Author: Konstantin Lomashuk, Artem Kotelskiy
Translation: Dingdang, Odaily Planet Daily
Editor's note: Recently, US listed companies have begun to "re-understand" Ethereum. SharpLink Gaming plans to invest up to $1 billion to purchase ETH as a strategic reserve by selling shares; BTCS has also purchased 3,450 ETH for about $8.42 million. These trends may be sending a clear signal: ETH is changing from "on-chain fuel" to "enterprise-level strategic assets."
From the experimental platform of the developer community, to the infrastructure of DeFi, to the long-term configuration in corporate finance, the role of Ethereum is undergoing a profound transformation. In this wave of value revaluation, how should we understand the technical logic and economic model behind ETH?
Odaily Planet Daily translated and refined the in-depth long article "Ethereum Roadmap: Becoming the Root Chain of the "World Computer"" co-authored by Konstantin Lomashuk, an early investor in Ethereum and co-founder of Lido, and Artem Kotelskiy, director of research at Cyber•Fund and a Ph.D. in mathematics from Princeton. This article systematically sorts out the development trajectory of Ethereum, the evolution of the protocol, the expansion path and its positioning in the Rollup era, and tries to answer a key question: Why is ETH worth "holding for a long time"?
Note: Since the original text is long, in order to improve readability, the translator has deleted and optimized some content without affecting the original meaning.
DeFi: The first product-market fit (PMF) found by Ethereum
Since its inception, Ethereum has been committed to building a globally shared, trustless computing platform. After ten years of development, it has grown from early technical experiments to the core foundation of decentralized finance (DeFi), block space market and even on-chain application ecology.
But to understand how ETH has come to where it is today, we must start from a key turning point - the product-market fit (PMF) of DeFi. It coincided with the bear market from 2018 to 2020. With the emergence of protocols such as ERC 20, Uniswap, DAI, Aave, and Compound, Ethereum gradually evolved into a self-hosted, composable, and permissionless financial system. The outbreak of DeFi is a natural fit between technological innovation and market demand.
The "DeFi Summer" in 2020 marked the climax of this point. The lock-up volume rose rapidly, and the on-chain transaction volume surpassed the centralized trading platform for the first time. The network value of ETH began to emerge. However, the high transaction fees that followed also exposed the bottleneck of Ethereum in scalability and laid the groundwork for the future transformation of the technical route.
ETH's value turning point: from EIP-1559 to The Merge
If DeFi allows Ethereum to demonstrate practical value, then the two upgrades of EIP-1559 and The Merge have given ETH the logic of long-term value.
In 2021, EIP-1559 was launched, which completely changed the fee mechanism of Ethereum. The original "priority bidding" model was replaced by the base fee (Base Fee), and this part of the fee paid by all users no longer belongs to the miners, but is directly destroyed. This means that the more active the network is, the more ETH is destroyed, the less inflationary pressure, and the stronger the value support of ETH.
The indigo part shows that ETH has begun to achieve "value reflux" through the destruction 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), marking the official landing of "The Merge". This change is extremely technically difficult, but also extremely critical-it reduces Ethereum's energy consumption by 8,000 times and reduces the annualized issuance rate required for network security from 4% to less than 1%.
After that, ETH's "net inflation rate" turned negative for quite a long time.
Green represents the weekly new issuance of ETH, orange represents the weekly destruction of ETH, and blue represents the net difference between the two. Long-term beliefs in the Rollup era: cooperation and parasitism?
Scaling is the core problem of Ethereum. Faced with the trilemma of decentralization, security and scalability, 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 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, but also changes the logic of ETH's value flow. In the past, users paid fees directly to the main chain. Now most transactions are completed through Rollup, and the demand for direct transactions on the main chain has decreased. Rollup earns revenue by reselling block space, but since the Cancun upgrade, its direct cost expenditure on the main chain has been greatly reduced, triggering a discussion on "parasitism". In fact, Rollup is more of a "business expansion" of Ethereum, relying on the security and data services of the main chain to bring more users and transactions.
