Original Title: "The 'Blockchain Revolution' is Ongoing, Maintaining a Bullish Outlook on Ethereum"

Original Source: Trend Research

Since the market crash in November 2022, the entire cryptocurrency market has been lackluster, with market makers and investors suffering heavy losses, and the recovery of funds and sentiment will take time. However, the crypto market is not short of new volatility and opportunities, and we remain optimistic about the future. The trend of mainstream crypto assets merging with traditional finance into a new business model has not changed; rather, it has quickly built a moat during the market downturn.

I. Strengthening Wall Street Consensus

On December 3, U.S. SEC Chairman Paul Atkins stated in an exclusive interview with FOX at the New York Stock Exchange: "In the coming years, the entire U.S. financial market may migrate to the blockchain."

Atkins stated:

(1) The core advantage of tokenization is that if assets exist on the blockchain, the ownership structure and asset attributes will be highly transparent. Currently, publicly traded companies often do not know who their shareholders are, where they are located, or where their shares are.

(2) Tokenization is also expected to achieve "T+0" settlement, replacing the current "T+1" trading settlement cycle. In principle, the delivery versus payment (DVP) / receipt versus payment (RVP) mechanism on-chain can reduce market risk and enhance transparency, while the time lag between clearing, settlement, and fund delivery is one of the sources of systemic risk.

(3) He believes that tokenization is an inevitable trend in financial services, and mainstream banks and brokerages are already moving towards tokenization. It may take less than 10 years globally… perhaps it will become a reality in just a few years. We are actively embracing new technologies to ensure that the U.S. maintains a leading position in areas such as cryptocurrency.

In fact, Wall Street and Washington have already built a deep capital network into crypto, forming a new narrative chain: U.S. political and economic elites → U.S. Treasuries → Stablecoins / Crypto Treasury Companies → Ethereum + RWA + L2

From this diagram, we can see the complex connections between the Trump family, traditional bond market makers, the Treasury, tech companies, and crypto companies, with the green oval connections forming the backbone:

(1) Stable Coin (USDT, USDC, WLD-backed dollar assets, etc.)

The main reserve assets are short-term U.S. Treasuries + bank deposits, held through brokers like Cantor.

(2) U.S. Treasuries

Issued and managed by Treasury / Bessent, used by Palantir, Druckenmiller, Tiger Cubs, etc., as low-risk interest rate bases, and are the yield assets pursued by stablecoins / treasury companies.

(3) RWA

From U.S. Treasuries, mortgages, accounts receivable to housing finance, tokenization is completed through Ethereum L1 / L2 protocols.

(4) ETH & ETH L2 Equity

Ethereum is the main chain that supports RWA, stablecoins, DeFi, and AI-DeFi, while L2 equity / tokens represent claims on future trading volume and fee cash flows.

This chain expresses:

Dollar credit → U.S. Treasuries → Stablecoin reserves → Various crypto treasuries / RWA protocols → Ultimately settled in ETH / L2.

From the TVL of RWA, compared to other public chains during the November 2022 downturn, ETH is the only public chain that quickly repaired its decline and rose. Currently, its TVL is 12.4 billion, accounting for 64.5% of the total crypto market.

II. Ethereum's Exploration of Value Capture

Recently, the Ethereum Fusaka upgrade did not create much of a stir in the market, but from the perspective of network structure and economic model evolution, it is a "milestone event." Fusaka is not just about scaling through EIPs like PeerDAS, but rather attempts to address the issue of insufficient value capture on the L1 mainnet caused by the development of L2.

Through EIP-7918, ETH introduces a "dynamic floor price" for blob base fees, binding its lower limit to the L1 execution layer base fee, requiring blobs to pay DA fees at a unit price of at least approximately 1/16 of the L1 base fee; this means that Rollups can no longer occupy blob bandwidth at nearly zero cost for an extended period, and the corresponding fees will flow back to ETH holders in the form of burns.

There are three instances related to "burning" in Ethereum's upgrades:

(1) London (one-dimensional): only burns the execution layer, ETH begins to experience structural burning due to L1 usage.

(2) Dencun (two-dimensional + independent blob market): burns the execution layer + blob, L2 data written to blobs will also burn ETH, but during low demand, the blob portion is nearly zero.

(3) Fusaka (two-dimensional + blob bound to L1): to use L2 (blob), one must pay at least a fixed proportion of the L1 base fee, which will be burned, making L2 activity more stably mapped to ETH burning.

Currently, blob fees reached 569.63 billion times the fees before the Fusaka upgrade at 23:00 on December 11, burning 1,527 ETH in one day, with blob fees contributing the highest proportion to burning, reaching 98%. As ETH L2 becomes more active, this upgrade is expected to bring ETH back to deflation.

III. Strengthening Ethereum's Technical Position

During the November 2022 downturn, ETH's futures leverage was fully cleared, and the leveraged positions were ultimately forced down to the spot market, while many who lacked faith in ETH led to many ancient OGs reducing their positions and fleeing. According to Coinbase data, speculative leverage in the crypto space has dropped to a historically low area of 4%.

A significant portion of the shorts on ETH came from traditional Long BTC/Short ETH pair trading, which generally performed very well in past bear markets, but this time it was unexpected. The ETH/BTC ratio has maintained a sideways resistance since November.

ETH currently has 13 million coins on trading platforms, about 10% of the total supply, at a historical low. As the Long BTC / Short ETH pair has become ineffective since November, and with extreme market panic, there may gradually be "short squeeze" opportunities.

As we approach 2025-2026, both the U.S. and China have released friendly signals regarding future monetary and fiscal policies:

The U.S. will actively pursue tax cuts, interest rate reductions, and relaxed crypto regulations, while China will implement moderate easing and financial stability measures (suppressing volatility).

In the context of relatively loose expectations in both the U.S. and China, suppressing asset downward volatility, and with extreme panic where funds and sentiment have not fully recovered, ETH remains in a favorable buying "strike zone."

This article is from a submission and does not represent the views of BlockBeats.

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