystem.We will also explore what we believe will be the next major catalyst for the Ethereum network, which, if implemented, will make Ethereum more than just the underlying layer of future finance: the convergence of Ethereum with AI-driven autonomous agents.In such a future, Ethereum will not only be a financial infrastructure, but also a backbone of machine-native economic coordination.

In short, the value of ETH is a function of Ethereum’s growing centrality in the digital economy.As Ethereum adoption grows in a compounded manner, so does its demand and strategic importance of native assets.Therefore, understanding the trajectory of Ethereum is crucial to understanding the full scope of ETH investment potential.

Why is Ethereum unique as a financial infrastructure

Advantages

For ETH’s long-term success, Ethereum must be recognized by institutions as a legitimate financial infrastructure and an undisputed leader in institutional-level blockchains.

As institutional investors increasingly recognize the limitations of existing financial infrastructure, Ethereum’s capabilities—its security, stability, scalability, programmability, decentralization and trustworthiness—make it the most likely platform to carry the global financial system in the future.

Proven uptime and resilience:Since its launch in 2015, Ethereum has never been offline, and it has undergone major agreement upgrades such as “mergers” and has not been interrupted.More than 10 independent client implementations further enhance their redundancy and robustness.All of this highlights its ready state as an institutional-level infrastructure.

Trusted neutral infrastructure:Ethereum is managed purely by transparent, auditable code – not affected by company interests, political pressures, or centralized personality.This credibility neutrality ensures fairness, predictability, and eliminates counterparty risk.

Large-scale decentralization:Ethereum’s validators are distributed globally, and anyone can access it as long as they have basic hardware and Internet connections.Its security stems from decentralization and diversity, not centralized data centers or privilege stakeholders.

Unparalleled market share:The Ethereum ecosystem carries 60%³⁹ of all stablecoins and 82% of tokenized real-world assets (RWA)40, including tokenized Treasury bonds and credit instruments.Most blockchain-based financial activities already exist on Ethereum41.

High-value settlement layer:Ethereum currently protects over $767 billion of total locked value (TVS) in its ecosystem.This number is expected to accelerate significantly as global finance moves more and more to the chain.

The safest developer tools:Ethereum Virtual Machine (EVM) is similar to JavaScript in terms of its popularity and adoption in the wider crypto ecosystem.It has been fully understood and has been tested in practice over the past decade through countless high-value financial applications.

transparency:Fully open source protocols and code, data can be publicly audited.

Scalability:A roadmap for performance enhancement and scaling solutions is clearly defined, which will enable Ethereum to handle transactions and usage at a truly global scale.

Customized environment:Modular, isolated solutions designed for organizations – including privacy, KYC compliance, custom gas models, data availability, and professional execution environments.

Security:A powerful proof-of-Stake consensus mechanism is strengthened through economic reduction mechanisms and consolidated through validator client diversity.

Neutrality:There is no centralized foundation or collection of validators for privileges/subsidies.Ethereum is both global and license-free, eliminating counterparty risks at the infrastructure level.

Programmability:Native, highly combinable smart contract capabilities powered by the richest and most proven ecosystem of developers and security tools.

Regulatory maturity:Ethereum is the most widely adopted and legally understood blockchain in the world’s institutional entities and regulators.

Minimum environmental footprint:ETH’s environmental footprint is close to zero (about 0.01 kg of carbon dioxide per transaction) 43.

Ethereum is more than just a decentralized ledger; it is an institutional-level public infrastructure.With its credible neutrality, proven resilience, mature regulatory status and long-term roadmap, it is the only blockchain that can serve as the infrastructure of the global financial system.

Why Ethereum is entering its revival

Ethereum’s fundamental advantages have long been underestimated, with its architecture, decentralization and developer ecosystem quietly driving most of the meaningful innovations in the crypto space.Now, after years of silent hard work and focused development, this ecosystem is experiencing a series of composite positive effects, which together are expected to push Ethereum into the spotlight and promote its rapid popularity.

For ETH, this revival is more than just background—it is a catalyst.The value of ETH is directly related to Ethereum’s strength, usage and institutional trust.As Ethereum becomes more performant, more intuitive and more deeply integrated into the global financial system, demand for ETH as a fuel, collateral and strategic reserve asset will accelerate.

The structural improvements and ecosystem shifts that define the Ethereum revival will be explored next – and why they will bring ETH a dramatic revaluation in the months and years to come.

