Compiled & Edited: Deep Tide TechFlow
Guest: Mike Nadeau, Founder of DeFi Report
Host: Ryan Sean Adams
Podcast Source: Bankless
Original Title: 10 Bullish ETH Charts
Broadcast date: July 17, 2025.
Key Points Summary
Ethereum's popularity continues to rise, but has the real bull market only just begun?
Mike Nadeau from DeFi Report will join us to delve into Ethereum's second-quarter fundamental performance and share the 10 most bullish charts from his latest report.
We will explore why institutional demand may be a key driver behind this rally, how ETF fund flows and treasury holdings accelerate this trend, and whether there is still a possibility of underestimation for Ethereum given the recent significant price increase.
Additionally, we will delve deeper into the Genius Bill legislation, the growth trends of stablecoins, on-chain real-world assets, and the key on-chain indicators that may drive Ethereum's next bull market.
Excellent Points Summary
Bitcoin funds are gradually flowing into the early rotation phase of Ethereum, and this trend may continue for a longer time and have deeper implications.
With the support of the Genius Bill, all major banks will also launch their own stablecoin strategies.
Market trust and confidence in Ethereum are continuously increasing.
The asset scale on Ethereum has reached $7.5 billion, and this figure is expected to show explosive growth in the future. Stablecoins and certain stocks that may go on-chain at some future points will become the main drivers of this growth.
The crypto market has strong reflexivity, and sometimes the key factor driving market development is actually the price of ETH itself. An increase in ETH price attracts more assets on-chain, brings more users into the on-chain ecosystem, and other fundamental factors will improve accordingly.
Key Data: Active loans on Ethereum have increased by 98%; the on-chain RWA annual growth rate has reached 200%; the asset management scale on Ethereum has reached historic highs; the ETH balance on CEX is at an all-time low.
Introduction
Ryan:
The price of Ethereum is rising, and today we will share the 10 most bullish Ethereum charts. Today, we have invited Mike Nadeau, who just released the Q2 Ethereum quarterly report. We selected five of the most bullish charts for detailed discussion.
Currently, the price of Ethereum is $3,225. Although this price is still far below the all-time high, I want to remind everyone that it is also below the $4,100 mark from last December. However, Ethereum has indeed shown good upward momentum recently.
Do you think this momentum can be explained by the fundamentals from Q2? Are you optimistic about the market?
Mike:
I think it is possible. I hope so. We just held a earnings call yesterday. Today, I want to emphasize some key points. In the call, we mainly provided data rather than sharing opinions. Today, we will delve deeper into the meaning behind this data and try to conduct some forward-looking analysis.
Ryan:
A lot has happened this week worth paying attention to. I feel the treasury issue has become particularly tense this week. But at the same time, we found that Ethereum showed an upward trend on days when Bitcoin was falling. This situation has occurred several times this week, which is a phenomenon I haven't seen in a long time. During this cycle, I don't even remember a similar situation happening. Although occasionally there might be a few days when Bitcoin rises slightly while Ethereum rises more, this situation is not common. And this week, on one day, possibly yesterday, Monday, or Tuesday, Bitcoin fell 2% within 24 hours, while Ethereum rose about 4%. This is very rare.
Mike:
This is a very significant shift, which is exactly the trend I have been focusing on. I might be one of the earlier ones to notice this, as many predicted the shift in the Ethereum to Bitcoin price ratio (EBTC ratio) early on, but now it truly feels like we have hit bottom. As you mentioned, we are currently at the lowest point in five years. I have never seen a situation where Bitcoin falls while Ethereum rises by 4% or 5%. Therefore, for me, this is the phenomenon I have been waiting for. It seems to mark the early rotation stage where Bitcoin funds are gradually flowing into Ethereum, and this trend may last longer and have deeper implications.
Peter Thiel purchased 9.1% of Tom Lee's ETH Treasury company.
