Market dynamics 2025-06-12 20:37:21
Author: Market Dynamics
As the most vibrant smart contract platform globally, Ethereum is entering an accelerated development stage driven by both underlying innovation and external catalysts. Its Layer 2 scalability technology is gradually maturing, and the DeFi, RWA, and social application ecosystems are flourishing, compounded by the continuous increase of traditional financial capital, making Ethereum the core of a new round of blockchain infrastructure revolution.
However, behind the noise, the true determinants of Ethereum's future development path are often not market sentiment but the direction of on-chain technological capital flows and the evolution of governance philosophy. Especially the financial policy of the Ethereum Foundation, its funding direction, technical bets, and value preferences constitute a 'signal set' that has been long undervalued by the market.
This report will focus on 'the latest financial policy released by EF,' analyzing macro market trends and the evolution context of Ethereum's scalability, comprehensively breaking down a highly likely new route that could trigger a hundredfold return — Unstoppable Rollup, and its core implementer: the Facet protocol, along with in-depth research and investment recommendations for the most promising tokens and projects in its ecosystem.
This report attempts to answer three questions:
Why are traditional institutions significantly increasing their holdings of Ethereum at this time?
What kind of technical direction is suggested by the financial movements of the Ethereum Foundation?
Who are the representative projects of Unstoppable Rollup? Who are the potential targets in its ecosystem?
1. Frequent positive developments for Ethereum — Analysis of macro trends and capital signals
1.1 Traditional institutions continue to increase their holdings of Ethereum: assessing long-term value from the perspective of allocation trends.
Since May 16, the ETH spot ETF has achieved 15 consecutive days of net inflow, totaling approximately $830 million, while the BTC spot ETF shows continuous outflow signs. This indicates that traditional institutions led by BlackRock are continuously increasing their allocation to Ethereum, reflecting that the capital market's recognition of Ethereum as the 'world computer' is gaining traction.
The continuous inflow of Ethereum releases key expectations, with inflows exceeding $800 million for 15 consecutive days, indicating that institutions currently prefer to hold Ethereum long-term rather than engaging in short-term speculation. Considering the upcoming Ethereum ETF staking and RWA premium implementation, this trend is expected to remain strong.
1.2 Shift of the U.S. SEC: What does the easing of staking regulation mean?
On May 29, the U.S. SEC issued an official statement: common models such as staking, third-party delegated staking, and custodial staking do not constitute securities transactions, and ancillary services (such as slashing coverage, early unlocking, reward distribution adjustments, asset aggregation, etc.) do not alter the nature of staking and do not fall under securities.
This clearly stated integration of staking incentive logic for Ethereum spot ETFs removes obstacles. Previously, ETH ETFs lacked yield due to the inability to stake, while the latest guidelines may allow for the integration of staking yield structures at the ETF level in the future.
Taking BlackRock as an example, the current management fee for the ETH ETF is 0.25%. If fully allocated for staking, at an annualized rate of 3%, the yield from staking would be 12 times the management fee. It is easy to imagine the immense temptation for issuers that staking brings, providing enough incentive for issuers to attract more clients, thereby driving up ETH prices.
ETH, as the main asset for staking, will align more with long-term value allocation logic, especially under compliant pathways possessing long-term absorption and price support capabilities.
1.3 The underlying chain of RWA explosion: Ethereum remains the core carrier.
RWA, or the on-chainization of real-world assets, is a key breakthrough in the integration of traditional finance and blockchain. Whether it's the securitization of real estate assets or the on-chain issuance of dollar bonds, a 'highly neutral, programmatically deterministic' execution platform is needed.
Ethereum, with its high degree of decentralization, global consensus, and EVM standards, is becoming the top choice platform for global RWA projects. For example:
The bond fund issued by Franklin Templeton is deployed on Ethereum;
The Hong Kong Monetary Authority's pilot project for government bond tokenization uses the Ethereum mainnet;
Several sovereign funds' blockchain experiments are based on the premise of 'Ethereum compatibility.'
The entry of RWA ecosystem will further solidify Ethereum's status as the 'world computer.'
