Chainfeeds Briefing:
Bitcoin is a commodity used as a simple store of value, while Ethereum is also a commodity that can serve as a store of value, but simultaneously possesses immense utility - effectively making it a productive reserve asset: the digital oil powering the digital economy.
Article Source:
https://mp.weixin.qq.com/s/4w4cHznNdR-OANzHWdnJ8A
Article Author:
Etherealize
Perspective:
Etherealize: ETH is more than just a cryptocurrency; it is a multifunctional asset and the native fuel and value support of the Ethereum network. Every time an operation is executed on the chain, including transfers, contract calls, application deployment, stablecoin circulation, and even tokenization of real-world assets, a certain amount of ETH is consumed. This process not only reflects the scarcity of ETH but also tightly binds it to the operation of the on-chain economy. As ETH is burned, it brings economic security to the network. This burning mechanism ensures that the supply becomes more constrained as on-chain activity increases, thereby enhancing its value foundation. Additionally, ETH plays a role in value storage and yield generation. Users can become validators by staking ETH and earn rewards from newly issued ETH. This mechanism not only provides sustainable income but also strengthens network security. More importantly, ETH's application as a collateral asset has already covered the entire Ethereum ecosystem, becoming the core value anchor for various on-chain assets, protocols, and liquidity systems. Against the backdrop of an increasingly strong global tokenization trend, ETH provides an unprecedented settlement basis and reserve guarantee for tokenized assets through its decentralized, credibly neutral, censorship-resistant, and sovereign-free attributes. Ethereum's monetary mechanism is ingeniously and robustly designed, being the closest model to a sustainable and deflationary system among all current crypto-economic systems. Since Ethereum completed its merge in 2022 and transitioned to a Proof-of-Stake (PoS) mechanism, ETH's issuance has significantly decreased. The Ethereum network ensures that inflation will not exceed 1.51% annually through a programmatic issuance cap - at most 166.3 times the current staked ETH amount. However, in reality, with only about 28% of ETH being staked and a large amount of transaction fees being burned, ETH's net issuance rate has been far below this cap, even remaining in a deflationary state for extended periods. The fee-burning mechanism introduced by EIP-1559 means that each transaction not only consumes ETH but also permanently reduces the total ETH supply. More critically, ETH validators have lower operational costs compared to Bitcoin miners, and they face less pressure to sell ETH, thus being more conducive to price stability and value support. This dual mechanism driven by demand-based burning and staking-driven security makes ETH not just a tradable fuel, but also a highly sustainable asset with a clear deflationary tendency - an economic structure extremely rare in traditional finance and commodity systems. Despite significant expansion in the Ethereum ecosystem over the past years, ETH as its native asset has been continuously undervalued in the market. Since 2022, ETH's price ratio relative to Bitcoin has declined by over 70%, returning to levels before the large-scale emergence of DeFi and stablecoins. This disconnection is not due to a weakening of Ethereum's strength, but because ETH's value logic has not been truly understood by mainstream institutions. Bitcoin won institutional trust through a simple digital gold narrative, while ETH is a multidimensional asset with utility, yield, and collateral capabilities that is difficult to assess using traditional models - which is precisely where its potential value lies. ETH's application foundation is more extensive, providing underlying fuel and security guarantees for the entire tokenized economy, DeFi systems, stablecoin circulation, and even AI-driven on-chain applications. It can serve as a strategic reserve asset and be used for staking, lending, and governance within complex financial logic. Today, global financial institutions including BlackRock, Fidelity, and JPMorgan have viewed Ethereum as the core infrastructure for their blockchain financial layout, with ETH gradually becoming part of their asset allocation. ETH's structural value and its position as the fulcrum of the entire on-chain economic operation determine that its long-term potential is far from being reflected by the market, and the current valuation misalignment represents the most attractive opportunity window for contrarian investors.
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