Original Title: Ethereum Thesis—Root Chain for the World Computer

Original Authors: Konstantin Lomashuk, Artem Kotelskiy

Original Translation: Ding Dang, Odaily Planet Daily

Editor's Note: Recently, publicly traded companies in the US have begun to "rethink" Ethereum. SharpLink Gaming plans to invest up to $1 billion in ETH as a strategic reserve through stock sales; BTCS has also purchased 3,450 ETH for approximately $8.42 million. These moves may be signaling a clear message: ETH is shifting from "on-chain fuel" to "enterprise-level strategic asset".

From an experimental platform in the developer community, to the infrastructure of DeFi, and to long-term allocations in corporate finance, Ethereum's role is undergoing a profound transformation. In this wave of value reassessment, how should we understand the technical logic and economic model behind ETH?

Odaily Planet Daily has translated and refined a deep essay titled "Ethereum Roadmap: Becoming the Root Chain of the 'World Computer'" co-authored by early Ethereum investor Konstantin Lomashuk and Cyber•Fund's Research Director, Princeton Ph.D. in Mathematics Artem Kotelskiy. This article systematically reviews Ethereum's development trajectory, protocol evolution, scaling paths, and its positioning in the era of Rollups, attempting to answer a key question: Why is ETH worth "HODLing" long-term? Note: Due to the length of the original article, and to enhance readability, the translator has made some deletions and optimizations to the content without affecting the original intent.

DeFi: Ethereum's First Product-Market Fit

From its inception, Ethereum has been committed to creating a globally shared, trustless computing platform. After a decade of development, it has evolved from early technical experiments to the core foundation of decentralized finance (DeFi), the blockchain space market, and the on-chain application ecosystem.

However, to understand how ETH has come to where it is today, you must start from a critical turning point—the Product-Market Fit (PMF) of DeFi. At that time, during the bear market from 2018 to 2020, with the successive emergence of protocols such as ERC-20, Uniswap, DAI, Aave, and Compound, Ethereum gradually evolved into a self-custodial, composable, permissionless financial system foundation. The explosion of DeFi was a natural fit between technological innovation and market demand. The "DeFi Summer" of 2020 marked the peak of this convergence, with TVL rapidly rising, on-chain transaction volumes surpassing those of centralized exchanges for the first time, and the network value of ETH beginning to show. However, the subsequent high transaction fees also exposed Ethereum's scalability bottleneck and laid the groundwork for the future transformation of its technical roadmap.

The Turning Point of ETH: From EIP-1559 to The Merge

If DeFi showcased Ethereum's utility value, then the two upgrades of EIP-1559 and The Merge provided a rationale for ETH's long-term value. In 2021, EIP-1559 was introduced, fundamentally changing Ethereum's fee mechanism. The original "First Price Auction" model was replaced by the Base Fee, and the portion of this fee paid by all users is no longer going to the miners but is instead burned. This means that the more active the network, the more ETH is burned, the lower the inflation pressure, and the stronger the value support for ETH.

The teal part shows that ETH began to achieve "value recapture" through the burning mechanism. In September 2022, Ethereum completed a historically significant upgrade: the consensus mechanism transitioned from Proof of Work (PoW) to Proof of Stake (PoS), marking the official implementation of "The Merge." This technological transformation was extremely challenging yet crucial—it reduced Ethereum's energy consumption by 8000 times and decreased the network's required annual issuance rate from 4% to less than 1%. Subsequently, ETH's "net inflation rate" turned negative for a considerable period of time.

The green represents ETH's weekly additions, the orange is ETH's weekly burn, and the blue represents the net difference between the two

The Long-term Faith of the Rollup Era: Collaboration or Parasitism?

Scalability is the core challenge of Ethereum. Faced with the trilemma of decentralization, security, and scalability, Ethereum ultimately chose the Rollup solution. Rollup moves transaction execution off-chain, only putting state changes and data writes onto the main chain, ensuring the security of the main chain and significantly increasing transaction throughput. This transformation also shifted Ethereum from a mere "execution platform" to a "security layer + data availability layer," forming a scalability roadmap centered around Rollup.