Ryan:
Interestingly, institutions seem to be driving this trend, or rather, institutional fund inflows may be pushing up Ethereum's price. I saw a report yesterday that Peter Thiel recently purchased 9.1% of Tom Lee's East Treasury company. As you may know, this company's stock code is MNR, and it is essentially an Ethereum treasury. Peter Thiel disclosed that he holds about 9% of the shares. I believe this has had a significant impact on the current market momentum. Therefore, today we will discuss some of the most bullish charts. These charts may be among the most representative content selected from your ETH Q2 report. Additionally, there are other charts worth noting in the report, such as revenue decline, fee reductions, increased L2 usage, and other data, which I recommend everyone check out to get a comprehensive understanding of Ethereum's overall performance.
Institutional Adoption of Stablecoins
Ryan:
Let's discuss the trend of institutional adoption of stablecoins through some charts. I think this story starts with stablecoins. Tom Lee likened stablecoins to a ChatGPT moment in the cryptocurrency space, as he talks about this topic almost every day on CNBC. When you look at the chart of stablecoin supply on Ethereum, what do you see? This is the first chart we will analyze Ethereum today.
Mike:
Yes, it is indeed refreshing to see Tom Lee publicly discussing stablecoins on CNBC. He is highly respected in the financial community and considers stablecoins a critical moment for cryptocurrency. I believe this is an essential part of the Ethereum ecosystem.
We see that the passage rate of the Genius Bill related to stablecoins this year seems to be as high as 95%. The general consensus is that this bill will pass this summer. This will be an important milestone for Ethereum and the entire cryptocurrency market.
The concept of stablecoins is actually very easy to understand. Anyone familiar with the crypto space knows the potential of stablecoins, and its influence is gradually entering the public eye. I am currently writing a report analyzing the potential impacts of this bill and its significance for fintech companies. We have seen that almost all fintech companies will soon launch their own stablecoins, and the banking industry may take the lead in releasing their own stablecoins. This will have profound implications for e-commerce payments and global financial inclusivity. Bitcoin was originally seen as a tool to achieve these goals, but I believe stablecoins are the best solution for achieving financial inclusivity. Last year, I spent five weeks in Buenos Aires, Argentina. In the US, people may not fully understand the necessity of stablecoins due to lower inflation rates. But in Argentina, stablecoins have become an integral part of people's daily lives.
I believe this is a huge opportunity. From the charts, the stablecoin supply shows a long-term growth trend. Although it stabilized in the second quarter, I expect this trend to see rapid growth with the passage of the Genius Bill.
Ryan:
According to the chart, by the end of the second quarter, the supply of stablecoins on Ethereum had reached about $140 billion. This figure has accounted for the majority of stablecoin supply sources, and you also predict that this number will further increase.
Regarding the Genius Bill, Trump referred to it as 'Crypto Week'. I believe they wish to pass and push this bill within this week. Although Congress encountered some resistance earlier, Trump is working to persuade the remaining opponents within the party to ensure the bill passes smoothly. Therefore, this bill may not only pass in the summer but could potentially be completed legislatively within this week. If passed, it will further boost the growth of stablecoin supply on Ethereum. Last night I also saw news that Jamie Dimon - the well-known crypto skeptic - indicated that even JP Morgan is considering doubling down on stablecoins. Jamie Dimon's exact words were: 'I don't quite understand the purpose of these things, but we will venture into this space.' Similar statements. Now we have seen PayPal, Circle, BlackRock, and crypto-native companies like Tether actively pushing the development of stablecoins. I believe that with the support of the Genius Bill, all major banks will also launch their own stablecoin strategies.
Mike:
I completely agree. I expect Stripe may also launch its own stablecoin. Through this bill, I believe another area worth focusing on is salary payments. How can we enable everyone to have a crypto wallet and start using stablecoins? I think some form of mandate is needed to achieve this. Salary payments might be that mechanism. If we can expedite the payment process and move away from the traditional weekly or bi-weekly payroll model, I think this could be a significant breakthrough.