Although the transaction demand of the main chain has declined, the expansion and upgrade of the main chain are still being actively promoted, with the goal of increasing the processing capacity by a hundred 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 ecosystem, with both division of labor and collaboration, laying the foundation for the sustainable development of Ethereum in the future.
Ethereum status indicators: crisis and deep-seated factor analysis
Since the collapse of FTX in 2022The crypto industry as a whole has maintained growth, but ETH performance has lagged significantly behind Bitcoin (BTC) and Solana (SOL). ETH prices are highly correlated with Ethereum network fees, and fee growth has been sluggish since 2022, especially compared with Solana's performance in the 2018-2022 cycle and this cycle, and revenue pressure is obvious. There are three main reasons:
Factor A: Rollup "parasitism"
Although Rollup makes profits through user fees, it has not yet returned enough value to the Ethereum mainnet.
From the data, although this factor exists, it currently has little impact on overall revenue. Rollup's current total weekly revenue is only at the level of several million US dollars, and its fees are low, partly because rollup's sorter can support gas limits far higher than the mainnet, so they do not need to charge users high fees like L1 networks.
More importantly, it is too early to question whether rollup has not fed back to the mainnet. In fact, the Ethereum community "accidentally" adopted the strategy of providing data availability (DA) space to rollups for free in order to attract as many aggregation layers as possible. This "concession" was the correct way to build an ecosystem in the early stage.
Factor B: The strategic focus of L1 shifted to DA, and the mainnet construction was marginalized
Since the launch of the Rollup route, Ethereum's strategy and user growth focus have almost all tended to rollups, and the expansion and maintenance of the mainnet have been relatively neglected.
This bias is indeed true to some extent. When Ethereum solved the problem of high mainnet fees, it chose to bet on Rollup in the future. This "all in" strategy ignored the potential of L1 itself. Looking back now, as the problem of Rollup fragmentation gradually emerged, and we gradually found a feasible L1 expansion path (such as access lists and the development of zkEVM), we will find that the strategic under-allocation of L1 may be a bit excessive.
However, it must be admitted that this judgment is based on a hindsight perspective. The Rollup route was originally a pragmatic move to deal with the congestion problem of the mainnet at the time, and solutions such as zkEVM were still a long way off. Therefore, it was difficult to reasonably allocate resources between L1 and DA.
In addition, even if we now have a clear path to increase the L1 gas limit by 100 times, some form of horizontal sharding is still inevitable to achieve performance of more than 10,000 TPS and support a comprehensive public chain computing platform. In this context, it was still a reasonable decision to choose a Rollup-first strategy at that time.
Factor C: Rollup's DA demand has not yet exceeded the mainnet's DA supply
This is the most critical and most overlooked underlying problem at present: Rollup's demand for data availability space (DA) has not substantially exceeded Ethereum's supply.
Rollup's sorter is very efficient when packaging transactions and uploading them to the mainnet, with extremely high compression rates, resulting in them consuming much less blob space than the theoretical value. In addition, some user activities in this cycle (such as Meme coin transactions) were also diverted to Tron and Solana.
Before the Pectra upgrade (May 7, 2025), based on 3 blobs per block, Ethereum's DA supply was about 210 TPS. Until November 2024, this supply exceeded market demand. Even if demand rose later, the blob gas price showed that its price did not rise significantly, indicating that demand still did not overwhelm supply. Recently, Pectra doubled the blob target to 6/block, and DA supply increased again, far exceeding actual demand.
Therefore, factor C is actually the fundamental variable that affects factors A and B. Once Rollup's demand for blob space really exceeds supply, blob fees will enter the market discovery stage, and the overall fee structure of the Ethereum network will undergo a qualitative change.