However, Rollup is not just a technological change; it has also altered the logic of ETH's value flow. In the past, users paid fees directly to the main chain, but now, most transactions are completed through Rollup, reducing the direct transaction demands on the main chain. Rollup earns revenue through block space reselling, but since the London upgrade, its direct cost to the main chain has significantly decreased, sparking discussions about "parasitism." In reality, Rollup is more of an "extension of Ethereum's business," relying on the security and data services of the main chain to bring in more users and transactions.

While the transaction demand on the main chain has decreased, main chain scaling and upgrades are still actively progressing. The goal is to increase the processing capacity by a hundredfold or even a thousandfold in the coming years, providing stronger security and data support for Layer 2. Rollup and the main chain form a mutually beneficial ecosystem, both dividing labor and collaborating to lay the foundation for the sustainable development of Ethereum in the future.

Ethereum Current State Metrics: Crisis and Deep Dive Analysis

Since the FTX collapse in 2022, the overall crypto industry has maintained growth, but ETH has significantly lagged behind Bitcoin (BTC) and Solana (SOL). The price of ETH is highly correlated with Ethereum network fees, and fee growth has been sluggish since 2022, especially compared to the 2018-2022 cycle and the current Solana performance period, exerting noticeable revenue pressure. There are three main reasons:

Factor A: Rollup "Parasitism"

Although Rollup profits from user fees, it currently does not provide enough value back to the Ethereum mainnet. Data shows that while this factor exists, its overall impact on revenue is relatively small. Rollup's current total weekly revenue is only in the range of a few million dollars, with low fees. Part of the reason is that Rollup sequencers can support gas limits far higher than the mainnet, so they do not need to charge users high fees as the L1 network does.

More importantly, it is premature to question whether Rollup has not yet given back to the mainnet. In fact, the Ethereum community "unexpectedly" adopted a strategy of providing data availability (DA) space to Rollup for free to attract as many layer 2 solutions as possible. This "subsidy" was the right early ecological building approach.

Factor B: L1 Strategic Focus Shifts to DA, Mainnet Development Marginalized

Since Ethereum embarked on the Rollup path, its strategic focus and user growth almost entirely leaned toward Rollup, while mainnet scaling and maintenance were relatively neglected. This bias is somewhat true. In addressing the high mainnet fee issue, Ethereum chose to bet its future on Rollup, ignoring the potential of L1 itself. In hindsight, as the issues of Rollup fragmentation gradually surfaced, and viable L1 scaling paths (such as the whitelist and zkEVM development) were discovered, it becomes apparent that the strategic underallocation to L1 may have gone a bit overboard.

However, it must be acknowledged that this assessment is based on hindsight. The Rollup roadmap was originally a practical move to address the mainnet congestion issue at the time, while solutions like zkEVM were still a long way off. Therefore, it was difficult at that time to feasibly allocate resources to both Layer 1 and Data Availability (DA). Furthermore, even though we now have a clear path to increase the L1 gas limit by 100 times to achieve performance of over 10,000 TPS and support a comprehensive public chain computation platform, some form of horizontal sharding is still inevitable. In this context, the decision to pursue a Rollup-first strategy at that time remains a reasonable one.

Factor C: Rollup's DA Demand Has Not Yet Exceeded the Mainnet's DA Supply

This is currently the most critical yet most overlooked underlying issue: Rollup's demand for Data Availability (DA) has not substantially surpassed Ethereum's supply. Rollup's sequencers are very efficient at packaging transactions for submission to the mainnet, with a very high compression rate, resulting in their consumption of blob space far below the theoretical value. Additionally, some user activities in this period (such as Meme coin transactions) have been diverted to Tron and Solana.

Before the Pectra upgrade (May 7, 2025), with 3 blobs per block calculation, Ethereum's DA supply was approximately 210 TPS. Until November 2024, this supply consistently exceeded market demand. Even as demand increased thereafter, the blob gas price did not significantly rise, indicating that demand had not yet outstripped supply. Recently, Pectra doubled the blob target to 6 per block, further increasing the DA supply, far exceeding actual demand.