1.4 Why is national-level capital more likely to bet on the Ethereum mainnet?
Recently, Joe Lubin (co-founder of Ethereum and CEO of Consensys) revealed: Consensys is "in negotiations with the 'major sovereign wealth funds and banks' of a 'very powerful' country about potential construction based on Ethereum."
From the policy trends of countries like the UAE, Hong Kong, Singapore, and France, the sovereign level's attention to 'decentralized infrastructure' is significantly increasing. On one hand, there is a demand for technological security and censorship resistance, and on the other hand, there is a compliance exploration of 'neutral execution platforms.'
In the context of Bitcoin lacking programmability and contract governance tools, Solana's stability and infrastructure are still inadequate, and other Layer 1s lack a global developer ecosystem, Ethereum comprehensively balances governance transparency, community inclusiveness, and technical evolutionary paths, making it most compatible with national-level asset management frameworks.
2. Strategic guidance in financial policy — the funding allocation philosophy and decentralization priority principles of the Ethereum Foundation.
2.1 Strategic preferences in funding allocation: Moving from centralized compromises to decentralized orders.
In June 2025, the Ethereum Foundation (EF) released a new Treasury Policy, clearly expressing a funding tendency towards protocols that are 'permissionless, censorship-resistant, and have strong mainnet inheritability.'
EF explicitly proposed to regain 'Cypherpunk Goals' in policy documents:
Privacy by default
Censorship resistance
Minimal, unstoppable base-layer execution
Permissionless economic participation model
This means that the Ethereum Foundation will allocate the vast majority of its future funding to the construction of systems without governance backdoors, promoting the implementation of 'open source + immutable + self-operating' protocols, completely abandoning the short-term behavior of exchanging efficiency for centralized governance.
2.2 Decentralization as a financial criterion: EF acts as a technical value investor.
From the funding structure of EF, it resembles a 'technical value investor' that is betting not on short-term effects but on the long-term impact of Ethereum's security, sustainability, and decentralized philosophy.
This tendency profoundly influences its funding allocation for Layer 2 solutions:
Neutrality principle for sequencers: Oppose sequencer architectures controlled by whitelists or multi-signature.
Avoid governance capture: Prioritize funding agreements whose key parameters cannot be altered by a minority of governance members.
Legal risk avoidance: Do not support projects with centralized governance risks to avoid becoming a target of censorship or regulatory attack;
Sovereign inheritance: Prefer systems that operate on the Ethereum mainnet, directly inheriting consensus and data availability.
Therefore, the foundation is no longer inclined to support solutions like Optimism and Arbitrum that have clear governance committees and sequencer control mechanisms but instead focuses on the decentralized path of Unstoppable Rollup.
2.3 Unstoppable Rollup: A pure extension of Ethereum's philosophy.
On May 16, the Facet team announced it received the first round of funding from EF to support Unstoppable Rollup.
In conjunction with this round of financial updates, EF has released a clear policy signal to the outside world, indicating that the Foundation is strategically supporting 'Unstoppable Rollup' represented by the Facet protocol. Such systems possess the following characteristics:
Permissionless sequencer market: Any node can participate in the sequencing rights through bidding, possessing anti-monopoly capabilities;
No governance upgrade channels: Protocol logic cannot be forcibly upgraded through voting or multi-signature, enhancing protocol stability;
High sovereign inheritability: directly inherit the data and consensus mechanism of the Ethereum mainnet, avoiding cross-chain bridge security issues.
Community self-management orientation: Emphasizing the replacement of official team centralized control with open-source governance and community-led ecological development.
From this perspective, Unstoppable Rollup is no longer just a choice of scalability routes but a pure extension of Ethereum's philosophy. The Facet protocol, as a pioneer of this route, will play a core role in the future symbiotic evolution with the Foundation.
3. The competition for scalability routes — Analysis of the technical paradigm and competitive advantages of Unstoppable Rollup
As Ethereum Layer 2 technology enters a phase of widespread deployment on the mainnet, achieving a balance between scalability, security, and decentralization becomes crucial for the future prosperity of the ecosystem. Rollup is currently one of the most mainstream scalability paths, but not all Rollup architectures are created equal. Among them, Unstoppable Rollup is gaining increasing attention because it not only achieves breakthroughs in execution efficiency but also defines the evolution goals of the next phase of Rollup in terms of 'censorship resistance' and 'decentralization.'
