The Transformation of the Global Financial System

Assets around the world are gradually being digitized and transferred to the blockchain, and the financial system is evolving towards complete digitalization and composability. This requires a secure, neutral, and reliable global settlement layer to support the operation of global assets. Ethereum has become the foundation for this.

Institutional adoption of Ethereum is accelerating, the U.S. regulatory framework supports blockchain innovation, and digital assets are becoming a mainstream part of traditional investment portfolios.

Bitcoin took 15 years to be widely recognized as digital gold: a scarce currency asset that transcends sovereign control. Ethereum, built on the foundation of Bitcoin, complements this: it not only stores value but also facilitates seamless transfer of value, trust building, and global collaboration. ETH is the next-generation asymmetric investment opportunity, expected to become a core holding in institutional digital asset portfolios.

Ethereum has become the default platform for stablecoins, high-value tokenized assets, and institutional blockchain infrastructure. Currently, over 80% of tokenized assets exist on Ethereum. With its robust architecture, Ethereum has earned the trust of leading global asset management firms and infrastructure providers: it is the world's most secure and decentralized blockchain, offering unparalleled reliability and zero downtime.

However, as the asset supporting this transformative system, ETH is still one of the most severely undervalued opportunities in the global market. Despite Ethereum's clear dominance in the market and significant technological upgrades, the current trading price of ETH is far below its all-time high in 2021. This price disparity will not last, and understanding ETH's unique value proposition will bring significant upside opportunities.

ETH is not just a token; it is also collateral for on-chain economies, computational fuel, and a financial infrastructure for earning interest. It is actively reserved, staked, burned, and utilized. Bitcoin is a simple value storage commodity, while Ethereum is also a commodity that can serve as a store of value but possesses immense utility—effectively making it a productive reserve asset: the digital oil powering the digital economy.

ETH: The Digital Oil Driving the Digital Economy

ETH is the native asset of the Ethereum network and the economic engine that drives its operation. It is digital oil - an asset that powers, secures, 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 foundational software layer – similar to an operating system, like Microsoft Windows – upon which the new global financial system will be built.

When all of this is realized, ETH will become the foundational asset of a comprehensive global platform that encompasses the future in areas such as finance, tokenization, identity, computing, and artificial intelligence. This inherent complexity makes it harder to define ETH, especially in comparison to a simple value storage asset like Bitcoin — but it also makes ETH strategically more valuable and implies that ETH has greater long-term potential.

ETH is not just a cryptocurrency; it is a multifunctional asset with the following roles:

Calculating fuel: Each on-chain operation will consume ( to destroy ) ETH. It is the underlying asset that drives computation, data storage, asset transfers, and value settlements on Ethereum, serving as fuel for the following:

• Each stablecoin transfer.
• The issuance of tokenized real-world assets each time.
• Every transaction executed on Ethereum.
• Every new application - DeFi, games, AI, identity - their operation will destroy ETH.

Value storage assets with attached收益: In addition to simply holding ETH as a store of value, ETH can also earn收益 through staking. When someone stakes ETH, they agree to lock it in the system and become a validator—a type of network participant whose role is similar to that of a referee, checking and verifying transactions. The verification process is mainly automated, so individuals or entities that stake their ETH typically do not need to do any additional work beyond staking their ETH. The network randomly selects validators to propose or confirm new transaction blocks. If validators correctly complete their work, they will be rewarded in the form of ETH.

Original settlement collateral: ETH provides security for billions of stablecoins, RWA( real-world assets ), and financial applications. ETH has censorship resistance and trusted neutrality, and is unaffected by devaluation; it is the foundational collateral of the Ethereum ecosystem, with approximately 32.6% of the total supply of ETH being used as collateral, and another 3.5% exported to other blockchains. As the number of externally controlled tokenized assets on Ethereum, such as stablecoins, RWA, and permissioned financial instruments (, continues to grow, the demand for a neutral reserve asset as a fundamental store of value becomes crucial. Tokenized assets may carry issuer, jurisdiction, and counterparty risks; in contrast, ETH anchors the entire system in a globally accessible, non-sovereign, and neutral manner, enabling settlement, collateralization, and liquidity routing without introducing systemic reliance on any single participant.

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 grown significantly. ETH is the only original collateral in the smart contract economy—completely independent of external counterparty risk. ETH represents the highest level of trust on Earth, which will contribute increasingly to its future monetary premium.

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Deflationary Asset: As network activity increases, ETH will become deflationary. Approximately 80.4% of transaction fees will be burned, reducing the total supply of ETH. The maximum issuance rate of 1.51% per year ) will only be reached under extreme conditions where 100% of ETH is staked and there are no transaction fees burned (. When the demand for network resources is high, ETH will transform into a deflationary commodity. Unlike traditional commodities, an increase in demand for ETH will not trigger an increase in supply, leading to a dynamic where demand may exceed supply over a longer period.