Therefore, Factor C is actually a fundamental variable that impacts 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 significant change.

How to Evaluate the Value of ETH? Ethereum's Business Logic

Is ETH ultimately a productive asset or a currency? We firmly believe that ETH should primarily be a productive asset and secondarily a currency. The reason is that Ethereum's strongest moat comes from its technological advantages: a trust foundation and stability tested over many years, neutrality and censorship resistance brought by decentralization, a leading DeFi ecosystem, a high-quality research and developer community, and a robust network activity security mechanism. Ethereum is truly an unstoppable "world computer."

Secondly, as a productive asset relying on technological adoption, ETH's monetary value can only be stabilized and strengthened. Although ETH is more easily able to transcend technological iteration cycles as a currency, the most prudent path is to first develop Ethereum as a technological platform, ensure its economic model is sustainable, and then let its monetary properties emerge naturally. On the contrary, relying solely on "speculating ETH as a currency" cannot establish a solid foundation.

In summary, ETH's price consists of three parts: the discounted value of future transaction fees, the currency premium (as a store of value, medium of exchange, or even unit of account), and the speculative premium (including cultural and memetic value). Although the latter two have a greater impact, to strengthen these three aspects, the key is to maximize the network's base income, which is the foundation of ETH's value.

Ethereum's Long-Term Rollup Strategy: Why is it Correct? The Truth about the Solana Debate

The reason Ethereum firmly chooses the "Rollup-centric" scaling path is very clear: it is the only architecture design that can balance security, scalability, and neutrality. From a technical supply perspective, Ethereum is currently the most secure and decentralized smart contract platform. Through a validating bridge and data availability layer, Ethereum can "wholesale" main chain security to Rollups, helping them build their chains without having to rebuild a trust system.

From a market demand perspective, users ultimately do not care which chain they are using — they only care about "which chain offers the cheapest and safest transactions." In the long run, the most rational choice is to choose a Rollup, buy security, buy data availability, buy consensus, and directly connect to Ethereum. This will naturally create a market convergence phenomenon: Rollups will, like businesses, build their services around Ethereum's "neutral ledger," rather than dispersing to other isolated chains.

Ethereum vs Solana

Based on the 2024 fee revenue, some believe Solana has begun to surpass Ethereum in the blockchain space market. However, Solana's hardware-driven expansion strategy carries a higher risk, with the network periodically experiencing overload. If the blockchain is to realize its full potential, namely to massively migrate financial infrastructure to the chain, Solana will eventually need to shift to sharded scaling, while Ethereum is already far ahead in security, Rollup infrastructure, and ecosystem adoption.

More importantly, most of Solana's on-chain activity comes from the Memecoin craze. Data shows that such transactions once accounted for over 50% of its DEX trading volume. However, Memecoins are a short-term, zero-sum game phenomenon — once the hype fades, the "high yield" myth is also difficult to sustain.

On the other hand, Ethereum is focused on high-engagement scenarios such as DeFi, where protocols rely on real on-chain financial activities rather than speculative trading. The most significant and important difference is Solana's centralized validator set, while Ethereum boasts the most diverse staking network globally. This decentralization itself is the strongest moat.

Issues with the Rollup Strategy

If the Rollup path is correct and Ethereum's long-term future is bright, why is the ETH price underperforming?

· Technically, the biggest flaw of Rollup is the lack of default interoperability, leading to state fragmentation and severely impacting user and developer experience.

· Business-wise, the key problem is that Ethereum has not clearly communicated Rollup's business strategy:

· Short-term adoption strategy: How to drive rapid Rollup adoption?

· Long-term moat: Why wouldn't Rollup shift to other data availability platforms?

Rollup's Business Strategy: Expansion, Differentiation, and Moat

1. Ethereum should prioritize expansion, providing continuous and affordable Data Availability (DA)

Ethereum is in a fiercely competitive and rapidly changing technical network market, and the ultimate winner will enjoy strong network effects. In this environment, the correct strategy is to offer a high-quality product, rapidly expand the user base at very low or almost free prices, which is the growth path for most successful tech networks. Therefore, Ethereum must keep the Data Availability (DA) price low, minimizing the barriers to Rollup adoption. After the Cancun upgrade, Ethereum provided capacity for 3 blobs, oversupplying in the short term, effectively suppressing prices. While this strategy was not deliberate, it has produced good results.

