ETH is moving from "on-chain fuel" to "enterprise-grade strategic assets." This article is based on an in-depth essay "Ethereum Thesis — Root Chain for the World Computer" co-authored by Konstantin Lomashuk and Artem Kotelskiy, head of research at CyberFund and Ph.D. in mathematics at Princeton, compiled and rewritten by Odaily. (Synopsis: Ethereum is about to take off? Four major factors may become coin price propellers) (Background supplement: Comment" Why Goldman Sachs' judgment on Ethereum is wrong) Editor's note: Recently, U.S. listed companies have begun to "re-understand" Ethereum. SharpLink Gaming plans to invest up to $1 billion in ETH as a strategic reserve by selling shares; BTCS has also purchased 3,450 ETH for approximately $8.42 million. These developments may send a clear signal that ETH is transforming from "on-chain fuel" to "enterprise-grade strategic assets." From the developer community's experimental platform, to DeFi's infrastructure, to the long-term configuration of enterprise finance, Ethereum's role is undergoing a profound transformation. In this wave of revaluation, how do we understand the technical logic and economic model behind ETH? Odaily Planet translated and refined the in-depth long essay "The Ethereum Roadmap: Becoming the Root Chain of the World's Computer" co-authored by early Ethereum investor and Lido co-founder Konstantin Lomashuk and head of research at CyberFund and Princeton Ph.D. in mathematics. This article systematically sorts out Ethereum's development trajectory, protocol evolution, scaling path and its positioning in the Rollup era, trying to answer a key question: Why is ETH worth being "held for the long term"? Note: Due to the long length of the original text, in order to improve readability, the translator has deleted and optimized some of the content without affecting the original meaning. DeFi: Ethereum's First Product-Market Fit (PMF) Since its inception, Ethereum has been committed to building a globally shared, trustless computing platform. After ten years of development, it has grown from an early technical experiment to the core foundation of decentralized finance (DeFi), block space market and even on-chain application ecology. But to understand how ETH got to where it is today, we have to start with a key inflection point – DeFi's Product Market Fit (PMF). It coincided with the bear market from 2018 to 2020, and with the emergence of ERC 20, Uniswap, DAI, Aave, Compound and other protocols, Ethereum gradually evolved into a self-custodial, composable, permissionless financial system bottom. The explosion of DeFi is a natural fit between technological innovation and market demand. The "DeFi Summer" of 2020 marked the culmination of this, with lock-ups rising rapidly, on-chain trading volumes surpassing centralized trading platforms for the first time, and the value of ETH's network began to appear. But the ensuing high transaction fees have also exposed Ethereum's bottleneck in scaling suites, and laid the groundwork for future technological route transformation. The Value Shift of ETH: From EIP-1559 to The Merge If DeFi has allowed Ethereum to demonstrate practical value, the two upgrades to EIP-1559 and The Merge lend the logic of long-term value to ETH. In 2021, EIP-1559 was launched, revolutionizing Ethereum's fee mechanism. The original "first bidding" model was replaced by a base fee, and all users paid this part of the fee is no longer owned by the miner, but is directly sold. This means that the more active the network, the more ETH is sold, the less inflationary pressure there is, and the stronger the value support of ETH. The indigo part shows that ETH began to achieve "value return" through the pin mechanism In September 2022, Ethereum completed a historic and important upgrade: the consensus mechanism switched from proof-of-work (PoW) to proof-of-stake (PoS), which marked the official landing of "The Merge". This change is technically difficult, but also critical — it reduces Ethereum's energy consumption by a factor of 8,000 and reduces the annualized issuance rate required for cybersecurity from 4% to less than 1%. After this, ETH's "net inflation" turned negative for quite some time. Green represents ETH's weekly new issuance, orange represents ETH's weekly sales, and blue represents the net difference between the two Long-standing beliefs in the Rollup era: cooperation vs. parasitism? Scaling is the core problem of Ethereum, facing the trilemma of decentralization, security and scalability suite, Ethereum finally chose the Rollup solution. Rollup puts transaction execution off-chain and only writes state changes and data to the main chain, which not only ensures the security of the main chain, but also greatly improves the transaction throughput. This also