Ethereum aims to be the "settlement layer of the future," targeting RWA.

Written by: Bao Yilong, Wall Street Watch

Ethereum is undergoing a public "self-reinvention," aiming to solidify its position as the future settlement layer through the "trillion-dollar security plan" and betting on the tokenization of real-world assets.

On May 14, Ethereum announced a trillion-dollar security plan on its official blog, aimed at positioning Ethereum as the future settlement layer for individuals and institutions, thereby embracing the mainstream trend of tokenizing real-world assets (RWA). The core of this initiative is to emphasize Ethereum's decade-long stable uptime and decentralized validator set, demonstrating its capability to secure trillion-dollar levels of value.

According to the official announcement from Ethereum, the "Trillion Dollar Security Plan" consists of three parts:

Map the security advantages and attack vectors of various fields and layers of the Ethereum technology stack. We will collect opinions from the entire ecosystem and compile them into a security overview report to help us identify key focus areas.

Improvements in key areas identified in the overview of mapping will be implemented. We will work closely with the ecosystem to carry out recent high-priority remediation measures and allocate funds for long-term improvement projects.

Communicate the security of Ethereum more effectively. Users of all types should be able to understand, utilize, and benefit from Ethereum's robust security foundation. Anyone should be able to assess Ethereum's security standards and compare them with other blockchains and traditional systems.

However, this ambitious vision has also raised questions. Katie Talati, the research director at Arca, believes that:

This is more like a marketing strategy rather than a true technological innovation. Relying solely on this statement is insufficient to regain the attention of developers and users. Nevertheless, the long-term development of Ethereum remains worthy of attention, especially after improvements in user experience and user interface, which may attract more developers.

Some media have pointed out that it is still uncertain whether institutional investors will buy into this. The US spot Ethereum ETF has yet to gain widespread recognition among institutions, with a net outflow of nearly $40 million as of May 15, while 12 spot Bitcoin funds saw a net inflow of $8 billion during the same period.

Although ETFs and staking yields are expected to enhance the appeal of Ethereum, it remains to be seen whether institutional buyers will be swayed by the abstract narrative of security. They may be more interested in yields, price increases, and the assurance of Ethereum's development roadmap.

Ethereum's dilemma: Facing challenges from Solana

According to media reports, despite continuous technical advancements in Ethereum, the performance of its native token Ether has been lackluster.

Since the merger of the original Ethereum mainnet (ETH1) and the Beacon Chain (ETH2) in 2022, Ethereum's performance has consistently lagged behind Bitcoin. Worse still, Ethereum's appeal among developers and users is diminishing, while more attractive competitors like Solana are rising.

According to data from Electric Capital, the number of active developers on Solana will grow by 83% in 2024, while Ethereum will lose 17%. With lower fees, aggressive collaborations, and the boost of meme coins, Solana has attracted a younger, more experimental user base and has also won investor interest, driving its token price to an all-time high.

Supporters of Ethereum are seeking change. The new organization Etherealize, backed by Ethereum co-founder Vitalik Buterin and led by Vivek Raman, aims to advocate for Ethereum among Washington and institutional investors. Raman stated:

The security of blockchain is the most important quality to ensure trust. Ethereum's goal is to become "digital oil," complementing Bitcoin's "digital gold" to form a balanced digital asset investment portfolio.

Reports indicate that Ethereum is trying to position itself as a solid, secure, but "boring" infrastructure. In the long run, this might be feasible. However, in a market filled with a "degen culture" (high-risk, high-reward) that chases short-term gains, Ethereum's "trillion-dollar" vision may be premature.