Ethereum as Digital Fuel
Unlike Bitcoin, Ethereum is not just a monetary asset—it is a decentralized global computing platform that enables smart contracts, tokenized assets, and financial settlements.
Ethereum as Digital Fuel
As financial markets continue their digital transformation, blockchain technology is moving beyond its speculative origins to become an integral part of corporate finance. While Bitcoin has been widely recognized as digital gold, a store of value asset held by institutions and corporations, Ethereum presents a complimentary value proposition. Unlike Bitcoin, Ethereum is not just a monetary asset—it is a decentralized global computing platform that enables smart contracts, tokenized assets, and financial settlements.
We propose that Ethereum should be regarded not merely as a reserve asset but as "digital fuel"—a fundamental infrastructure component driving the next generation of financial systems. This perspective moves beyond short-term price speculation and focuses on Ethereum’s unique ability to facilitate transactions, generate yield while strengthening network security, and serve as the foundation for tokenized economies.
Why Ethereum’s Value Extends Beyond Its Price
One of the most significant misunderstandings about Ethereum is that its value should be assessed purely through price movements. Ethereum may continuously exhibit periods of inflation and deflation in the near term and these dynamics are designed to maintain balance in the network. Since the Merge, the total supply of Ethereum has only decreased approximately 0.03% and its true strength lies in its utility rather than just scarcity. Unlike Bitcoin, Ethereum is not just a store of value—it is a productive asset.
The Foundational Infrastructure
Ethereum serves as the settlement layer for the world’s largest decentralized finance (DeFi) applications, tokenized asset platforms, and NFT marketplaces. Its programmability allows corporations and financial institutions to issue fiat backed stablecoins, digitize real-world assets (RWAs), and automate financial agreements through smart contracts. Additionally, staking ETH to provide network security generates a yield, transforming it from a volatile commodity into a revenue-generating asset.
Institutional adoption continues to accelerate, with 13 of the 20 major financial firms building crypto infrastructure choosing to issue tokenized assets on Ethereum and its Layer 2s (L2). These include money market funds such as Franklin Templeton’s OnChain U.S. Government Money Fund and government bonds issued by the European Investment Bank.
Ethereum remains the leading blockchain for RWA tokenization, commanding nearly 10 times the value of RWAs issued compared to Stellar. BlackRock's USD Institutional Digital Liquidity Fund (BUIDL), launched on Ethereum in March 2024, is now the third-largest tokenized fund globally and operates across six networks, including three Ethereum L2s. Over the past year, the total value of RWAs on Ethereum has tripled, now spanning 160+ tokenized assets held across 60,000 active wallets.
Stablecoins have experienced similar growth, with Ethereum maintaining over 54% of the total stablecoin market share and a 70% increase in circulating supply over the past year.
The expanding integration of Ethereum highlights its role as a trusted and scalable blockchain for broader Web2 applications. As various platforms leverage Ethereum’s core infrastructure, the demand for ETH to cover transaction fees grows, directly linking network activity to its value. The success of these applications reinforces positive network effects, where increasing adoption enhances Ethereum’s utility, economic sustainability, and long-term value proposition.
Scalability Is an Edge, Not a Curse
Ethereum’s L2 ecosystem has faced criticism for fragmentation, but rollups are a cornerstone of its modular scaling strategy. As the leading blockchain in Total Value Locked (TVL) in DeFi, Ethereum benefits from L2s like Arbitrum and Optimism, which enhance scalability while maintaining security. Rather than competing with Ethereum, L2s complement its infrastructure by batching transactions off-chain, significantly lowering gas fees and improving transaction throughput. As L2 technology advances, transaction costs continue to decrease, making Ethereum more accessible to a broader range of users and industries.
Beyond crypto-native firms, over 50 non-crypto companies have integrated Ethereum’s L2 rollups into their operations. Deutsche Bank, for example, is developing an Ethereum-based rollup under Project DAMA 2, a global initiative led by MAS and 24 financial institutions to establish scalable, auditable, and interoperable financial infrastructure. Meanwhile, Sony has launched its Ethereum L2, Soneium, utilizing the OP tech stack to support gaming, finance, and entertainment applications.
Ethereum’s rollup-centric model provides traditional finance and industry leaders with a customizable and compliant blockchain framework. By leveraging Ethereum’s security and scalability, institutions can develop tailored, real-world blockchain solutions, reinforcing Ethereum’s role as the foundation for enterprise adoption and next-generation financial infrastructure.
Sustainable Economic Model
Ethereum’s tokenomics are designed to ensure long-term value accrual through a balanced supply-and-demand mechanism. Unlike many cryptocurrencies, ETH effectively captures the value generated by decentralized applications (dApps) and other blockchain-based businesses.
A key aspect of ETH’s economic model is its monetary policy, which functions similarly to a central bank but is governed by code rather than a centralized authority. ETH is issued as staking rewards to validators who secure the network, but a significant portion of transaction fees—around 80%—is permanently removed from circulation through a process known as burning. This mechanism counteracts inflation, reducing the overall supply of ETH and indirectly increasing its value for holders.
Ethereum’s supply dynamics have made it deflationary in recent years, though as of September 30, 2024, it maintains a controlled inflation rate of 0.24%. Unlike fiat currencies, which can be devalued by excessive money printing, ETH’s monetary policy is transparent, predictable, and resistant to centralized intervention. Any adjustments require consensus from the entire network, reinforcing Ethereum’s decentralized and self-sustaining economic model.