transforms Ethereum from a simple "execution platform" to a "security layer + data availability layer", forming a "rollup-centric" expansion route. However, Rollup is not just a technological change, it has changed the value flow logic of ETH. In the past, users paid fees directly to the main chain, and now most transactions are completed through Rollup, and the need for direct transactions on the main chain is reduced. Rollup earns money by reselling block space, but since the Cancun upgrade, its direct expenses to the main chain have been significantly reduced, sparking a "parasitic" discussion. In fact, Rollup is more of a "business extension kit" for Ethereum, relying on the security and data services of the main chain, bringing more users and transactions. Although the transaction demand of the main chain has declined, the expansion and upgrading of the main chain is still actively advancing, and the goal is to increase the processing power by a hundredfold or even a thousand times in the next few years, providing stronger security and data support for L2. Rollup and the main chain together form a complementary ecology, both division of labor and collaboration, laying the foundation for Ethereum's future sustainable development. State of Ethereum Indicator: Analysis of Crisis and Deep Factors Since the FTX crash in 2022, the crypto industry as a whole has maintained growth, but ETH has significantly lagged behind Bitcoin (BTC) and Solana (SOL). ETH prices are highly correlated with Ethereum network fees, and fee growth has been weak since 2022, especially compared to the performance of Solana in the 2018-2022 cycle and this cycle, and the revenue pressure is obvious. There are three main reasons: Factor A: Rollup is "parasitic" Although Rollup profits from user fees, it does not currently return enough value to the Ethereum mainnet. From the data, although this factor exists, it currently has little impact on overall income. Rollup's current total weekly revenue is only in the multi-million dollar range, and its fees are low, in part because rollup's sequencers can support gas limits much higher than mainnet, so they don't have to charge users the same high fees as L1 networks. What's more, now questioning rollup...
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Pacific001
· 18h ago
That is to say, there is no clear value, and there will be a more perfect algorithm to replace Ether later.
Long article: Where does the value of ETH come from? A comprehensive analysis of Ethereum from asset logic to business strategy.
ETH is moving from "on-chain fuel" to "enterprise-grade strategic assets." This article is based on an in-depth essay "Ethereum Thesis — Root Chain for the World Computer" co-authored by Konstantin Lomashuk and Artem Kotelskiy, head of research at CyberFund and Ph.D. in mathematics at Princeton, compiled and rewritten by Odaily. (Synopsis: Ethereum is about to take off? Four major factors may become coin price propellers) (Background supplement: Comment" Why Goldman Sachs' judgment on Ethereum is wrong) Editor's note: Recently, U.S. listed companies have begun to "re-understand" Ethereum. SharpLink Gaming plans to invest up to $1 billion in ETH as a strategic reserve by selling shares; BTCS has also purchased 3,450 ETH for approximately $8.42 million. These developments may send a clear signal that ETH is transforming from "on-chain fuel" to "enterprise-grade strategic assets." From the developer community's experimental platform, to DeFi's infrastructure, to the long-term configuration of enterprise finance, Ethereum's role is undergoing a profound transformation. In this wave of revaluation, how do we understand the technical logic and economic model behind ETH? Odaily Planet translated and refined the in-depth long essay "The Ethereum Roadmap: Becoming the Root Chain of the World's Computer" co-authored by early Ethereum investor and Lido co-founder Konstantin Lomashuk and head of research at CyberFund and Princeton Ph.D. in mathematics. This article systematically sorts out Ethereum's development trajectory, protocol evolution, scaling path and its positioning in the Rollup era, trying to answer a key question: Why is ETH worth being "held for the long term"? Note: Due to the long length of the original text, in order to improve readability, the translator has deleted and optimized some of the content without affecting the original meaning. DeFi: Ethereum's First Product-Market Fit (PMF) Since its inception, Ethereum has been committed to building a globally shared, trustless computing platform. After ten years of development, it has grown from an early technical experiment to the core foundation of decentralized finance (DeFi), block space market and even on-chain application ecology. But to understand how ETH got