How to evaluate the value of ETH? Ethereum's business logic
Is ETH a productive asset or a currency? We firmly believe that ETH should be a productive asset first, and a currency second.
The reason is that Ethereum's strongest moat comes from its technological advantages: the trust foundation and stability that have been tested for many years, the neutrality and anti-censorship capabilities brought by decentralization, the leading DeFi ecosystem, the high-quality R&D and developer community, and the powerful network activity guarantee mechanism. Ethereum is a truly unstoppable "global computer".
Secondly, as a productive asset that relies on technology adoption, the monetary value of ETH can be stabilized and strengthened. Although ETH as a currency is more likely to cross the technology iteration cycle, the most reliable path is to first build Ethereum as a technology platform to ensure that its economic model is sustainable, and then the monetary attributes will naturally emerge. On the contrary, "hyping ETH as a currency" alone cannot establish a solid foundation.
In short, the price of ETH consists of three parts: the discounted value of future handling fees, the currency premium (as a store of value, a medium of exchange, or even a unit of account), and the speculative premium (including cultural and meme value). Although the latter two have a greater impact, the key to strengthening these three is to maximize the basic network income, which is the foundation of ETH's value.
Ethereum's long-term Rollup strategy: Why is it right? The truth behind the dispute with Solana
The reason why Ethereum firmly chooses the "Rollup-centric" expansion route is very clear: it is the only architectural design that can balance security, scalability and neutrality.
From the perspective of technical supply, Ethereum is currently the safest and most decentralized smart contract platform. Through the validating bridge and the data availability layer (DA), Ethereum can "wholesale" the main chain security to RollupHelp them build their own chains without having to rebuild a trust system.
From the perspective of market demand, users ultimately don’t care which chain they are using - they only care about “which chain is the cheapest and safest to trade on”. In the long run, the most rational choice is to be a Rollup, buy security, buy DA, buy consensus, and connect directly to Ethereum. This will naturally form a market convergence phenomenon: Rollup will build its own services around Ethereum’s “neutral ledger” like an enterprise, rather than being dispersed to other isolated chains.
Ethereum vs Solana
Based on the fee income in 2024, some people believe that Solana has begun to surpass Ethereum in the block space market. However, Solana’s strategy centered on hardware expansion is risky, and the network is periodically overloaded. If blockchain is to realize its full potential, that is, to migrate financial infrastructure to the chain on a large scale, Solana will eventually need to turn to sharding expansion, and Ethereum is already far ahead in security, Rollup infrastructure and ecological adoption.
More importantly, most of Solana's on-chain activity comes from the Memecoin craze. Data shows that such transactions once accounted for more than 50% of its DEX trading volume. But Memecoin is a short-term, zero-sum game phenomenon - after the heat is over, its "high income" myth will be difficult to sustain.
In contrast, Ethereum focuses on high-stickiness scenarios such as DeFi. These protocols are not driven by fanatical speculation, but the on-chain migration of real financial behavior.
The most significant and important difference: Solana's verification nodes are centralized, while Ethereum has the most diverse network of stakers in the world. This decentralization itself is the strongest moat.
Problems with Rollup Strategy
If the Rollup route is correct, Ethereum's long-term future is bright, so why is the ETH price underperforming?
On the technical level, the biggest flaw of Rollup is the lack of default interoperability, which leads to state fragmentation and seriously affects the user and developer experience.
On the business level, the key issue is that Ethereum has not clearly communicated the business strategy of Rollup:
Short-term adoption strategy: How to drive rapid growth of Rollup?
Long-term moat: Why won't Rollup turn to other data availability platforms?
Business strategy of Rollup: expansion, differentiation and moat
I. Ethereum should prioritize expansion and continue to provide sufficient and low-cost data availability (DA)
The technology network market in which Ethereum is located is highly competitive and changing rapidly, and the ultimate winner will enjoy a strong network effect. In this environment, the right strategy is to provide high-quality products and quickly expand the user base at very low or even almost free prices, which is also the growth path of most successful technology networks.