3.1 Issues of controllability and potential risks of Rollup
In traditional Rollup architectures, most projects rely on upgradable smart contract bridges that allow development teams to make changes to the system through admin privileges. While this flexibility facilitates version iterations, it also brings two fundamental risks:
Upgrading control centralization: Currently, most academic or commercial Rollup projects rely on multi-signature wallets, security committees, or governance contracts to implement key control logic upgrades. Once the relevant governance is attacked or altered, it may lead to system paralysis or financial losses.
The defect of the exit window mechanism: mainstream Rollups rely on a 'time window'-based exit logic, allowing users to withdraw assets in the event of an attack or system failure. However, this mechanism requires users to have technical skills and respond quickly, heavily relying on the coordination of user behavior, making it difficult to cope with black swan events.
3.2 Design philosophy of Unstoppable Rollup: minimal trust assumptions + minimal governance burden.
The core demand of Unstoppable Rollup is to build an unupgradeable, immutable, and unfrozen Rollup system, enabling it to maintain viability in the face of hostile governance, contract attacks, and other extreme situations.
The core advantage of Unstoppable Rollup lies in:
No governance (Governance-minimized): The core protocol cannot be upgraded, does not require governance proposals or majority voting, minimizing human intervention and governance attacks;
Open sequencer market (Permissionless Sequencing): Any node can bid for sequencing rights, avoiding monopolistic and bribery behaviors;
Strong composability (Composable with L1): Natively inherits the state and data availability of the Ethereum mainnet, requires no bridging, and has no data layer splitting;
Sovereign security (Sovereign Security): Does not rely on any third-party validators, security is equivalent to that of Ethereum;
Censorship-resistant design (Censorship Resistance): Sequencer behavior is transparent, challenge mechanisms are clear, and it naturally resists arbitrary packing or leaking attacks from centralized structures.
This structure reflects the typical execution of 'Ethereum first principles,' extending L1 consensus to L2 without compromising throughput through governance.
3.3 Technical comparison analysis: Unstoppable Rollup vs mainstream Rollup
Note: ✅ indicates strong advantage, ⚠️ indicates neutrality or dependence on realization, ❌ indicates obvious disadvantage.
Unstoppable Rollup has significant advantages in censorship resistance, minimal governance, open sequencing rights, and native mainnet inheritability, and has gradually become a mainstream candidate path for the next generation of Ethereum scalability.
Its greatest value lies not in 'higher performance' but in 'being harder to shut down,' 'being less reliant on trust,' and 'being better able to sustain on-chain economic sovereignty.' This also aligns with the strategic funding preferences of the Ethereum Foundation in its financial policy.
The biggest feature of Unstoppable Rollup is that it 'freezes' the system in a state that requires no human intervention, allowing Rollup to operate like a natural system, where users do not rely on any entity for approval, do not need bridging, and do not require upgrades to continue running, just as Ethereum was originally designed.
4. Facet Protocol — Ethereum Foundation's renewed focus on Unstoppable Rollup laboratory
In the current evolution of Rollup technology, truly sustainable and censorship-resistant solutions are receiving high attention from the Ethereum community and core developers. Facet Protocol, as a protocol laboratory born from the Ethscriptions community, not only received direct funding from the Ethereum Foundation but also made bold technical and governance attempts based on the Unstoppable Rollup concept.
4.1 Origin of Facet: The evolutionary path from Ethscriptions to Unstoppable Rollup.
Background of Ethscriptions: Facet originated from the Ethscriptions community, a lightweight innovative system that achieves on-chain inscription by recording data on 'calldata.' Unlike traditional ERC-721 or ERC-1155, Ethscriptions significantly reduces the cost of minting and verification, providing an extremely scalable experimental platform for Rollup.
From tool to protocol: propelled by community-driven efforts, Ethscriptions evolved into a Rollup experimental platform equipped with key modules such as state management, sequencers, and on-chain verification, officially evolving into the Facet Protocol.
Echoing the Unstoppable Rollup philosophy: Ethscriptions' 'zero-trust issuance' and on-chain proof concepts became the theoretical foundation for subsequent designs of Facet, emphasizing that any asset or data should possess characteristics of trustlessness, immutability, and perpetual existence.
