Ethereum Repricing: From Rollup-Centric to “Security Settlement Layer”
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Ethereum Repricing: From Rollup-Centric to “Security Settlement Layer”
ETH’s value is no longer confined to gas or blob revenue, but lies in its institutional premium as the world’s most secure EVM settlement layer and native monetary asset.
Navigating Web3 tides with focused insightsAuthors: Jacob Zhao, Jiawei, Turbo
On February 3, 2026, Vitalik published a pivotal reflection on Ethereum’s scalability roadmap via X. As the practical challenges of evolving Layer 2 (L2) toward full decentralization have been newly recognized—and as Ethereum’s mainnet (L1) throughput is projected to increase substantially over the coming years—the original assumption that L2 alone would bear the core scaling burden is being revised. A new “settlement–service” paradigm is emerging between L1 and L2: L1 focuses on delivering the highest degree of security, censorship resistance, and settlement sovereignty; meanwhile, L2s evolve into “differentiated service providers” (e.g., for privacy, AI, or high-frequency trading). Ethereum’s strategic focus is returning to the mainnet itself, reinforcing its positioning as the world’s most trusted settlement layer. Scaling is no longer the sole objective—security, neutrality, and predictability are reasserting themselves as Ethereum’s core assets.
Key Shifts:
- Ethereum is entering an “L1-First Paradigm”: With direct L1 expansion and persistently falling fees, the original assumption—that L2 must shoulder the primary role in scale—is no longer valid.
- L2s are no longer “brand shards,” but rather points along a trust spectrum: L2 decentralization has progressed far more slowly than anticipated, making it difficult for them to uniformly inherit Ethereum’s security. Their role is thus being redefined as networks occupying distinct trust levels.
- Ethereum’s core value is shifting from “traffic” to “settlement sovereignty”: ETH’s value is no longer confined to gas or blob fee revenue, but lies in its institutional premium as the world’s most secure EVM settlement layer and native monetary asset.
- Scaling strategy is becoming increasingly protocol-native: Building upon sustained direct L1 expansion, exploration of protocol-level native verification and security mechanisms may reshape the security boundary and value capture architecture between L1 and L2.
- Valuation frameworks are undergoing structural migration: Weightings for security and institutional credibility are rising significantly, while those for transaction fees and platform effects are declining. ETH pricing is transitioning from a cash-flow model toward an asset-premium model.
This article analyzes the paradigm shift and valuation reconstruction of Ethereum’s pricing model across three layered dimensions: facts (technological and institutional developments already realized), mechanisms (impacts on value capture and pricing logic), and implications (for portfolio allocation and risk–return profiles).
I. Returning to First Principles: Ethereum’s Values
Understanding Ethereum’s long-term value hinges not on short-term price fluctuations, but on its unwavering design philosophy and value orientation.
- Trustless Neutrality: Ethereum’s core objective is not efficiency or profit maximization, but to serve as a trustlessly neutral infrastructure—its rules are public, predictable, impartial toward any participant, and not controlled by any single entity. Participation is permissionless. The security of ETH and on-chain assets ultimately rests on the protocol itself—not on any institutional credit.
- Ecosystem-First, Not Revenue-First: Ethereum’s key upgrades consistently reflect a coherent decision logic—deliberately forgoing short-term protocol revenue to achieve lower usage costs, broader ecosystem scale, and greater system resilience. Its goal is not to “collect tolls,” but to become an indispensable, neutral settlement and trust foundation for the digital economy.
- Decentralization as a Means: The mainnet focuses on delivering the highest level of security and finality, while L2 networks sit at varying points along a connectivity spectrum with the mainnet—some prioritize efficiency while inheriting mainnet security; others emphasize differentiated functionality. This enables the system to simultaneously serve global settlement and high-performance applications—not fragmented “brand shards.”
- Long-Termist Technical Roadmap: Ethereum adheres to a slow-and-sure evolutionary path, prioritizing system security and trustworthiness. From the transition to Proof-of-Stake (PoS) through subsequent scaling and confirmation mechanism optimizations, its roadmap emphasizes sustainability, verifiability, and irreversible correctness.
Security Settlement Layer: Refers to Ethereum’s mainnet, which provides irreversible finality services for L2s and on-chain assets via decentralized validator nodes and consensus mechanisms.
This Security Settlement Layer positioning signifies the establishment of “settlement sovereignty”—a transition from a “confederal” to a “federal” structure, marking Ethereum’s “constitutional moment” as a digital nation and representing a major architectural and foundational upgrade.
After the American Revolutionary War, under the Articles of Confederation, the 13 states operated as a loose alliance: each printed its own currency and imposed tariffs on others. Each state engaged in free-riding—enjoying collective defense without contributing financially; benefiting from the alliance’s brand while governing autonomously. This structural flaw eroded national credit and prevented unified foreign trade, severely hindering economic development.