1. A more coordinated and forward-looking ecosystem

Ethereum was born in an environment full of regulatory uncertainty, innovation often faces resistance, and popularity is accompanied by risks.As one of the few blockchains that are as truly decentralized as Bitcoin, Ethereum intentionally puts neutrality, security and censorship resistance above speed or active promotion.Therefore, for many years, the Ethereum Foundation has emphasized R&D rather than marketing and institutional cooperation.

This practice is now undergoing a significant shift.With the increasing regulatory clarity, the Ethereum community has taken a more forward-looking attitude.Although there is no single entity managing Ethereum, the new leadership of the Ethereum Foundation — Tomasz Stanczak and Hsiao-Wei Wang, co-executive directors — are clearly and clearly communicating the technology roadmap of the protocol.Around them, a diverse alliance of experienced builders, well-known funds and key infrastructure providers are uniting to actively increase Ethereum’s visibility and strategic relevance.

1. Ethereum Layer 1 is expanding – without sacrificing decentralization

Historically, Ethereum’s expansion strategy has focused on Layer-2 solutions.As mentioned earlier, L2 is an independent chain designed to reduce Ethereum Layer 1 traffic, improve transaction throughput, and help maintain fees at a reasonable level.

This method is adopted because the direct expansion of L1 has previously undermined the core principle of Ethereum – namely the trustworthiness neutrality and decentralized security of the basic layer.However, recent breakthroughs, such as production-grade zero-knowledge virtual machines (zkVMs) and innovative research projects like FOCIL, have opened up new possibilities to enable Layer-1 to achieve significant performance improvements without compromising decentralization or security.

Ethereum is now expanding capacity in two directions at the same time: vertical expansion of L1 and horizontal expansion of L2.These progress has gone beyond the theoretical stage; the enhancement of L1 is under active development and is expected to be deployed in 2025.The result will be

A significantly higher performance base layer, serving as a central hub for economic activity, supplemented by continuing to expand Ethereum scalability and global coverage L2 networks.

1. Ethereum L2 is faster, cheaper and more interconnected than competitive L1

The Ethereum L2 ecosystem has expanded at an extraordinary speed to form a vibrant, modular high-performance chain network, all anchored to Ethereum’s security and economy.This flexible architecture has attracted significant institutional adoption, with major global entities such as Deutsche Bank (via zkSync and Memento), Sony (via Soneium), UBS, Coinbase (via the largest L2 Base), Kraken (via Ink), and World Chain (co-founded by OpenAI’s Sam Altman).

The initial rapid growth led to fragmentation, as each L2 operates independently, bringing friction to the entire ecosystem.Now, this challenge is being resolved decisively.A new generation of interoperability standards are being introduced one after another, reconnecting these Layer-2 chains into a cohesive Ethereum experience.

The result will be a unified, seamless ecosystem – it will retain the strong security of Ethereum Layer 1 while providing performance and cost advantages comparable to or exceeding their competitive Layer-1 blockchains (as L2 uses Ethereum to ensure security rather than rebuilding from scratch).With the full deployment of interoperability protocols and abstract wallet experiences, Ethereum will once again run and feel like a single, unified chain.

1. Ethereum’s user experience is entering its fintech phase

One of the most important changes in Ethereum’s history is not purely technical—it is experiential.For much of the past decade, interactions with Ethereum involved clumsy interfaces, lengthy 24-word mnemonics, and uncomfortable tradeoffs between friction and risk.That era is coming to an end quickly.

In May 2025, Ethereum introduced Account Abstraction, its most ambitious comprehensive user experience reform to date.Account abstract unlocks significant enhancements including biometric-based transactions (e.g., face ID), seamless integration with secure hardware enclaves (e.g., those built into iPhones) for native key management, and advanced smart wallet features such as social recovery.Ethereum is finally beginning to imitate the seamless experience of the modern Internet – intuitive and secure, almost invisible to end users.

1. Institutional adoption is no longer an assumption, it is accelerating

Ethereum’s architecture—decentralized at the base layer and customizable at the application layer—is built specifically for institutional adoption.This design has proven to be prescient.Today, Ethereum has become the main destination for tokenized assets 44, attracting the vast majority of institutional-level blockchain deployments built on Ethereum Layer 2.

