Ethereum: The New Oil of the Digital Age

The global financial system is undergoing significant changes, with various assets gradually being digitized and transferred to the blockchain. This evolution requires a secure, neutral, and reliable global settlement layer to support the operation of global assets. Ethereum has become this foundation.

The institutional adoption of Ethereum is accelerating, and the U.S. regulatory framework supports blockchain innovation, with digital assets becoming a mainstream component of traditional investment portfolios.

Bitcoin took 15 years to be widely recognized as digital gold: a scarce currency asset that transcends sovereign control. Ethereum builds upon Bitcoin by not only storing value but also facilitating seamless value transfer, trust establishment, 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 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 historical high in 2021. We believe that this price discrepancy will not last, and understanding ETH's unique value proposition will bring one of the biggest upside opportunities in today's asset class.

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

Report Explanation

This report aims to explain why ETH should be considered a core allocation in institutional strategies, particularly those that prioritize long-term value creation, technological exposure, and future-oriented financial infrastructure. The report is divided into three core parts:

Understand ETH: The Digital Oil Driving the Digital Economy

This section will explore the relationship between Ethereum and ETH, the practicality and unique characteristics of ETH, evaluate the appropriate valuation framework for ETH as an asset, and analyze the reasons why it is currently undervalued and underweighted in institutional investors' portfolios that seek asymmetric opportunities and productive value storage.

Ethereum: The underlying infrastructure driving the rise of ETH

This section will cover the structural, technical, and economic driving factors behind the growing momentum of the Ethereum network. It will elaborate on the potential position of Ethereum as a foundational layer of the global digital financial system, and how this position will support and amplify the economic significance of ETH.

Ethereum and AI: The Economic Engine of Autonomous Economy

This section will look to the future, assessing the role and potential value of Ethereum------and its derivative ETH------in a financial system driven by autonomous agents.

Key Points

ETH is digital oil: ETH powers the Ethereum economy and accumulates value through its utility, scarcity, and yield.

ETH is a censorship-resistant store of value: ETH is the settlement, security, and collateral asset of the digital economy. As the number of externally controlled tokenized assets ( stablecoins, real-world assets, and permissioned financial instruments ) on Ethereum increases, the demand for a globally neutral, censorship-resistant reserve asset as a fundamental store of value becomes crucial.

ETH is not a tech company: the valuation framework must evolve; ETH cannot be valued like tech stocks solely based on fee income ------ Ethereum is a unique digital infrastructure and is encapsulated as a global reserve asset.

Programmatic issuance + destruction = predictable scarcity: The theoretical annual maximum issuance of ETH is 1.51%, but the goods destroyed from platform usage usually result in a net issuance that is lower. Since September 2022, ETH supply inflation has been hovering around 0.09%, lower than fiat currency and Bitcoin.

ETH provides native yield: Validator staking makes the staked ETH a productive, revenue-generating digital commodity.

ETH has already become a reserve asset: ETH is already the reserve asset of the Ethereum digital economy and will soon become a reserve asset for institutions and sovereign nations.

ETH is undervalued: The lag of ETH behind BTC is a temporary mispricing rather than a structural weakness, creating a rare asymmetric investment opportunity.

The role of ETH in the future AI economy has not yet been priced: as autonomous agents integrate into the financial world, a new type of economic infrastructure will be needed. Ethereum is the most suitable and likely platform to support this future, serving as the operating layer of a human-machine hybrid economy—with ETH as its native currency and reserve asset.

ETH has trillion-dollar potential: the short-term target is $8,000; in the long term, conservatively estimated, as a reserve currency/commodity asset, ETH could exceed $80,000.

ETH: The Digital Oil Driving the Digital Economy

ETH is the native asset of the Ethereum network and is also the economic engine that drives its operation.

It is digital oil------an asset that powers, guarantees, and reserves for 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 a 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 will encompass the future in areas such as finance, tokenization, identity, computing, and artificial intelligence. This inherent complexity makes it harder to define ETH, especially in relation 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 transfer, and value settlement on Ethereum, serving as fuel for the following:

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

Value-storing assets with additional yield: In addition to simply holding Ether as a value store, Ether can also earn yield through staking. When someone stakes their Ether, 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 mostly automated, so individuals or entities staking their Ether usually do not need to do any extra work beyond staking their Ether. The network randomly selects validators to propose or confirm new transaction blocks. If a validator successfully completes their work, they will receive rewards in the form of Ether.

Original settlement collateral: ETH provides security for billions of stablecoins, RWA( real-world assets ) and financial applications. ETH has censorship resistance, trusted neutrality, and is not subject to depreciation, making it the foundational collateral of the Ethereum ecosystem, with approximately 32.6% of the total ETH supply currently used as collateral, and another 3.5% exported for use on other blockchains. As the number of externally controlled tokenized assets on Ethereum (, such as stablecoins, RWAs, and permissioned financial instruments ) continues to grow, the demand for a neutral reserve asset as a foundational store of value becomes critical. Tokenized assets may carry issuer, jurisdiction, and counterparty risks; in contrast, ETH anchors the entire system in a globally accessible, non-sovereign, neutral store of value, 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 significantly increased. 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.

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

The embodiment of tokenized economic growth: Just as the 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 dollars 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 evolving towards an increasingly decentralized global economy. As business, trade, and asset ownership move on-chain, 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. On Ethereum, 70.6% of trading pairs are priced in ETH. Similar to how most currencies are traded against the US Dollar in traditional finance, to efficiently trade most digital assets, they must be traded against ETH or USD stablecoins.

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 for automated market making (AMM), or directly integrated into custody protocols, vesting schemes, payment systems, bridging mechanisms, and more. While BTC mainly remains idle as a vault asset, ETH actively enhances vault productivity and operational efficiency. As a neutral reserve asset, ETH stands out in ensuring and driving the global tokenized financial system.

This is not a theory; the competition for accumulating Ether has already begun. Strategic Ether reserves are rapidly expanding, with publicly disclosed institutional Ether holdings nearing $2 billion. As institutions increasingly recognize the multifaceted value proposition of Ether, the opportunities for early movers become clear and compelling. Ether 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 using the discounted cash flow method. Instead, ETH must be viewed from the perspective of strategic value storage and utility-driven scarcity. This perspective