The year 1787 marked America’s “constitutional moment.” The new Constitution granted the federal government three critical powers: the authority to levy taxes directly, regulate interstate commerce, and issue a unified currency. But what truly brought the federal government to life was Alexander Hamilton’s 1790 economic plan: the federal government assumed state debts, redeemed them at face value to rebuild national credit, and established the First Bank of the United States as a financial hub. A unified market unlocked economies of scale; national credit attracted capital inflows; infrastructure projects gained financing capacity. America evolved from 13 mutually suspicious mini-states into the world’s largest economy.
Today’s Ethereum ecosystem faces an identical structural challenge.
Each L2 functions like a “sovereign state,” with its own user base, liquidity pools, and governance tokens. Liquidity is fragmented; cross-L2 interaction is friction-heavy; L2s enjoy Ethereum’s security layer and brand without meaningfully feeding value back to L1. Locking liquidity on their own chains is rational for each L2 in the short term—but when all L2s do so, Ethereum’s most vital competitive advantage—its cohesive ecosystem—is lost.
Ethereum’s current roadmap is, in essence, its constitution-drafting and central economic system-building process—establishing “settlement sovereignty”:
- Native Rollup Precompile = Federal Constitution. L2s retain full freedom to build differentiated functionality outside the EVM, while EVM components can obtain Ethereum-grade security verification via native precompiles. Non-integration remains possible—but at the cost of losing trustless interoperability with the broader Ethereum ecosystem.
- Synchronous Composability = Unified Market. Mechanisms such as Native Rollup Precompiles enable trustless, synchronous composability across L2s and between L2s and L1—directly eliminating “interstate trade barriers” and freeing liquidity from isolated silos.
- L1 Value Capture Restoration = Federal Taxing Power. When all critical cross-L2 interactions settle on L1, ETH re-emerges as the ecosystem’s settlement hub and trust anchor. Whoever controls the settlement layer captures value.
Ethereum is using a unified settlement and verification framework to transform its fragmented L2 ecosystem into an irreplaceable “digital nation”—a historical inevitability. Of course, this transformation may unfold gradually. Yet history shows that once completed, the network effects unleashed will far exceed linear growth under fragmentation. America’s unified economic system transformed 13 small states into the world’s largest economy. Ethereum will similarly convert its loosely coupled L2 ecosystem into the world’s largest security settlement layer—and ultimately, the global financial rail.
Ethereum Core Upgrade Roadmap and Valuation Impact (2025–2026)
II. Valuation Misconceptions: Why Ethereum Should Not Be Treated as a “Tech Company”
Applying traditional corporate valuation models (P/E, DCF, EV/EBITDA) to Ethereum is fundamentally a category error. Ethereum is not a profit-maximizing company, but an open infrastructure for the digital economy. Corporations maximize shareholder value; Ethereum maximizes ecosystem scale, security, and censorship resistance. To achieve this, Ethereum has repeatedly opted to suppress protocol revenue—for example, EIP-4844 introduced Blob Data Availability, structurally lowering L2 data publishing costs and reducing L1 fee revenue from rollup data. From a corporate perspective, this resembles “revenue self-destruction”; from an infrastructure perspective, however, it sacrifices short-term fees to secure long-term neutrality premiums and network effects.
A more appropriate conceptual framework treats Ethereum as a globally neutral settlement and consensus layer—providing security, finality, and trustworthy coordination for the digital economy. ETH’s value arises from multiple structural demands: rigid final settlement needs, the scale of on-chain finance and stablecoins, supply impacts from staking and burning mechanisms, and long-term, sticky capital inflows from institutional adoption—including ETFs, corporate treasuries, and Real World Assets (RWA).
III. Paradigm Reconstruction: Seeking Pricing Anchors Beyond Cash Flow
At the end of 2025, Hashed’s team launched ethval.com, offering a comprehensive, reproducible set of quantitative models for Ethereum. However, traditional static models struggle to capture the dramatic narrative pivot underway in 2026. We therefore adapted its systematic, transparent, and reproducible underlying models (covering yield, monetary, network effect, and supply structures), while restructuring the valuation architecture and rebalancing weighting logic:
- Structural Reconfiguration: Mapping the model onto four value quadrants—Security, Monetary, Platform, and Revenue—and summing weighted valuations.
- Weight Reallocation: Significantly increasing weightings for security and settlement premiums, while downweighting protocol revenue and marginal contributions from L2 expansion.
- Risk-Control Overlay: Introducing a macro- and on-chain risk-aware circuit-breaker mechanism, granting the valuation framework cross-cycle adaptability.
- Eliminating “Circular Reasoning”: Models incorporating current price inputs (e.g., Staking Scarcity, Liquidity Premium) are no longer used as fair-value anchors; they serve only as position-sizing and risk-preference indicators.