4.2 Analysis of Facet's technical features: no multi-signature, no committee, sequencer decentralization.
Decentralized sequencer design: Facet allows anyone to join the sequencer network without whitelist authorization, solving the issue of sequencers becoming centralization bottlenecks in most current Rollups.
No multi-signature, no security committee: the protocol itself does not introduce any off-chain governance bodies, and there are no 'emergency brakes' or 'super privilege accounts' in the contracts, minimizing human intervention.
Data availability assurance: All transaction and state data is directly published on the Ethereum mainnet, rejecting external DA solutions, ensuring that state reconstruction and censorship resistance do not rely on additional assumptions.
Through the aforementioned design, Facet does not rely on any trusted third party; any user can verify, synchronize, and exit the Rollup state solely based on the Ethereum mainnet, which is extremely rare among current Rollup projects.
The essence of this technological logic is to view 'governance' as a tool for limiting power rather than a tool for empowerment, providing institutional guarantees for Unstoppable Rollup.
4.3 Position of the Facet ecosystem: Ethereum Foundation funding and Zellic security audit endorsement.
Ethereum Foundation funding: Facet obtained official funding support from the Ethereum Foundation in May 2025, with its protocol logic highly aligned with the 'Defipunk Criteria' set by the Foundation (see section 5.3 of the EF financial policy original text) — governance minimization, strong censorship resistance, and strong self-custody compatibility embody the typical 'Ethereum-native modularity.'
Zellic security audit: Zellic is one of the most authoritative security audit companies in the blockchain field, having conducted in-depth audits for projects like Aptos, Sui, LayerZero, Pyth, Uniswap, etc. It will complete an in-depth audit of Facet contracts and issue a report in November 2024. The core protocol logic of Facet has received top expert recognition in terms of security models, especially under the 'no multi-signature, no admin' minimalist architecture, capable of withstanding challenges of logical integrity and attack resilience.
Enhanced community trust: Facet has rapidly emerged among the new Rollup elites due to its technical transparency and clarity of funding sources, becoming a focus of attention for the L2 community and Rollup governance researchers.
Unstoppable Rollup practical sample: Facet is gradually becoming a decentralized Rollup benchmark that 'does not rely on any trusted oracle and is not controlled by any off-chain organization,' significantly expanding the life boundaries of Rollup technology.
Facet Protocol, starting from Ethscriptions, integrates minimalism, self-sufficiency, and censorship resistance throughout the protocol and builds a truly Unstoppable Rollup through decentralized on-chain governance and trustless technical architecture.
This minimalist architecture is highly consistent with Ethereum's own 'verifiability first' philosophy, making Facet the closest current solution to a 'theoretically complete Rollup'.
5. Tracking potential hundredfold targets — Facet ecosystem leaders
ETHS was born on June 18, 2023, as the first token issued on the Ethereum mainnet based on the Ethscriptions protocol, with a total supply of 21 million, naturally possessing non-inflatable and non-tamperable native inscription properties. As a pioneer in the inscription field, ETHS has created a decentralized experimental path for Ethereum native assets, establishing a model for subsequent Facet ecosystems with its fair launch, public key on-chain, no pre-mining, and no team allocation mechanisms.
It is the continuous technical advancement, ecological practice, and ideological expansion of the ETHS community that have propelled the birth and rapid formation of the Facet protocol.
5.1 Symbiotic evolution of ETHS and the Facet protocol.
The Facet protocol was initially proposed to address high gas and fragmentation issues that ETHS faced at the transaction layer. It is not a traditional Layer 2 but a Rollup architecture natively based on inscription technology. The ETHS community and protocol founders jointly built the initial user needs and technical direction of Facet, providing liquidity and consensus support for its cold start.
Driven by ETHS, Facet completed its mainnet launch and went live with Facetswap in 2023, and launched Facet V2 in 2024 to achieve ecological compatibility between the Ethereum mainnet and the Facet protocol, enabling seamless conversion between ETH and ETHS. By 2025, Facet was granted the identity of 'Unstoppable Rollup' by the Ethereum Foundation, becoming the only censorship-resistant Rollup protocol to receive official funding. Its decentralized design philosophy is a continuation and elevation of the early governance culture of the ETHS community.