Therefore, Ethereum must keep the price of data availability (DA) low and minimize the entry threshold of Rollup. Ethereum provided 3 blobs of capacity after the Cancun upgrade. In the short term, supply exceeded demand and effectively suppressed prices. Although this strategy was not intentional, it achieved good results.
II. Solve Rollup interoperability and improve user and developer experience
Interoperability is the biggest shortcoming of Ethereum in the Rollup era. Fragmentation seriously affects users and developers. Solving the interoperability problem to unify the experience and narrow the gap with the integrated chain is also the key to building a liquidity moat.
The community is actively promoting solutions such as ERC-7683 second-level medium-sized asset cross-chain exchange and 2-of-3 OP+ZK+TEE hour-level large-value asset cross-chain bridge.
III. Differentiation strategy and moat construction
Ethereum needs to differentiate itself in DA services to attract marginal Rollup customers and build a moat to lock in ecological customers.
The key moat comes from three major network effects: trust, liquidity and composability. At present, the demand for cross-Rollup composability is unclear, and the main value is concentrated in trust and liquidity. After solving interoperability, these two will naturally expand from Ethereum L1 to the Rollup ecosystem.
In terms of trust, Rollup enjoys the highest security through Ethereum DA, and the security of independent chains is weak. The security of Rollup using Ethereum DA is constantly enhanced, and the moat continues to consolidate.
In terms of liquidity, the institutional-level liquidity of Ethereum L1 is an important factor in the selection of Rollup. After Rollup is connected to Ethereum DA, it can obtain the institutional liquidity of the entire ecosystem, greatly improve capital efficiency, and form a solid moat.
Therefore, the market will push Rollup to use Ethereum DA for the highest security and liquidity. Ethereum should strengthen these two advantages and attract institutional customers with brand and trust.
The path of value return: from "maximizing fees" to "maximizing value carrying"
When Ethereum expands data availability (DA) to the million TPS level (such as through solutions such as 2D PeerDAS), and the Rollup ecosystem is voluntarily and firmly bound to Ethereum DA, Ethereum will obtain significant fee income.
At the main chain level, the widespread adoption and enterprise application of DeFi will become the main driving force, and the popularity of Rollup will further amplify this effect. At the same time, Rollup will also pay fees for interoperability and settlement services, further contributing to revenue.
At the DA level, the key to achieving a sustainable economy is to increase the minimum blob price. The specific approach is to monitor the overall revenue of Rollup and set a reasonable minimum price so that Rollup transfers a certain proportion of value to Ethereum.
For example, in the next few years, assuming that Rollup occupies the CeDeFi payment market and processes about 10,000 TPSAnnual revenue is billions of dollars while Ethereum DA supply exceeds 10,000 TPS. At this point, although blob transaction fees will not fully enter the market price discovery, if the minimum fee is set to 0.3 cents per DA transaction, it can bring about $1 billion in annual revenue to ETH holders.
Further covering high-frequency trading markets, such as social, trading, and coordination between AI agents, Rollup's TPS can reach 30,000 levels, bringing DA fee revenue of more than $10 billion, and the transaction cost is still less than one cent.
Such revenue is affected by ETH prices and other factors, and the minimum price needs to be adjusted dynamically, which is expected to be determined by community consensus, similar to today's gas limit mechanism. In the future, it is necessary to further study the optimal pricing strategy of blobs, such as improving the connection with Ethereum L1 fee market. In addition, as Ethereum transitions to zkEVM or RISC-V, new technologies such as SNARK infrastructure will help improve the efficiency of fee capture.
The key is that at this stage, we should not rush to extract value directly from transactions, but should maximize support and promote high-value activities in Ethereum block and blob space. This will not only generate and enhance network effects, but also help Ethereum seize the expanding block space market and consolidate its economic foundation.