We can observe the changes in this area over the next one to two years. But stablecoins must get into everyone's hands and circulate on the blockchain. I believe this will significantly enhance economic activity on the Ethereum chain. Currently, 51% of stablecoins in the crypto market are on the Ethereum main chain (L1), while there are another 4% to 5% on Layer 2 networks (L2). Therefore, overall, about 55% of stablecoins are within the Ethereum ecosystem. This is a critical moment, and we have even seen major retailers like Walmart discussing launching stablecoins. Such trends indicate that stablecoins have enormous development potential, and the Genius Bill may become a catalyst for this trend. Looking back at the last cycle in 2021, there was a bill related to stablecoins that passed OCC scrutiny, leading to a bull market for Ethereum. Therefore, the Genius Bill may again become a key factor driving the market.
The active loans on Ethereum have increased by 98%.
Ryan:
I guess institutions may choose to purchase Ethereum (ETH) when deploying stablecoins as part of their strategy in the Ethereum ecosystem. This is a chart that reflects activity on Ethereum and its L2 network, which is very noteworthy. This chart shows active loan data on Ethereum, and currently, this number has reached an all-time high. So, what is the important significance of this?
Mike:
This is very important because it indicates that the market's trust and confidence in Ethereum are continuously increasing. We also see that Ethereum's staking rate has reached historic highs, with the proportion of circulating supply steadily rising. This not only indicates confidence in the Ethereum protocol itself but also shows that users' interest in loans and accessing decentralized finance (DeFi) is increasing. At the same time, we may also observe more re-collateralization loops, which refer to the process of increasing leverage by reusing collateral, indicating that the activity level within the Ethereum ecosystem is significantly increasing.
For me, this chart is a signal indicating that the market's demand for accessing DeFi, using collateral, and assuming corresponding risks is rising. From the chart, this reflects the overall trend over the past five years, and the current active loan data has surpassed the previous cycle's historical high. I expect this number to continue to climb during this cycle.
Ryan:
The active loans on Ethereum have grown by 98% compared to last year. I think the significance of this growth lies in its close connection with institutional financial strategies. Currently, billions of dollars are driving competition between several publicly listed financial companies to acquire more Ethereum assets. This is not just a scale of billions; I believe many of these companies are actively deploying ETH as productive assets within Ethereum and its broader ecosystem. This trend may bring about the 'late blooming effect' in the DeFi market, wherein the massive influx of institutional funds leads to a rapid development phase in the DeFi market. Imagine these financial companies; they are essentially like actively managed funds, and where do their earnings come from? First, staking is a low-risk way to earn yields, but beyond staking, they may also utilize some decentralized lending protocols, like Aave and others. Thus, I think this is a very noteworthy story.
The on-chain RWA annual growth rate has reached 200%.
Ryan:
On-chain real-world assets are another important component of Ethereum's institutional development. We have observed that since last year, the growth of these assets has shown a hockey stick trend, with very significant acceleration. Currently, the annual growth rate of real-world assets on Ethereum has reached 205%. What do you think this phenomenon reflects?
Mike:
This chart is very meaningful as it shows that more and more assets are migrating to Ethereum. Currently, the asset scale on Ethereum has reached $7.5 billion, and this figure is expected to show explosive growth in the future. In my view, stablecoins and certain stocks that may go on-chain at some future points will become the main drivers of this growth. Notably, companies like Robinhood have already started building related projects within the Ethereum ecosystem.
Bringing assets on-chain is the key first step to driving this trend, and enabling these assets to achieve liquidity on-chain is the more important next step. If we can successfully bring more real-world assets on-chain, this will further promote the development of active loans and decentralized finance (DeFi). As more assets and collateral enter DeFi, users will be able to leverage these on-chain assets to optimize capital efficiency, thereby enhancing capital efficiency and promoting the prosperity of the entire ecosystem.
I believe there is a feedback loop phenomenon here: as more assets go on-chain, more funds flow into DeFi, and more assets are used as collateral, which leads to changes in gas fees, further impacting Ethereum's burn mechanism. The burn mechanism reduces Ethereum's supply by burning a portion of transaction fees, optimizing the entire ecosystem. Ultimately, this cycle will drive rapid development of the entire ecosystem.