5.2 Strategic positioning of ETHS in the Facet ecosystem
ETHS is not only the starting point of Facet but also the core driving force of its current ecosystem:
(1) Uniqueness of value genes
As a pioneering asset of the Ethscriptions protocol, ETHS has non-reproducible on-chain native characteristics.
Its total supply is fixed, contracts cannot be upgraded, and inscription rules cannot be modified, forming a protocol-level value anchor.
(2) The spillover effect of community momentum
The ETHS community has built the early user base of the Facet protocol, accounting for over 85% of the current ecosystem's total TVL.
In the design of key modules of Facet, such as Facetswap, protocol promotion, and technical upgrades, ETHS holders always play a core role.
(3) Multi-dimensional ecological empowerment
Payment layer: ETHS is the core trading pair of Facetswap, with on-chain transaction volume exceeding 110,000 $ETH ($300M).
Governance layer: Holders can participate in upETHS platform governance and enjoy proposal weight bonuses.
Application layer: ETHS will share revenue dividends in the upcoming upETHS platform.
5.3 Essential relationship: bi-directional nested symbiosis
ETHS provides the initial narrative resources, community soil, and liquidity foundation for Facet, while Facet offers ETHS technical architecture, trading platforms, and the Ethereum Foundation's official endorsement.
The symbiotic relationship between the two is reflected in:
Collaboration between technology and community: Facet has realized the scalability of ETHS assets, while the ETHS community has driven the iteration and implementation of the Facet protocol.
Unity of value and vision: Both center around decentralization, censorship resistance, and protocol native characteristics, aligning with Ethereum's long-term development philosophy.
Guarantees of key person connections: Core developers, including Facet's founder @dumbnamenumbers, have been actively involved in the ETHS community, creating a resonance between ideas and technology.
ETHS is not an adjunct to Facet; it is the source of its soul.
In the future, ETHS will continue to stand at the forefront of Ethereum's fundamentalism and censorship resistance, becoming a faith anchor and value cornerstone of the Rollup ecosystem.
ETHS has completed the leap from on-chain inscribed experiments to a core asset of Ethereum L2, with its consensus strength and ecological traction continuously improving. During the window period when 'Unstoppable Rollups' become the mainstream narrative, the valuation model of ETHS is expected to be completely reshaped.
Facet is technology, ETHS is consensus, and the community is fundamental. Facing the next decade of the Ethereum ecosystem, ETHS+Facet is at the intersection of Ethereum's most core narrative.
As the only Unstoppable Rollup funded by the Ethereum Foundation, Facet is rapidly attracting attention from developers and capital, while ETHS is the most explosive potential asset in its ecosystem.
In the future, ETHS is expected to become a hundredfold dark horse in the Ethereum ecosystem alongside Facet.
Conclusion
Extracting value from trends, gaining insights into the future from capital flows
Every cycle of bull market myths is not accidental; they are born from the resonance of macro trends and underlying logic. The combination of ETHS + Facet stands at such a critical turning point: the protocolization of inscribed assets + the core evolutionary path of Ethereum's decentralized scalability. The flow of funds and policy orientation of the Ethereum Foundation clearly reveal that they are betting on a future that is more censorship-resistant and decentralized.
And the capital flow — whether it's topping the Gitcoin donation list or the surge in trading volume after the mainnet launch — demonstrates that the market is placing bets on consensus with real assets. Where the trend points is where ETHS is.
Why is it that truly long-term projects are always highly related to 'decentralization'?
Because only decentralization does not rely on the credit support of individuals or institutions and can survive in the face of any regulation, censorship, and black swan events. ETHS is not a product of centralized airdrop games, but a community-forged ecological consensus. Facet is also not an L2 relying on security committees for protection, but a truly 'unstoppable' scalable infrastructure that operates by the protocol itself.
It is this characteristic of 'not relying on others, only relying on code' that builds their moat.
History will prove: those projects that can complete an entire cycle, survive bear markets and black swan events, and ultimately become hundredfold projects are always those that are 'most decentralized.'