Ethereum's Strategic Transformation: From World Computer to World Ledger

Many people see Vitalik Buterin's emphasis on Ethereum as the "world ledger" as a brand new strategic adjustment, but in reality, this transformation was completed as early as when EIP-1559 went live. The stablecoin's 50% dominance on Ethereum further solidifies its position as a financial settlement layer. Let's delve into this change:

1. The core of EIP-1559 lies in redefining the value capture mechanism of the Ethereum mainnet. It no longer relies on the gas consumption brought by an increase in transaction volume to capture value, but instead adopts a new model.

Before the implementation of EIP-1559, all transactions were concentrated on the mainnet, resulting in huge ETH gas consumption. In 2021, the daily average of burned ETH was close to thousands. The mainnet was severely congested, and Layer 2 also had to engage in high and unpredictable gas competition when submitting batch data for validation.

After EIP-1559 introduced a predictable Base fee mechanism, the batch submission costs of Layer 2 on the mainnet have become stable and controllable, lowering the operational threshold for Layer 2. This allows more Layer 2 solutions to rely solely on Ethereum for final settlement.

Superficially, EIP-1559 provides convenience for Layer 2, but it profoundly changes the value capture logic of Ethereum: shifting from the "consumption-based growth" reliant on high-frequency trading on the mainnet to the "tax-based growth" reliant on Layer 2 settlement demand.

This model is similar to the banking system: banks handle daily operations locally, but large interbank settlements must be confirmed through the central bank system. The central bank does not directly serve ordinary users, but all banks need to "pay taxes" to the central bank and accept regulation.

This is exactly the positioning of the "World Ledger".

2. According to statistics from data platforms, the total market value of stablecoins worldwide exceeds $250 billion, with Ether accounting for 50% of the share, a percentage that has increased since the launch of EIP-1559. The reason Ether is so attractive to capital lies in its irreplaceable security premium.

Specifically, a certain stablecoin has settled $62.99 billion on Ethereum, while another stablecoin has $38.15 billion. In comparison, the total amount of stablecoins on other public chains is relatively small.

The reason stablecoin issuers choose Ethereum is not because of its transaction speed or cost, but because of the unparalleled economic security provided by nearly one hundred billion dollars in staked Ether. This is a crucial consideration for institutions managing assets worth hundreds of billions of dollars.

The massive accumulation of stablecoin funds has formed a self-reinforcing growth flywheel for the Ethereum ecosystem: the more stablecoins there are → the deeper the liquidity → more DeFi protocols choose Ethereum → generating more demand for stablecoins → attracting more capital inflow.

From this perspective, the large-scale aggregation of stablecoins on Ethereum is actually the result of global liquidity voting with action, and it is also the market's recognition of its positioning as a world ledger.

3. When the Ethereum mainnet focuses on being a "central bank" level settlement layer, the strategic positioning of the entire Ethereum ecosystem becomes clear: Layer 2 is responsible for high-frequency trading, while the Ethereum mainnet focuses on final settlement, with clear and efficient division of labor. Each settlement returning from Layer 2 to the mainnet will continue to burn ETH, making the deflationary flywheel turn faster and faster.

However, real data shows that the development of Layer 2 does not seem to contribute to the deflation of the Ethereum mainnet as expected. The daily average amount of ETH burned on the mainnet has significantly decreased, sometimes even to less than a few hundred. Meanwhile, the transaction volume and profitability of some Layer 2 platforms have significantly increased.

The reason for this phenomenon is that users are turning to Layer 2 in large numbers, resulting in a decrease in transactions on the mainnet. Layer 2 charges a large amount of fees daily, but the "protection fee" given to the mainnet is relatively small.

Nevertheless, this issue does not undermine Ethereum's status as the world's ledger. The massive accumulation of stablecoins, nearly $100 billion in security guarantees (28% of the supply staked), and the largest DeFi ecosystem globally all demonstrate that capital chooses Ethereum's settlement authority rather than the trading prosperity of Layer 2 ecosystems.

Currently, the Ethereum founder seems to have realized this issue and is trying to enhance the performance of the Ethereum mainnet to prevent Layer 2 from becoming a developmental obstacle to the overall positioning of Ethereum's global ledger.

But ultimately, the success or failure of Layer 2 is not directly related to Ethereum's positioning as the world's ledger.

Emphasizing the concept of "world ledger" is more like an official confirmation of an established fact. EIP-1559 was that historic turning point; from that moment on, Ethereum was no longer a "world computer" but transformed into a "world central bank."

In other words, if one believes that the future of cryptocurrency dividends lies in the integration of on-chain DeFi infrastructure with traditional finance, then Ethereum's positioning as the "world central bank" is sufficient to solidify its status, and the prosperity of the Layer 2 ecosystem is not crucial.

Of course, if you still believe that Ethereum must rely on the strength of the Layer 2 ecosystem to rise, then this analysis can be ignored.