The crypto market has strong reflexivity, and sometimes the key factor driving market development is actually the price of ETH itself. An increase in ETH price attracts more assets on-chain, brings more users into the on-chain ecosystem, and other fundamental factors will improve accordingly. This phenomenon is the opposite of how traditional finance operates, where fundamentals usually lead and then assets move. This is the trend I anticipate, especially observing the price movements of ETH over the past month and their positive impact on fundamentals.
Ryan:
Regarding real-world assets, it is interesting to consider how much these assets can grow on Ethereum. Currently, we are still in a very early stage, and although this growth is commendable, going from nearly 0% to $7 billion is still insignificant compared to the scale of all real-world assets. Consider markets like treasury bonds, stocks, etc., where the total scale of these assets could reach trillions of dollars, while Ethereum's potential in this area has only just begun to emerge.
The asset management scale on Ethereum has reached historic highs.
Ryan:
We have analyzed the first three charts reflecting the bull market trend, and now let's look at the fourth chart. It shows the asset management situation on Ethereum. Recently, we observed that Ethereum's fund inflow was very strong, indeed reaching historic highs at the end of the quarter, right?
Mike:
That's right, this data is as of June 30, and the latest figures show that the scale of managed assets on Ethereum has reached 4.11 million ETH, accounting for 3.4% of the total supply. Two weeks later, this ratio further rose to 3.8%, and currently, the total amount of ETH held in ETFs has reached 4.6 million.
The performance of ETFs has been exceptional. I have some data to illustrate this. Since the establishment of the ETF, Ethereum's net inflow has reached $5.7 billion, equivalent to 20% of Bitcoin's inflow scale. Bitcoin's net inflow is $50 billion. Many are optimistic about the performance of Bitcoin's ETF, believing that the inflow of funds in the first year will reach $5 billion to $10 billion, while Ethereum has already exceeded this expectation. Currently, Ethereum's total asset scale has reached 4.6 million ETH, equating to about $13 billion. In recent weeks, the inflow scale has increased by $1.2 billion. From the trend of net inflows, our inflow amount is already close to last year's fourth-quarter levels, and the performance of the ETF is indeed impressive.
Ryan:
It seems that institutional investors' interest in Ethereum is rapidly growing. Tom Lee has stated that Ethereum could be 'the next Bitcoin' and is trying to prove this possibility. If the inflow patterns of Bitcoin ETFs can be replicated in Ethereum, what would that look like?
This is a new trend in the second quarter, but the one that continues to maintain momentum in the third quarter is the number of Ethereum held in the treasury. If I understand correctly, this holding has almost increased by 6000%. Most of this is public treasury, and investors can purchase these assets through the US capital markets.
Mike:
This trend has clearly gained more attention with Tom Lee's influence. For example, Bit Digital increased its holdings by about 100,000 ETH while selling all their Bitcoin. This is a very noteworthy phenomenon. You can also see Joe Lubin promoting this token while discussing Ethereum on CNBC.
This is very important. I believe this aspect has not been widely discussed. Bitcoin has done a better job in this regard; for instance, Michael Saylor talks about the Bitcoin story almost every day on television and podcasts while continuously buying assets. Now we see the Ethereum community is also taking similar actions. This market change cannot be ignored, and I believe this is another bullish signal.
Ryan:
I believe this shift indicates that Ethereum is striving to overcome barriers and become a value storage asset similar to Bitcoin. Bitcoin took more than a decade to break this barrier. Ultimately, this transition was essentially completed in 2020 when Michael Saylor began buying Bitcoin in bulk and persuaded others to do the same. Therefore, maybe Ethereum is undergoing a similar process.
Mike:
As you mentioned, Ethereum's potential as a value storage asset is an important investment argument, and its supply dynamics are closely related to this. For example, in the second quarter of this year, Ethereum's circulating supply only grew by 0.18%, while block fees fell by 80% during the same period. Through the burning of block fees and base fees, Ethereum's burn mechanism effectively countered part of the issuance, and these two factors together propelled Ethereum's deflationary economics.