2. Address Rollup interoperability, enhance user and developer experience

Interoperability is the biggest missing piece of the Rollup era for Ethereum. Fragmentation significantly affects users and developers. Solving interoperability to provide a unified experience and narrowing the gap with integrated chains is key to building a liquidity moat. The community is actively driving solutions such as ERC-7683 for sub-second medium-scale asset cross-chain exchanges, 2-of-3 OP+ZK+TEE for hour-scale large asset cross-chain bridges, and more.

3. Differentiation Strategy and Moat Construction

Ethereum needs to achieve differentiation in Layer 2 (L2) services to attract marginal Rollup customers while building a moat to lock in ecosystem participants. The key moat comes from three major network effects: trust, liquidity, and composability. Currently, the cross-Rollup composability needs are unclear, with the primary value concentrated in trust and liquidity, which will naturally extend from Ethereum L1 to the Rollup ecosystem after addressing interoperability.

In terms of trust, Rollups benefit from the highest security provided by Ethereum's data availability, whereas standalone chain security is weaker. By utilizing Ethereum's data availability, Rollup security continues to strengthen, reinforcing the moat. In terms of liquidity, Ethereum L1's institutional-grade liquidity is a key factor for Rollup selection. After connecting to Ethereum's data availability, Rollups can access ecosystem-wide institutional liquidity, greatly improving capital efficiency and forming a strong moat.

Therefore, the market will drive Rollups to use Ethereum data availability to achieve maximum security and liquidity. Ethereum should strengthen these two advantages and leverage its brand and trust to attract institutional clients.

Path to Value Capture: From "Maximizing Fees" to "Maximizing Value Transfer"

When Ethereum scales data availability to the millions of transactions per second (TPS) level (e.g., via 2D PeerDAS), and the Rollup ecosystem voluntarily and securely binds to Ethereum data availability, Ethereum will gain significant fee revenue. At the base chain level, the widespread adoption of DeFi and enterprise applications will be a major driver, while Rollup's proliferation will further amplify this effect. Additionally, Rollups will charge fees for interoperability and settlement services, further contributing to revenue.

At the data availability level, achieving a sustainable economy is key to raising the minimum blob price. The specific approach is to monitor the overall income of Rollups and set a reasonable minimum price, allowing Rollups to pass on a certain percentage of value to Ethereum. For example, within the next few years, assuming Rollups dominate the CeDeFi payment market, processing around 10,000 TPS, generating billions of dollars in annual income, and Ethereum data availability supplying over 10,000 TPS. At this point, although blob transaction fees may not entirely enter market price discovery, setting the minimum fee as 0.3 cents per DA transaction can bring approximately $1 billion in annual income to ETH holders.

To further cover the high-frequency trading market, such as social, trading, AI agent coordination, Rollup's TPS can reach the 30,000 level, bringing DA transaction fee revenue to over $10 billion, with transaction costs still below one cent. Such revenue is influenced by the ETH price and other factors, and the minimum price needs to be dynamically adjusted, expected to be decided by community consensus, similar to today's gas limit mechanism. Further research is also needed in the future on the optimal pricing strategy for blobs, such as enhancing the association with the Ethereum L1 fee market. In addition, as Ethereum transitions to zkEVM or RISC-V, new technologies such as SNARK infrastructure will help improve fee capture efficiency.

The key point is that, at this stage, one should not rush to directly extract value from transactions, but should maximally support and promote high-value activities between Ethereum blocks and blob space. This will not only generate and enhance network effects but also help Ethereum seize the rapidly expanding block space market, solidifying its economic foundation. The path for value reinjection is therefore very clear.

Original Article Link

Welcome to join the official BlockBeats community:

Telegram Subscription Group: https://t.me/theblockbeats

Telegram Discussion Group: https://t.me/BlockBeats_App

Official Twitter Account: https://twitter.com/BlockBeatsAsia