From asset management companies tokenizing treasury bonds and credit markets to banks deploying settlement infrastructure, Ethereum has become the application of these applicationsFact Standard.This adoption is no coincidence; it is structural.Ethereum uniquely provides what organizations operating around the world needSupervisionNeutrality, security assurance and composability.Leading tokenization initiatives have explicitly chosen Ethereum as its infrastructure.45 More than 10.2 billion USD 46 (about 82%)*** of all non-stable tokenized assets, including Treasury bonds, credit markets and interest-bearing funds, have been issued on Ethereum by global leading institutions such as BlackRock, JPMorgan Chase, Franklin Templeton, Fidelity, Apollo, Deutsche Bank, UBS and Sony.47Coinbase and other major exchanges are actively deploying customized Layer-2 blockchains that are directly integrated into the Ethereum security layer and economy.

However, this institutional wave is still in its early stages.Ethereum’s infrastructure has finally matured, the regulatory environment is evolving rapidly, and institutional demand continues to accelerate.Ethereum is approaching its “ChatGPT moment” – mainstream institutions suddenly realize that Ethereum is best suited to power future digital infrastructure.

1. SupervisionClarityComing soon

Ethereum has been under constant regulatory uncertainty for the past decade.In the United States, development on Ethereum is accompanied byReputation, financial and legal risks are enormous,thisKill innovation and deter institutional capital.The Ethereum Token (ETH) itself has also been in a state of regulatory vagueness.Continuously facing risks of being classified as securities.So despite Ethereum’s technological advantages, meaningful institutional adoption has been delayed.

However, the regulatory landscape is changing.The U.S. government in 201848Confirm and treat Ethereum as a commodity rather than a securities, and inReiterated this decision in 2024.49In May 2024, Spot EthereumETFApproved, This has enabled ETH to gain legal status in the eyes of traditional financial institutions.In 2025, the U.S. government says it intends to implement a clear legal framework for digital assets, which is likely to further reaffirm Ethereum’s approved regulatory status and increase institutions’ confidence in using blockchain.

The level of confidence in institutions has begun to increase rapidly, and the evidence isMore and more institutions are publicly transferring their assets to the chain, which shows that they are not worried that doing so will put them on the opposite side of regulators.

1. Reverse capital is pouring in – ETH is the core asset that has been mispriced

Despite the high adoption metrics for Ethereum, ETH itself is still severely undervalued and under-equipped.Over the past two years, ETH has lagged behind Bitcoin (BTC) despite clear evidence of the dominance of the Ethereum platform, increasing institutional trust and substantial economic utility.This disconnect provides a rare investment opportunity.

Savvy capital is beginning to notice this.ETH currently offers asymmetric upward potential: it is a liquid, interest-producing, institutional-level asset that is mispriced due to retail narratives and traditional valuation frameworks.For reverse investors, ETH represents a compelling, highly certain value revaluation opportunity—similar to AI in 2022, BTC in 2020, or tech stocks in early 2009.

ETH is the “digital oil” that drives the digital economy.As Ethereum institutional adoption accelerates, the value of ETH will also grow.The market has not yet included this rapid adoption curve in price, which provides investors with an excellent entry point.

Ethereum and Artificial Intelligence: The Engine of the Autonomous Economy

The market drivers outlined in the previous section are already ready for Ethereum — and therefore ETH — to achieve a breakthrough in the near future.However, if we take the timeframe a little further, there is a future catalyst that, if it can be achieved, will make ETH one of the most popular assets in the world, even the most popular: the convergence of artificial intelligence and digital finance.

The amount of capital flowing into artificial intelligence today is comparable to the most ambitious infrastructure project in human history.In today’s dollars, the Apollo moon landing program costs about $200 billion, and the U.S. interstate system costs about $600 billion.In contrast, private sector investments in artificial intelligence have alreadyAchieving trillions of levels, and is accelerating.

In 2024 alone, NVIDIA generated $130 billion in revenue.·

Meta allocated $65 billion to its Llama model in 2025.

Microsoft is investing $80 billion in artificial intelligence infrastructure, training and deployment.

Apple announces $500 billion in four years to invest unprecedented investments related to artificial intelligence

This influx of capital is reshaping the power grid, computing infrastructure, and the capabilities of the software itself.At the heart of this evolution is a new paradigm:AutonomousAIThe rise of agents——These intelligent, self-oriented software entities are able to interact with the world, perform complex tasks, and coordinate with other agents.

As AI agents become more complex, they will require programmable currencies, embedded financial services, and native digital ownership frameworks.They will require instant transactions, settlement payments and execution of contracts worldwide without relying on traditional human intermediaries.

