From Rollup-Centric to Economic Headquarters
Scaling the decentralized world computer has been a long journey. To compete with faster, cheaper, and more centralized chains, the Ethereum roadmap has focused on a hub and spoke model. Security and settlement on the main layer (L1) while offloading execution and higher throughput activity to counterparties (L2s). Conceptually, this setup made sense as a way to tackle scaling challenges, but putting it into practice exposed some key weaknesses.
Price action for ETH, the asset has been flat to down for almost four years. ETH proponents argued that increasing speed and scale would solve all of Ethereum’s issues. But the market found the approach convoluted and confusing. Supporters did not realize how important strong messaging, business development, and a good user experience matter. While Ethereum struggled to present a solid, unified plan, other projects, ones that were quicker, easier to use, and better at reaching out to businesses, started pulling ahead.
Recently, the Ethereum Foundation made some major organizational changes to address these key issues. The focus is now on bringing L1 and L2 together into one holistic network with teams dedicated to the development of each layer of the stack. Ethereum has finally entered wartime mode after resting on its laurels for far too long.
Accelerating Business Development
Ethereum has never put serious effort into business development, instead relying on its tech to speak for itself. In reality, all crypto protocols are effectively early-stage start-ups, and business development is immensely important. While competitors built slick teams to win over companies, governments, and big institutions, Ethereum leaned on its developer community and natural growth instead.
The original approach worked fine when the industry was young and experimental. But now, with serious money from corporations, countries, and financial giants moving online, having connections, lobbying power, and a proper outreach plan is a must.
New efforts are starting to make Ethereum’s outreach more professional, primarily through a new third-party agency called Ethrealize. Without strong voices speaking up to policymakers and institutions, Ethereum could lose ground to better-organized rivals. If Ethereum wants to safeguard trillions of dollars in digital assets, stablecoins, and decentralized apps, it has to get as good at business and diplomacy as it is at building its tech.
Scaling Layer 1 Without Compromising Layer 2
As L2s have scaled over the past few years, they have captured the fees the base used to assume. These L2s became “parasitic” L1 value capture. While the L1 may miss out on fee revenue (we think fees are going to zero for L1s), L2s aren’t just about handling more transactions; they offer variety in how businesses can operate and flexibility for different needs.
Big companies, governments, and other major players have their own rules and requirements. L2s let them build custom, controlled setups while still tapping into Ethereum’s security and ability to link with other systems.
Even as the L1 improves, L2s are still extremely important to the Ethereum ecosystem. They’re not just overflow valves, they create tailored spaces for specific industries and regions. Improving L1 boosts the whole network. A stronger L1 keeps final transactions secure and affordable, while L2s focus on adding unique features. The two layers don’t fight each other, they team up.
Rethinking Value Capture and Incentives
The big question for Ethereum investors is, how does the native asset ETH benefit as the network grows?
Right now, L2s don’t pay much to the L1, even though they depend on its security. These are businesses operating at 90%+ profit margins. That’s okay for now: low costs help growth and testing. But as Ethereum, the network continues to grow, investors and advocates need to decide if fees or scale are more important.
Future upgrades, like built-in systems called enshrined base rollups, could “fix” value capture by tying L2 profits directly to L1’s security and staking. This is key to keeping Ethereum’s economic strength solid, ensuring its token, ETH, stays valuable and tied to the network’s activity. The aim is a system where L2 innovation powers up L1, not pulls it apart.
The New Framework for Valuing Ethereum
Old-school financial measures, like transaction fees or network income, don’t fit blockchains like Ethereum. Higher fees mean fewer users. Networks thrive by the compounding effects of user growth. As using the network gets cheaper and fees drop, we need a fresh way to think about their worth.
We believe Ethereum’s value should come from economic security, and its total worth needs to match the value it protects, not just the cash it pulls in. If it ends up securing trillions in global assets such as digital property, bonds, stablecoins, and DeFi apps, as a proof of stake network, its token has to be valuable enough to shield that system from attacks (at least ⅓ of the value of these assets).
We like to think of ETH more like a nation state. The value comes from the size and strength of the economies they back, not government profits. Ethereum isn’t just a company or a platform, it’s becoming the base of a new financial world.
Pricing ETH
With digital assets, stablecoins, and big institutions jumping in, the bull case for ETH is finally looking clear.
Price appreciation won’t come from one huge moment but from steady steps: better usability, stronger business efforts, successful scaling updates, and growing trust in Ethereum’s security and leadership. The market will back networks that are both tech-savvy and trusted by institutions. Ethereum’s move to a teamed-up L1 and L2 model, plus smarter outreach and aligned rewards, sets it up to win.