From my perspective, this is actually a bullish signal. Although on-chain economic activity significantly decreased in the second quarter, especially in the context of gas price optimization, Ethereum's supply growth rate remains lower than Bitcoin's inflation level. Even with reduced on-chain activity, while network upgrades are ongoing, Ethereum's supply dynamics still exhibit strong advantages.
You will find that despite a significant decline in on-chain activity and network upgrades taking place, supply has still not exceeded Bitcoin's issuance. This is interesting because now you have a value storage asset that looks like Bitcoin, but we know Ethereum also has yields. And these ETFs, I believe some applications will be launched before the end of the year that allow some of the yields to be passed on to ETF holders. Thus, this point is interesting because it combines the aspect of value storage well with the fact of yields, while Bitcoin does not provide yields.
Ryan:
As investors gradually understand this, the trend becomes very attractive. Bitcoin's supply is fixed at a total of 21 million, while Ethereum's annual issuance is fixed but fluctuates to a certain extent, with a maximum issuance rate of no more than 1.45%. If annualized, this is roughly equivalent to 0.45%, lower than Bitcoin's current issuance rate of about 0.85%. In contrast, the annual issuance of other value storage assets like gold typically ranges between 1% to 1.5%, depending on the price of gold. This comparison is also very interesting.
Additionally, I want to remind everyone that if you missed the bull market cycle in 2021, Ethereum's monetary policy was not well understood at that time. That was before the Ethereum merge, and people had limited understanding of its future monetary policy and issuance mechanism. Looking back, the merge actually took place after the market crash in the summer of 2022. Since the merge was completed in September 2022, Ethereum's issuance policy and monetary policy have become more stable and refined. While Ethereum's monetary policy is not yet as well recognized as Bitcoin's, it may become more comprehensible as this cycle progresses. Furthermore, Ethereum's supply dynamics are also providing advantages for its long-term development, such as reducing supply to optimize the ecosystem.
43% of ETH supply is locked in smart contracts, and ETH balance on CEX is at an all-time low.
Ryan:
Here is a synchronous indicator about Ethereum's supply that reveals an interesting trend. This is the proportion of Ethereum's supply locked in on-chain smart contracts. Although this proportion has decreased compared to the previous two years, we can see an overall growth trend. What does this trend indicate?
Mike:
Yes, this indicates that currently about 43% of the ETH supply is locked in smart contracts. This means that 43% of the supply on-chain is active. When this line continues to rise over the long term, it typically signifies that users are increasingly confident in putting assets into DeFi, staking contracts, and utilizing protocols. Therefore, I believe this is a bullish signal, indicating that on-chain use cases are increasing. I expect this ratio to further grow in the future.
Ryan:
Another relevant chart shows that the ETH balance on centralized exchanges is nearly at an all-time low. This is the lowest level in the past eight years. This indicates that Ethereum's supply is shifting from exchanges to on-chain.
Mike:
This actually echoes the previous chart, reflecting the trend of assets shifting from centralized exchanges to on-chain. Users are not only transferring assets on-chain but are also putting these assets into staking contracts. For me, this indicates that users are pouring capital into the on-chain ecosystem, which may suggest they are longer-term holders or are more inclined to use Ethereum as a value storage asset. If this trend continues, the sellable assets on centralized exchanges will decrease.
Ryan:
So, regarding the current bullish argument, it can be summarized as follows: first, we see institutional adoption of Ethereum is increasing, which includes demand growth driven by stablecoins and real-world assets, and this trend may accelerate further with the Bill. Second, institutional demand is becoming evident, reflected in the inflow of funds into Ethereum and the asset allocations of some treasury companies, while this demand is expanding with the promotion from Wall Street figures like Tom Lee and Joseph Lubin. Additionally, Ethereum's supply dynamics are more robust compared to the past, including strengthened monetary policy and extremely low issuance rates. Finally, Ethereum's locked ratio in smart contracts is continuously rising, while the trend of assets flowing out of centralized exchanges is also strengthening, all of which further support the bullish viewpoint.