Ethereum: Infrastructure built for autonomous agents

Ethereum has unique advantages in supporting the emerging autonomous digital economy, providing capabilities that traditional finance and even other blockchains simply cannot be replicated:

Finality and execution assurance: Ethereum’s atomized, composable transaction structure enables AI agents to seamlessly execute complex financial interactions, which cannot be supported by traditional settlement systems.

worldwideproperty, not jurisdictional claims: Ethereum’s smart contract enforces property rights through code rather than court.AI agents can safely trade across borders without jurisdictional friction and complexity.

License-free finance: Ethereum provides native access to stablecoins, tokenized assets, DeFi protocols, oracle services, identity systems, etc., all of which have institutional-level liquidity and security.

Programmability and speed: AI agents interacting with Ethereum can deploy, upgrade and trigger complex financial logic on the fly, mimicking human decision-making processes but running at the speed of computing.

Ethereum’s toolchain: Agent development and collaboration platform

In addition to its financial capabilities, Ethereum also provides a powerful and mature toolchain that is perfectly designed for the creation, deployment and coordination of autonomous AI agents:

Decentralized data curation and governance: Transparent, protocol-based system for managing datasets, governance, and proxy evolution.

Tokenization framework: Built-in mechanism to define ownership, allocate royalties and raise funds through tokenization models and assets.

Model Training Market: A market-driven platform that transforms data in specific fields into high-quality, finely tuned AI models.

Agent Hosting Market: The infrastructure market that simplifies agent deployment and operations without the need for private infrastructure.

Crucially, Ethereum-based proxy does not exist in isolation.Once deployed, these autonomous agents can discover natively, communicate with each other and compensate each other, forming a decentralized proxy network capable of complex real-time collaboration.This autonomous agent grid will enable applications, from autonomous logistics and transactions to personalized health care, education, and more—and ETH will serve as a universal medium of exchange and coordination.

Reasons for bullish ETH

Ethereum is expected to become the infrastructure to support the global economy.If this is achieved, trillions or even hundreds of trillions of dollars of assets will eventually be tokenized on Ethereum’s Layer-1 and Layer-2 networks, unlocking unprecedented utility, innovation and financial access worldwide.

Ethereum is already at the forefront and its leading position will continue to expand as its role as a global record ledger is growing.Ethereum’s strategic emphasis on decentralization, security, reliability and uptime enables it to gain steadily global adoption, deliberately avoiding the trap of “act quickly and break the routine” mentality.

ETH itself represents a completely new asset class.Although oil provides the closest classic analogy due to its global economic utility and strategic importance, even such comparisons fail to fully demonstrate the full potential of ETH.

The supply of ETH is programmed through issuance caps and is protected by a global decentralized network.ETH is an ideal productive store of value asset.These properties will inevitably lead to a substantial tightening of supply as institutions will compete to stockpile ETH as a treasury-level reserve asset.

Ethereum currently dominates the adoption of institutional blockchains, but ETH remains a reverse investment.As the financial industry realizes Ethereum’s unrivaled institutional appeal, ETH will quickly reprice to its true valuation.

ETH is digital oil that powers the global financial system and the broader digital economy.Ethereum and its native asset ETH are entering its revival, creating a compelling opportunity for forward-thinking investors.

introduction

1 This maximum inflation rate is for the current supply; since inflation is a function of supply, the value fluctuates inversely as supply increases or decreases.

2 Data source ultrasound.money (change the time range to calculate from the time of merge).

3 Although staking ETH in combination with active validator services can generate benefits—sometimes described as making ETH a “productive” store of value—this dynamic is similar to the gains gained when it is lent or used as collateral; in both cases, it is not the underlying commodity itself that is inherently productive, but the external service activity established around that commodity.The core valuation of ETH is still driven by its role as a scarce currency commodity, rather than through a discounted cash flow model.

4 Data comes from (ETH in DeFi) andvalidatorqueue.com(ETH staked); Breakdown graphic + script

5 Data comes from api.llama.fi/tokenProtocols/ETH((total ETH in chain and bridge contracts / total ETH supply); Breakdown graphic +script

6 data comes from defilama.com/fees/ethereum (from August 6, 2021 to May 9, 2025, that is, during the implementation of the destruction mechanism, the total amount of destruction [US$12.388 billion] divided by total expenses [US$15.401 billion])

7 This maximum inflation rate is for the current supply; since inflation is a function of supply, the value fluctuates inversely as supply increases or decreases.

