Authors: Konstantin Lomashuk, Artem Kotelskiy, XiaMiPP(Odaily)
Editor's Note: Recently, publicly traded US companies have begun to "rediscover" Ethereum. SharpLink Gaming plans to invest up to $1 billion in ETH as a strategic reserve by selling stocks; BTCS has also purchased 3,450 ETH for approximately $8.42 million. These moves may be sending a clear signal: ETH is transforming from "chain fuel" to a "corporate-level strategic asset".
From a developer community experimental platform to DeFi infrastructure, and now to long-term allocation in corporate finance, Ethereum's role is undergoing a profound transformation. In this wave of value reassessment, how should we understand the technological logic and economic model behind ETH?
Odaily has translated and refined the in-depth article "Ethereum Roadmap: The Root Chain to Becoming a 'World Computer'" co-authored by Konstantin Lomashuk, an early Ethereum investor and Lido co-founder, and Artem Kotelskiy, research director at Cyber•Fund and Princeton mathematics PhD. The article systematically combs through Ethereum's development trajectory, protocol evolution, expansion paths, and its positioning in the Rollup era, attempting to answer a key question: Why is ETH worth "long-term holding"?
Note: Due to the length of the original text, the translator has deleted and optimized some content to enhance readability without affecting the original meaning.
DeFi: Ethereum's First Product Market Fit (PMF)
From its inception, Ethereum has been dedicated to creating a global, trustless computing platform. After a decade of development, it has grown from an early technical experiment to the core foundation of decentralized finance (DeFi), block space market, and on-chain application ecosystem.
But to understand how ETH has reached its current state, we must start from a key turning point—DeFi's Product Market Fit (PMF). During the bear market of 2018 to 2020, with the emergence of protocols like ERC 20, Uniswap, DAI, Aave, and Compound, Ethereum gradually evolved into a self-custodial, composable, and permissionless financial system infrastructure. DeFi's outbreak was a natural convergence of technological innovation and market demand.
The "DeFi Summer" of 2020 marked the peak of this trend, with total value locked rapidly rising and on-chain transaction volume surpassing centralized exchange platforms for the first time, revealing ETH's network value. However, the subsequent high transaction fees also exposed Ethereum's scalability bottleneck, laying the groundwork for future technological route transformation.
ETH's Value Inflection: From EIP-1559 to The Merge
If DeFi demonstrated Ethereum's practical value, then the two upgrades of EIP-1559 and The Merge endowed ETH with long-term value logic.
In 2021, EIP-1559 was introduced, fundamentally changing Ethereum's fee mechanism. The original "priority bidding" model was replaced by a base fee, with all users' fees no longer going to miners but being directly burned. This means that the more active the network, the more ETH is burned, reducing inflationary pressure and strengthening ETH's value support.
The indigo section shows that ETH begins to achieve "value reflux" through the burning mechanism
In September 2022, Ethereum completed a historic important upgrade: switching consensus mechanism from Proof of Work (PoW) to Proof of Stake (PoS), marking the official landing of "The Merge". This transformation was technically extremely difficult yet crucial—it reduced Ethereum's energy consumption by 8000 times, and lowered the annual issuance rate required for network security from 4% to less than 1%.
Afterward, ETH's "net inflation rate" turned negative for a considerable period.
Green represents weekly ETH new issuance, orange represents weekly ETH burning, blue represents the net difference between the two
(Translation continues in the next response due to character limit)This bias is indeed somewhat true to a certain extent. When solving the high mainnet fee issue, Ethereum chose to bet on Rollup for the future, and this "all in" strategy overlooked the potential of L1 itself. Looking back now, as the fragmentation problems of Rollup gradually become apparent and we have gradually found viable L1 expansion paths (such as access lists and the development of zkEVM), we find that the strategic underestimation of L1 might have gone too far.
However, it must be acknowledged that this judgment is based on a hindsight perspective. The Rollup route was a pragmatic approach to addressing mainnet congestion at the time, and solutions like zkEVM were still far from reach. Therefore, it was difficult to reasonably allocate resources between L1 and DA at that time.
Moreover, even if we now have a clear path to increase L1 gas limits by 100 times, to achieve performance above 10,000 TPS and support a comprehensive public chain computing platform, some form of horizontal sharding is still inevitable. In this context, choosing a Rollup-first strategy at that time was still a reasonable decision.
Factor C: Rollup's DA Demand Has Not Yet Exceeded the Mainnet's DA Supply
This is the most critical and overlooked deep-seated problem: Rollup's demand for data availability (DA) space has not substantially exceeded Ethereum's supply.