Note: The following models are not intended for precise point forecasts, but to characterize the relative pricing direction of different value sources across cycles.
1. Security Settlement Layer: Core Value Anchor (45%, elevated during risk-aversion periods)
We treat the Security Settlement Layer as Ethereum’s most fundamental value source, assigning it a baseline weight of 45%; this weight increases further during periods of heightened macro uncertainty or falling risk appetite. This judgment stems from Vitalik’s latest definition of “truly scaling Ethereum”: scaling is not about boosting TPS, but about creating blockspace fully endorsed by Ethereum itself. Any high-performance execution environment relying on external trust assumptions does not constitute genuine scaling of Ethereum.
Within this framework, ETH’s value manifests primarily as a credit premium for a global, sovereign-free settlement layer—not as protocol revenue. This premium is supported by structural factors including validator scale and decentralization, long-term security track record, institutional adoption, regulatory clarity, and protocol-native rollup verification mechanisms.
In concrete pricing, we adopt two complementary methods: Validator Economics (yield-equilibrium mapping) and Staking DCF (perpetual staking discounting), jointly capturing ETH’s institutional premium as a “global security settlement layer.”
- Validator Economics (Yield-Equilibrium Pricing): Derives theoretical fair price based on the ratio of annual staking cash flow per ETH to a target real yield:
Fair Price = (Annual Staking Cash Flow per ETH) / Target Real Yield
This expression characterizes the equilibrium relationship between yield and price—as a directional, relative valuation tool—not as a standalone pricing model.
- Staking DCF (Perpetual Staking Discounting): Treats ETH as a long-duration asset generating sustainable real staking yields, discounting its cash flows in perpetuity:
M_staking = Total Real Staking Cash Flow / (Discount Rate − Long-Term Growth Rate)
ETH Price (staking) = M_staking / Circulating Supply
Fundamentally, this value layer does not benchmark against platform companies’ revenue generation capacity, but rather resembles the settlement credit of a global clearing network.
2. Monetary Attribute: Settlement & Collateral (35%, dominant during utility-expansion phases)
We treat the monetary attribute as Ethereum’s second core value source, assigning it a baseline weight of 35%, becoming the primary utility anchor in neutral markets or during on-chain economic expansion. This judgment does not rest on narratives equating ETH to the U.S. dollar, but on ETH’s structural role as the native settlement fuel and ultimate collateral asset of the on-chain financial system. The security of stablecoin transfers, DeFi liquidations, and RWA settlements all depend on the settlement layer secured by ETH.
For pricing, we employ an extended form of the Quantity Theory of Money (MV = PQ), but model ETH’s use cases hierarchically to account for order-of-magnitude differences in velocity across scenarios—a stratified monetary demand model:
- High-Frequency Settlement Layer (gas payments, stablecoin transfers)
- M_transaction = Annual Transaction Settlement Volume / V_high
- V_high ≈ 15–25 (based on historical on-chain data)
Medium-Frequency Financial Layer (DeFi interactions, lending liquidations)
- M_defi = Annual DeFi Settlement Volume / V_medium
- V_medium ≈ 3–8 (based on turnover rates of major DeFi protocols)
Low-Frequency Collateral Layer (staking, restaking, long-term lockups)
- M_collateral = Total ETH Collateral Value × (1 + Liquidity Premium)
- Liquidity Premium = 10–30% (compensation for liquidity sacrifice)
3. Platform / Network Effect: Growth Option (10%, bull-market amplifier)
Platform and network effects are treated as growth options within Ethereum’s valuation—assigned only 10% weight—to explain nonlinear premiums arising from ecosystem expansion during bull markets. We apply a trust-adjusted Metcalfe model, avoiding equal-weight inclusion of L2 assets with differing security levels:
- Metcalfe Model: M_network = a × (Active Users)^b + m × Σ (L2 TVL_i × TrustScore_i)
- Platform/Network Effect Valuation Price: ETH Price(network) = M_network / Circulating Supply
4. Revenue Asset: Cash-Flow Floor (10%, bear-market support)
We treat protocol revenue as the cash-flow floor—not the growth engine—of Ethereum’s valuation system, assigning it 10% weight. This layer functions primarily during bear markets or extreme risk events, defining the valuation floor.
Gas and blob fees cover the network’s minimum operational costs and influence supply dynamics via EIP-1559. For valuation, we adopt both a price-to-sales (P/S) ratio and a fee-yield model, selecting the more conservative result solely as a floor reference. As L1 continues scaling, protocol revenue’s relative importance declines—its core function is to provide downside protection during downturns.