Ethereum’s role in global finance is expanding beyond speculative trading and towards actual institutional adoption. However, for Ethereum to function as a core financial asset, it needs to be structured in a way that aligns with traditional corporate and institutional investment frameworks.
The Oil Analogy: Digital Assets as Financial Infrastructure
A useful way to understand Ethereum’s economic role is by comparing digital assets to crude oil. Just as crude oil is highly valuable but requires refinement into gasoline, jet fuel, and plastics to realize its full utility, Ethereum must be structured appropriately to be fully utilized by corporate treasuries and institutional investors.
Bitcoin is often compared to gold—a scarce asset with a fixed supply that serves as a store of value. Its simplicity makes it attractive for corporate reserves and large-scale institutional accumulation. Ethereum, however, offers an additional advantage, functioning more like a fuel source for decentralized applications, tokenized assets, and on-chain financial products.
As of 2025, the global economy encompasses approximately $900 trillion in assets, spanning equities, financial instruments, real estate, and intangible assets such as art and intellectual property. Around half of these assets are held for their ability to outperform inflation, while the other half are held for their utility. Since Ethereum’s launch in 2015, it has outperformed all other asset classes, achieving a compound annual growth rate (CAGR) of 120%. Moreover, Ethereum possesses intrinsic value, derived from its Proof-of-Stake security model and its necessity for transaction fees (measured in Gwei and commonly referred to as "Gas").
When evaluating ETH purely as an asset, it has significantly outperformed BTC, NVDA, TSLA, and MSFT over the past decade. While a 120% CAGR is unlikely to be sustainable long-term, even a conservative estimate of 50% CAGR through 2034 would place Ethereum’s market capitalization at $26 trillion. In comparison, Bitcoin, now in its 17th year, continues to grow at a CAGR of 70%.
Beyond its role as an asset, ETH derives substantial value from its utility. Tokenized assets trade far more efficiently than traditional assets, which are often burdened by taxes, legal complexities, and high transaction fees. The global economy currently allocates over $6 trillion annually to IT solutions and $2 trillion to payment processing. As tokenization becomes increasingly prevalent, the demand for ETH is expected to rise, even if only for transaction fees. Given that Ethereum's market capitalization currently stands at approximately $400 billion, the migration of even 5% of these traditional financial costs to an on-chain model would result in Ethereum’s market cap doubling.
ETH serves as the foundation for some of the most widely used financial platforms, with institutions actively integrating into the Ethereum network. Drawing a parallel to the broader global economy, the wealthiest nations in 2025 are built upon vast oil reserves. It stands to reason that digital oil—Ethereum—may serve as the foundation for a similar level of wealth in the 21st century.
Ethereum’s role in finance mirrors that of oil in the global economy. Just as oil powers industries by fueling machinery, transportation, and manufacturing, Ethereum enables on-chain finance, smart contract execution, and decentralized commerce. However, in its raw form, Ethereum is often perceived as too complex or volatile for direct institutional investment. This underscores the need for an "Ethereum refinery"—a framework that structures ETH into institutional-grade financial products, facilitating broader adoption and integration into mainstream finance.
Ethereum as a Corporate Reserve: A New Approach
Bitcoin’s success as a corporate reserve asset has largely been driven by its fixed supply and simple investment thesis. Companies such as MicroStrategy have demonstrated that leveraging corporate balance sheets to acquire BTC can be a viable treasury strategy. However, applying the same approach to Ethereum requires a different framework due to ETH’s broader functionality and economic model.
For corporations to hold Ethereum as a strategic reserve asset, a more structured approach may involve:
Strategic Accumulation – Corporations accumulating ETH not just as a store of value but as an operational asset for on-chain finance, settlements, and tokenization.
Staking for Yield – Unlike Bitcoin, Ethereum allows for staking, enabling corporations to earn yield and offset treasury risks while securing the network.
Tokenization & Financial Structuring – Transforming ETH into structured investment products, such as ETFs, tokenized securities, or collateralized lending instruments, making it more attractive to institutional investors.
Regulatory Optimization – Leveraging jurisdictions with progressive crypto regulations to establish a compliant framework for ETH reserves.
This Ethereum reserve model goes beyond simply holding ETH on a balance sheet. By integrating Ethereum into yield-generating financial products, corporations can transform a volatile crypto asset into a structured financial instrument with institutional-grade stability.
A Paradigm Shift in Corporate Finance
As financial institutions increasingly explore blockchain-based infrastructure, Ethereum’s role is shifting from a speculative asset to a fundamental component of financial markets. Its ability to power financial transactions, tokenize assets, and serve as a corporate reserve asset positions it as a long-term structural element of modern finance.
While Bitcoin will likely remain the dominant store of value in the crypto ecosystem, Ethereum’s unique ability to facilitate programmable finance and decentralized applications makes it an equally valuable—but distinct—investment.
Rather than being viewed solely as a cryptocurrency, Ethereum should be understood as a critical piece of digital financial infrastructure. The "Ethereum as Digital Fuel" thesis provides a framework for corporations and institutions to adopt ETH not just as a balance sheet asset, but as a core enabler of digital finance.
About Republic Technologies
The Ethereum corporate reserve division of a publicly traded company in Canada (official announcement in March 2025), pioneering institutional Ethereum adoption with a MicroStrategy 2.0 approach.https://x.com/republictech_io
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Certain information included here may have been obtained from third-party sources, including portfolio companies affiliated with Republic Technologies. The views expressed in this post are those of the authors and do not necessarily reflect the views of Republic Technologies or its affiliates. These opinions are subject to change without notice and may not be updated.