Rollup's sequencers are highly efficient when packaging and uploading transactions to the mainnet, with extremely high compression rates, resulting in them consuming far less blob space than the theoretical value. Additionally, some user activities this cycle (such as meme coin trading) have been diverted by TRON and Solana.
Before the Pectra upgrade (May 7, 2025), calculating 3 blobs per block, Ethereum's DA supply is about 210 TPS. Until November 2024, this supply will exceed market demand. Even afterward, if demand increases, the blob gas price shows that it has not significantly risen, indicating that demand still has not overwhelmed supply. Recently, Pectra will double the blob target to 6 per block, further increasing DA supply, far exceeding actual needs.
Therefore, Factor C is actually the fundamental variable affecting Factors A and B. Once Rollup's demand for blob space truly exceeds supply, blob fees will enter a market discovery phase, and Ethereum's overall fee structure will undergo a qualitative change.
How to Assess ETH's Value? Ethereum's Business Logic
Is ETH a productive asset or a currency? We firmly believe that ETH should first be a productive asset, and secondarily a currency.
The reason is that Ethereum's most powerful moat comes from its technological advantages: a trust foundation tested over many years, stability, neutrality and censorship resistance brought by decentralization, leading DeFi ecosystem, high-quality R&D and developer community, and a powerful network activity guarantee mechanism. Ethereum is truly an unstoppable "global computer".
Secondly, as a productive asset dependent on technological adoption, ETH's monetary value can be solidified and strengthened. Although ETH as a currency can more easily cross technological iteration cycles, the most secure path is to first build Ethereum as a technological platform, ensure its economic model is sustainable, and then let its monetary attributes naturally emerge. Conversely, merely "hyping ETH as currency" cannot establish a solid foundation.
In short, ETH's price consists of three parts: the discounted value of future fees, monetary premium (as a store of value, transaction medium, and even unit of account), and speculative premium (including cultural and meme value). Although the latter two have greater influence, to strengthen these three, the key is to maximize the underlying network income, which is the foundation of ETH's value.
[The translation continues in the same manner for the rest of the text.]III. Differentiation Strategy and Moat Construction
Ethereum needs to achieve differentiation in DA services, attract marginal Rollllup customers, and simultaneously build a moat to lock in ecosystem customers.
Key moats come from three network effects: trust, liquidity, and composability. Currently, cross-Rollup composability needs are not yet clear, with primary value concentrated in trust and liquidity aspects, which will naturally expand from Ethereum L1 to Rollup ecosystem after resolving interoperability.
In terms of trust, Rollups enjoy the highest security guarantee through Ethereum DA, while independent chain security is weaker. Rollups adopting Ethereum DA continuously enhance security, solidifying their moat.
In terms of liquidity, institutional-level liquidity on Ethereum L11 crucial factor for Roll Rollup selection. After connecting to Ethereum DA, Rollups can obtain ecosystem-wide institutional liquidity, significantly improving capital efficiency and forming a solid moat.
Therefore, the market will drive Rollups to use Ethereum DA to obtain maximum security and liquidity. Ethereum should strengthen these two advantages and attract institutional customers through its brand and trust.
< h3>Value Backflow Path: From "Fee" maximization"" to "Maximum ValueIciency">At the main chain level, widespread DeFi adoption and enterprise applications will be the primary driving force, with Rollup proliferationation furtherifying Simultaneously, Rollups will pay fees for interoperability and settlement services,,, income.
At the DA layer, the key to achieving sustainable economics lies in raising the minimum blob price.
For example, in the next few, years Occupies the CeDeFi payment market, processing around 10,000 TPS, with annual annual revenue of billions of dollars, while Ethereum DA supply exceeds 10,000 TPS. At this point, although blob transaction fees won't completely fully enter market price discovery, setting a minimum fee of 0.3 cents per DA transaction burned could bring ETH holders approximately $1 billion in annual income.
Further covering high-frequency trading markets such markets social AI agent coordination, Rollup TTPS can reach 30,000 level,PS bringing transaction exceeding $10 billion, with transaction transaction costs still below one.
Such income is influenced by ETH price and other factors, with minimum minimum price nedynamically adjusted, expected to be determined by community consensus, similar to today's gas limit mechanism. Future research research optimal blob pricing strategies, such as improving correlation with L1 fee market. Additionally, as Ethereum transitions to zkEVM or RISC-V, new technologies like SNARK infrastructure will help improve fee capture efficiency.
The key is that at the current stage, one should not rush to to value from transactions, but maximize support and promotion of high-value activities in Ethereum blocks and blob spaces This produce and effects, but also help Ethereum capture the continuously expanding block space market,izing foundation. The value backflow path is thus very clear.