- P/S Ratio Model (P/S Floor): M_PS = Annual Protocol Revenue × P/S_multiple
- P/S Valuation Price: ETH Price (PS) = M_PS / Circulating Supply
- Fee-Yield Model: M_Yield = Annual Protocol Revenue / Target Fee Yield
- Fee-Yield Valuation Price: ETH Price(Yield) = M_Yield / Circulating Supply
- Cash-Flow Floor Pricing (minimum of the two): P_Revenue_Floor = min(P_PS , P_Yield)
IV. Dynamic Calibration: Macro Constraints and Cycle Adaptation
If the preceding sections establish Ethereum’s “intrinsic value center,” this chapter introduces an independent “external environment adaptation system.” Valuation cannot operate in a vacuum—it must be constrained by macro conditions (funding costs), market structure (relative strength), and on-chain sentiment (crowdedness). Accordingly, we construct a Regime Adaptation mechanism that dynamically adjusts valuation weights across cycles—releasing optionality premiums during accommodative regimes and retreating to the revenue floor during risk-aversion periods—thus enabling a leap from static modeling to dynamic strategy. (Note: Due to space constraints, only the core logic framework of this mechanism is presented here.)
V. Institutionalization’s Second Curve: Conditional Pathways
The prior analysis rests on internal crypto dynamics—technology, valuation, and cycle logic. This section addresses a higher-order question: when ETH is no longer priced solely by native crypto capital, but progressively integrated into traditional finance, how will its pricing power, asset characteristics, and risk profile change? Institutionalization’s second curve is not an extension of existing logic, but an exogenous redefinition of Ethereum:
- Shift in Asset Characteristics (Beta → Carry): Spot ETH ETFs resolve compliance and custody issues—offering pure price exposure. In contrast, future staking ETFs will introduce on-chain yield to institutional investors via compliant vehicles. ETH thus evolves from a “zero-yield, high-volatility asset” to a “configurable asset with predictable yield,” expanding its potential buyer base from traders to pensions, insurers, and long-duration accounts sensitive to yield and duration.
- Shift in Usage Patterns (Holding → Using): If institutions begin treating ETH not merely as a tradable instrument, but as settlement and collateral infrastructure—whether JPMorgan’s tokenized funds, compliant stablecoins, or RWAs deployed on Ethereum—ETH demand shifts from “holding demand” to “operational demand.” Institutions don’t just hold ETH—they execute settlements, liquidations, and risk management on it.
- Shift in Tail Risk (Uncertainty → Pricing): As stablecoin regulatory frameworks (e.g., the GENIUS Act) gradually crystallize, and as Ethereum’s roadmap and governance transparency improve, the regulatory and technical uncertainties most sensitive to institutions are being systematically compressed—meaning uncertainty is now being priced, not avoided.
The “institutionalization second curve” reflects a change in demand nature—providing authentic demand drivers for the “Security Settlement Layer + Monetary Attribute” valuation logic, propelling ETH from an emotion-driven speculative asset toward a foundational asset serving both allocative and functional roles.
VI. Conclusion: Anchoring Value in the Darkest Hour
Over the past week, the industry underwent severe deleveraging, pushing market sentiment to a nadir—undoubtedly crypto’s “darkest hour.” Pessimism is spreading among practitioners, and Ethereum—the asset most emblematic of crypto’s ethos—stands at the eye of the storm.
Yet as rational observers, we must pierce through the fog of panic: What Ethereum is experiencing is not “value collapse,” but a profound “pricing-anchor migration.” With direct L1 scaling advancing, L2s redefined as networks across a trust spectrum, and protocol revenue deliberately subordinated to system security and neutrality, ETH’s pricing logic has structurally shifted toward “Security Settlement Layer + Native Monetary Attribute.”
Against a backdrop of elevated real interest rates, absent liquidity easing, and unpriced on-chain growth options, ETH’s price naturally converges to a structural value range supported by settlement certainty, verifiable yield, and institutional consensus. This range is not an emotional bottom, but the value center after stripping away platform-growth premiums.
As long-term builders of the Ethereum ecosystem, we refuse to be ETH’s “blind bulls.” Through a rigorous logical framework, we aim to prudently substantiate our forecast: Only when macro liquidity, risk appetite, and network effects collectively satisfy the market’s regime-triggering conditions will higher valuations be repriced.
Thus, for long-term investors, the critical question today is not anxiously asking “Can ETH still rise?”—but soberly recognizing: At current conditions, at what “floor price” are we purchasing which core value layer?
Disclaimer: This article was assisted in its creation by AI tools including ChatGPT-5.2, Gemini 3, and Claude Opus 4.5. The authors have made every effort to verify information and ensure accuracy, though minor oversights remain possible. Readers’ understanding is appreciated. Importantly, cryptocurrency markets commonly exhibit divergence between project fundamentals and secondary-market price performance. This article serves solely for informational synthesis and academic/research exchange—not as investment advice nor as a recommendation to buy or sell any token.
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