to where it is today, we have to start with a key inflection point – DeFi's Product Market Fit (PMF). It coincided with the bear market from 2018 to 2020, and with the emergence of ERC 20, Uniswap, DAI, Aave, Compound and other protocols, Ethereum gradually evolved into a self-custodial, composable, permissionless financial system bottom. The explosion of DeFi is a natural fit between technological innovation and market demand. The "DeFi Summer" of 2020 marked the culmination of this, with lock-ups rising rapidly, on-chain trading volumes surpassing centralized trading platforms for the first time, and the value of ETH's network began to appear. But the ensuing high transaction fees have also exposed Ethereum's bottleneck in scaling suites, and laid the groundwork for future technological route transformation. The Value Shift of ETH: From EIP-1559 to The Merge If DeFi has allowed Ethereum to demonstrate practical value, the two upgrades to EIP-1559 and The Merge lend the logic of long-term value to ETH. In 2021, EIP-1559 was launched, revolutionizing Ethereum's fee mechanism. The original "first bidding" model was replaced by a base fee, and all users paid this part of the fee is no longer owned by the miner, but is directly sold. This means that the more active the network, the more ETH is sold, the less inflationary pressure there is, and the stronger the value support of ETH. The indigo part shows that ETH began to achieve "value return" through the pin mechanism In September 2022, Ethereum completed a historic and important upgrade: the consensus mechanism switched from proof-of-work (PoW) to proof-of-stake (PoS), which marked the official landing of "The Merge". This change is technically difficult, but also critical — it reduces Ethereum's energy consumption by a factor of 8,000 and reduces the annualized issuance rate required for cybersecurity from 4% to less than 1%. After this, ETH's "net inflation" turned negative for quite some time. Green represents ETH's weekly new issuance, orange represents ETH's weekly sales, and blue represents the net difference between the two Long-standing beliefs in the Rollup era: cooperation vs. parasitism? Scaling is the core problem of Ethereum, facing the trilemma of decentralization, security and scalability suite, Ethereum finally chose the Rollup solution. Rollup puts transaction execution off-chain and only writes state changes and data to the main chain, which not only ensures the security of the main chain, but also greatly improves the transaction throughput. This also transforms Ethereum from a simple "execution platform" to a "security layer + data availability layer", forming a "rollup-centric" expansion route. However, Rollup is not just a technological change, it has changed the value flow logic of ETH. In the past, users paid fees directly to the main chain, and now most transactions are completed through Rollup, and the need for direct transactions on the main chain is reduced. Rollup earns money by reselling block space, but since the Cancun upgrade, its direct expenses to the main chain have been significantly reduced, sparking a "parasitic" discussion. In fact, Rollup is more of a "business extension kit" for Ethereum, relying on the security and data services of the main chain, bringing more users and transactions. Although the transaction demand of the main chain has declined, the expansion and upgrading of the main chain is still actively advancing, and the goal is to increase the processing power by a hundredfold or even a thousand times in the next few years, providing stronger security and data support for L2. Rollup and the main chain together form a complementary ecology, both division of labor and collaboration, laying the foundation for Ethereum's future sustainable development. State of Ethereum Indicator: Analysis of Crisis and Deep Factors Since the FTX crash in 2022, the crypto industry as a whole has maintained growth, but ETH has significantly lagged behind Bitcoin (BTC) and Solana (SOL). ETH prices are highly correlated with Ethereum network fees, and fee growth has been weak since 2022, especially compared to the performance of Solana in the 2018-2022 cycle and this cycle, and the revenue pressure is obvious. There are three main reasons: Factor A: Rollup is "parasitic" Although Rollup profits from user fees, it does not currently return enough value to the Ethereum mainnet. From the data, although this factor exists, it currently has little impact on overall income. Rollup's current total weekly revenue is only in the multi-million dollar range, and its fees are low, in part because rollup's sequencers can support gas limits much higher than mainnet, so they don't have to charge users the same high fees as L1 networks. What's more, now questioning rollup...