8L1 Total Lock Value (TVS) comes from defilama.com/bridged/ethereum; L2 Total Lock Value (TVS) comes from growthepie.xyz/fundamentals/total—value—secured (select all L2); L2 Real-world Assets (RWA) comes from app.rwa.xyz/networks (not counted in other values), ETH market value.

9 data comes from defilama.com/yields (total trading pairs using ETH or ETH derivatives on Ethereum L1 and the top 9 L2)

10 Strategic ETH reserve https://www.strategicethreserve.xyz/BTCS Inc. https://www.btcs.com/wp—content/uploads/2025/05/Convertible—Note—May—14—2025—vF.pdf

Source: strategythreserve.xyzbyFabrice Cheng

11 data comes from validatorqueue.com, calculated at the spot value of ETH $2,600.

12860,000,000 TH/s/500 TH/s= 1,720,000 units* $4791/ units= $824 million

13 Data comes from ultrasound.money (change the time range to start calculation from when merged

14 data from etherscan.io/chart/ethersupplygrowth

15 This maximum inflation rate is for the current supply; since inflation is a function of supply, the value fluctuates inversely as supply increases or decreases.

16 data from validatorqueue.com

17 data from ultrasound.money

18 data comes from ultrasound.money (change the time range to start calculation from when merged)

19 data comes from ultrasound.money (30-day time range)

20 data comes from defilama.com/fees/ethereum (total destruction [$12.388B] divided by total expenses s [$15.401B] The time range is from August 6, 2021 to May 9, 2025, that is, during the implementation of the destruction mechanism)

21 This maximum inflation rate is for the current supply; since inflation is a function of supply, the value fluctuates inversely as supply increases or decreases.

22 Data source etherscan.io/chart/ethersupplygrowth

23 This maximum inflation rate is for the current supply; since inflation is a function of supply, the value fluctuates inversely as supply increases or decreases.

24 data sources ultrasound.money (30-day time range)

25 data sources charts.bitbo.io/inflation

26ETH vs. BTC: Ethereum’s excellent currency features yyoutube.com/v/skcZbXitZxQ

27 Data source defilama.com/fees/ethereum Total destruction [USD 1.2388 billion] Divided by total expense [USD 1.5401 billion] The time range is from August 6, 2021 to May 9, 2025, that is, during the implementation of the destruction mechanism)

28 It is necessary to run a validator node with ETH as collateral; providing verification services to the network can be analogous to providing services to oil companies to the oil industry.

29 Ethereum data comes from digiconomist.net/ethereum—energy—consumption

30 Bitcoin data comes from digiconomist.net/bitcoin—energy—consumption

31 tokenized assets mainly exist in the Ethereum ecosystem (accounting for 82%) rwa.xyz/networks

32 reserve data comes from worldometers.info/oil, and the price per barrel comes from marketwatch.com/investing/future/cl.1

33 data from McKinsey

34 reserve data comes from worldometers.info/oil, and the price per barrel comes from marketwatch.com/investing/future/cl.1

35 data comes from companiesmarketcap.com/gold/marketcap

36 data comes from techsciresearch.com/report/bond—market/27048.html

37 data from streetstats.finance/liquidity/money

38 data comes from app.rwa.xyz/networks (Ethereum L1 + L2s)

39 The total stablecoin data of the Ethereum system comes from growthepie.xyz (select “Total Ecosystem”, select “All Networks”, and select “Stack Chart”), and the total stablecoin data comes from app.rwa.xyz/stablecoins

40 data comes from app.rwa.xyz/networks (Ethereum L1 + L2s)

41 High-profile entity ethereumadoption.com/built—on—ethereum/

42L1 TVS (total lock value) from defilama.com/bridged/ethereum;L2 TVS from growthepie.xyz/fundamentals/total—value—secured (select all L2s);L2 RWAs data from app.rwa.xyz/networks (no other values ​​counted)

43 data comes from https://digiconomist.net/ethereum—energy—consumption

44 assets can be found on app.rwa.xyz/networks/ethereum.

45app.rwa.xyz/networks

46 data comes from app.rwa.xyz/networks (Ethereum L1 + L2s)

47 major entities are being built on Ethereum, from ethereumadoption.com

48SEC.gov | Digital Asset Transactions: When Howey Met Gary (Plastic)

49Federal Court Finds Ether Is a Commodity in CFTC Fraud Case |PracticalLaw