The manifestation of tokenized economic growth: Just as global demand for oil increases with economic expansion, ETH also derives value from the growth of the on-chain economy—but due to its issuance limit, its supply elasticity is much smaller compared to oil.

• Ethereum's Total Value Secured ): Ethereum currently holds over $767 billion in assets. This represents the highest TVS among all blockchains, solidifying Ethereum's position as the foundation of the tokenized economy.

• Exponential Growth: The paradigm shift is moving towards an increasingly decentralized global economy. As business, trade, and asset ownership shift onto the blockchain, Ethereum's economic throughput is expected to achieve exponential growth. This will significantly increase the demand for ETH, whether as transaction fuel or as a core currency reserve supporting the new global financial system.

Reserve Trading Pair: ETH is the primary reserve trading pair in decentralized exchanges, where 70.6% of trading pairs are denominated in ETH on Ethereum. Similar to how most currencies in traditional finance trade against the US dollar, to efficiently trade most digital assets, they must be traded against ETH or a USD stablecoin.

Strategic Reserve Asset: An increasing number of applications, DeFi protocols, and institutional fund managers are accumulating ETH as a strategic reserve asset. 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 vault automation and complex financial management. The reserved ETH can be programmatically staked, deployed as collateral for lending, used in automated market makers (AMM), or directly integrated into custody protocols, vesting schemes, payment systems, bridging mechanisms, and more. While BTC primarily sits idle as a treasury asset, ETH actively enhances treasury productivity and operational efficiency. As a neutral reserve asset, ETH stands out in ensuring and driving a global tokenized financial system.

• This is not a theory; the competition to accumulate ETH has already begun. Strategic ETH reserves are rapidly expanding, with publicly disclosed institutional ETH holdings nearing $2 billion. As institutions increasingly recognize the multifaceted value proposition of ETH, the opportunities for first movers are becoming clear and prominent. ETH is not only becoming a strategic reserve asset but also an indispensable component of institutional fund management.

It is precisely because of all these unique features and characteristics that we cannot evaluate ETH as a tech stock. ETH is a whole new category of asset.

Therefore, ETH cannot be accurately valued through the discounted cash flow method. Instead, ETH must be viewed from the perspective of strategic value storage and utility-driven scarcity. This perspective is necessary to capture the true upside potential of ETH, which may even surpass Bitcoin's "digital gold" narrative.

Oil is a consumable commodity asset that is stored as reserves and consumed as fuel. Oil has shaped nations, driven industrial development, and fueled global trade. The intrinsic utility, inherent scarcity, and strategic importance of oil make it one of the most valuable commodities in history—shaping nations, driving industry, and propelling global trade. As a result, the total market value of the world's proven oil reserves is approximately $85 trillion.

Considering that ETH is on a similar development trajectory, but oriented towards the digital domain, this is a meaningful reference point for ETH.

ETH powers the digital economy.

ETH ensures the security of the digital economy.

ETH derives value from the growth of the digital economy.

Due to its supply dynamics and issuance cap, ETH has intrinsic scarcity.

As the global economy transitions to tokenized infrastructure, ETH will become indispensable, not only as fuel but also as the native asset of the future financial system's currency and settlement layer.

Currency Design of ETH: Simple, Transparent, Sustainable

The economic principles of ETH are elegant and concise, yet their importance is often overlooked. Unlike traditional commodities, the supply and demand dynamics of Ethereum are transparently encoded in its protocol, enabling predictable issuance and sustainable network security. Ethereum has established an optimal issuance plan for ETH, combining robust security with approximately $88 billion in staked ETH, compared to the roughly $10 billion in ASIC mining machines securing Bitcoin, alongside a very low inflation rate. Since the network transitioned from proof of work to proof of stake consensus in September 2022, the annual inflation rate has been only 0.09%. The more ETH is staked, the more expensive and impractical it becomes to attack Ethereum, as attackers would need to acquire at least 51% of the existing ETH to successfully disrupt or alter the network. This structure also provides protection against cartel-like, price-manipulating entities that arise around traditional commodities, similar to OPEC.

Issuance

Issuance mechanism

The issuance of ETH is programmatic and transparent. Similar to Bitcoin's halving mechanism, newly minted ETH is distributed as rewards to validators (, that is, individuals or entities who have staked ETH to help secure the network and validate transactions; this is exactly the "yield" component of ETH mentioned earlier and will be discussed further below ). However, unlike Bitcoin, Ethereum's issuance is dynamically adjusted based on network security needs, rather than a fixed schedule. The calculation method is straightforward:

The maximum annual ETH issuance = 166.3 × staked ETH

This formula establishes a natural balance: as more ETH is staked to secure the network, the issuance will increase, but the rate of increase will decrease. This structure incentivizes validators while ensuring that the inflation rate has a very low cap.

The key is that this mechanism sets a clear upper limit on the issuance of ETH. Even in extreme hypothetical scenarios —