ETH has dropped below the 200-day moving average, hitting an all-time low.
Ryan:
This leads to a question that all investors are concerned about: Is now a good time to buy? A few months ago, the price was still around $15, and now it is close to $30. Have people missed the best buying opportunity? What is the reasonable market value of this asset? What do you think on this issue? What does the MVRV Z score tell us?
Mike:
The MVRV metric measures the ratio of market value to realized value, and we used Glassnode's data. Glassnode's analysis is primarily based on on-chain wallet data, so it does not include assets on ETFs or exchanges. It concludes by calculating the cost basis of tokens in these wallets and comparing it to the historical average cost basis of the network.
At the end of the quarter, the MVRV Z score was about 0.3, indicating the current price's distance from the historical standard deviation, while the five-year average is around 1. Therefore, at the end of the quarter, the asset price appeared reasonable. Recently, the price has risen, and the MVRV Z score has risen to 0.8, approaching the five-year historical average. But as the chart illustrates, this indicator can highlight some ideal buying opportunities, while during overheated markets, market value often far exceeds the historical average cost basis of the network token. Therefore, even at current levels, from a historical perspective, this is still a good price range.
Ryan:
So, the current MVRV Z score is 0.8, while 1.04 is the five-year historical average, right? We’ve also seen this score far exceed 1 during bull markets, even reaching 2 or 3. At what point do you think the MVRV metric will start showing that the market is overheating? It hasn't reached that yet, but when the score gets to 2 or 3, do you think that is a signal that the market is entering an irrational state?
Mike:
I think this needs to consider multiple factors comprehensively, and MVRV is one of them. We also have a chart showing the 200-week moving average, which is another important reference indicator. Currently, the MVRV Z score is 0.8, combined with the significant price increase over the past two to three months, short-term indicators may show that the market is slightly overheated, so we may see a price pullback. But in the long term, the current price range still belongs to a reasonable value range.
We are also looking at another indicator, the 200-week moving average. Typically, when prices approach the 200-week moving average, the market tends to hit a bottom. Earlier this year, during a major sell-off, we even fell below the 200-week moving average, setting a historic low.
Ryan:
The price fell below the 200-week moving average.
Mike:
Yes, it fell below. This drop is the largest drop below the 200-week moving average, appearing to be a generational buying opportunity. Afterward, the price rebounded from this point and is currently just above the 200-week moving average, priced at about $20,500. Although the price has started to slightly diverge from this line, as the chart shows, prices usually far exceed this purple line during bull markets, and we have not reached that stage yet.
Comparison of market cap and TVL along with bull market data models.
Ryan:
Another indicator worth paying attention to is the comparison between market cap and TVL. I believe this indicator may not have received enough attention. Why do you think investors should focus on it?
Mike:
This is a very valuable metric, thanks to Token Terminal for providing data support. This metric reflects the total locked value (TVL) of the entire ecosystem, covering not only the TVL of decentralized finance (DeFi) but also the locked value of stablecoins. Therefore, it is a more comprehensive number for assessing the overall health of the blockchain ecosystem.
We have observed that during bear markets, the market value typically falls back to the level of the ecosystem's TVL. This phenomenon is somewhat akin to the 'book value' in traditional finance, which refers to the intrinsic value of an asset. We have been trying to understand these kinds of comparative indicators related to DeFi, and the relationship between market cap and TVL can be seen as the 'book value' of the blockchain space. Interestingly, whenever the price falls back to the so-called 'book value' (TVL), the market often welcomes a strong rebound.
Ryan:
I did some mathematical projections about the bull market on Twitter, assuming that Ethereum's TVL could grow to $1 trillion, while Ethereum's current market cap is about $300 billion. Do you think this scenario is possible?
Mike:
Based on current trends, this growth is indeed possible.
Ryan:
Given the rapid growth of stablecoins, this scenario is entirely possible. If the locked value of stablecoins reaches $500 billion, along with the locked value of real-world assets reaching $100 billion, while the values of all crypto-native assets also increase, we can arrive at a target of $1 trillion through some simple calculations. If we multiply this number by a higher TVL multiple, say 2.5, then the price of Ethereum could reach $20,000. This is the logic behind this mathematical model.
Of course, we currently cannot determine how much TVL will ultimately be deployed on Ethereum, but this model tells a story worth paying attention to. Especially the relationship between market cap and TVL, this purple line may become a key indicator in this bull market.
Mike:
This is indeed interesting. With the massive influx of stablecoins into the market, this lays the groundwork for the bear market. Therefore, continuously tracking the relationship between market cap and TVL will be very important. This is also a good way to think about potential valuations, as more assets enter the blockchain ecosystem, the on-chain value may significantly increase.
Performance and yields of ETH L2, comparison between bear and bull markets.
Ryan:
Mike, I have another question. There are some charts in your report that tell different stories. Although we did not discuss them today, I would like to hear your overall opinion. Do you think these charts can be interpreted in a bullish or bearish way?
In the report, I noticed that Ethereum's fee revenue, including MEV (Maximum Extractable Value) revenue, is generally trending downward. Compared to the last bull market cycle, Ethereum's actual revenue has decreased. Part of the reason is that Ethereum expanded the supply of block space through the Petra upgrade. Although changes on Layer 1 are minimal, the supply of block space on Layer 2 has significantly increased. However, this has resulted in Layer 2's revenue not meeting expectations. Some believe that the expansion of Layer 2 'drains' usage, business, MEV, and fees from the Ethereum mainnet, creating a 'parasitic effect'. From this perspective, this could be a bearish signal as the decline in assets and actual revenue may raise concerns about Ethereum's prospects.
Of course, there are more bullish viewpoints arguing that these upgrades have indeed enhanced the efficiency and productivity of the Ethereum network. We have seen significant growth in Layer 2 usage. Not only have active addresses and transaction volumes increased, but user numbers and transaction frequencies are also on the rise. While the fees paid by users have decreased, this may be a good thing, as lowering fees can attract more users and further solidify the network effect of the EVM (Ethereum Virtual Machine). This network effect is expected to translate into more revenues in the future and widespread use of Ethereum as a value storage asset. This is a more optimistic viewpoint, suggesting that Layer 2 strategies are working, compensating for revenue shortfalls through widespread adoption of the network, attracting more users, and promoting Ethereum's value storage function.
When prices rise, people often think 'the bull market perspective is correct'; when the ETH price drops to $300, everyone questions 'did the whole concept of Layer 2 fail?' How do you view this issue? When weighing Layer 2 data against Ethereum's bullish and bearish viewpoints, what is your perspective?
Mike:
This is a very important topic. I believe Ethereum's roadmap is progressing as planned. The growth and value of Layer 2 are already very apparent. For instance, why has Coinbase launched Layer 2 now? Because it benefits their business. The same goes for Robinhood, and their choices also demonstrate the value of Layer 2.
In my view, although Ethereum is not a traditional commercial project, it is indeed a product that requires widespread adoption by users. As long as the product meets market demand, it forms what is called 'product-market fit.' This is a key point. Any entrepreneur knows that the first step is to find product-market fit, and then adjust pricing strategies and build competitive advantages. Ethereum is currently at this stage. With the widespread adoption of Layer 2, if Ethereum can provide quality services to these Layer 2 solutions and establish strong network effects, I believe the market will gradually self-adjust.
Therefore, my view is that although current yields have declined, Ethereum is going through a transition period. If it can maintain product-market fit, there will be opportunities to adjust pricing strategies and further enhance value in the future. We may specifically discuss the development path of native Rollups in the future, which is a topic worth delving into. The key lies in the execution power of the Ethereum Foundation and community to find a balance that allows sufficient value to flow into Ethereum while validating the interests of ETH holders.
Ryan:
We may still be in the early stages of ETH price rotation, and of course, it's still uncertain. The price has not yet reached a level sufficient to validate this, so it's still an observation phase.