Vitalik Guides the Bull Run: Deconstructing the Three Horsemen Driving the Ethereum Value Flywheel

Written by: Oliver, Mars Finance

On June 19, 2025, when Ethereum's figurehead Vitalik Buterin replaced the original oil barrel icon representing "digital oil" with a cartoon image of a "cow" on social media, it was not just a whimsical doodle. This seemingly minor action resembles a carefully planned declaration of value, a profound restructuring of the logic behind Ethereum's bull market. It suggests that today, as the spot ETF has rolled out the red carpet for Wall Street, the story of Ethereum is transcending the somewhat outdated metaphor of "fuel for the digital world," evolving into a grander, more solid, and more complex paradigm of value.

What Buterin forwarded and "edited" was a discussion about the three core values of Ethereum — "digital oil," "store of value," and "global reserve asset." These three concepts are already well-known melodies within the community, but when they are juxtaposed together by this founder using a brand new visual language, their inherent tension and synergistic effects emerge with unprecedented clarity. This "bull" is no longer a symbol of a single narrative, but rather an economic behemoth forged by the combined strength of these three pillars. This article aims to deeply deconstruct this emerging new paradigm and explore how the foundations of its value have undergone profound and subtle changes as Ethereum moves toward becoming a mainstream asset.

From "Digital Oil" to "Economic Heart": Revaluation of Value in the L2 Era

Ethereum's narrative as "digital oil" is its earliest and most successful value positioning. This metaphor intuitively explains the fundamental use of ETH: as the fuel (Gas) that drives the operation of the world's largest smart contract platform. Every transfer, every DeFi interaction, and every NFT minting requires the consumption of ETH. This indispensable practicality has built a solid demand base for ETH. In the past, network congestion and high Gas fees were even seen as a manifestation of network prosperity, directly linked to ETH's value capture.

However, as we enter 2025, this classic narrative is facing a profound challenge triggered by Ethereum's own success. The Dencun upgrade in March 2024, especially the implementation of EIP-4844 (Proto-Danksharding), has fundamentally changed the game. By providing a dedicated and inexpensive data publishing channel (Blobs) for Layer 2 (L2) networks, Ethereum has successfully "outsourced" a significant amount of transaction activity to scaling solutions like Arbitrum and Optimism. This is undoubtedly a tremendous technological victory, realizing the grand blueprint of allowing ordinary users to participate in the digital economy at a very low cost. However, it also brings about a sharp economic paradox: as the vast majority of economic activity migrates to the inexpensive L2, the congestion level of the mainnet (L1) dramatically decreases, directly leading to a plummet in Gas fees and a sharp reduction in ETH burn rate.

According to data from Dune Analytics, since the Dencun upgrade, the average Gas price of Ethereum L1 has remained in the single-digit Gwei range for a long time, which was unimaginable in the past few years. The decrease in fees means that the amount of ETH destroyed through the EIP-1559 mechanism has also shrunk. This directly impacts the core logic of the "digital oil" narrative — the positive correlation between network usage and value capture (deflation). If the consumption of "oil" is structurally decreasing, how should we evaluate its value?

This is precisely the key to the shift in value paradigms. The new cognitive framework considers that the value of ETH is no longer merely reflected in the fuel that is "consumed" as L1, but rather elevated to the "economic heart" that ensures the security of the entire modular ecosystem. Ethereum L1 is transforming from a crowded "world computer" into a highly secure "global settlement and security layer." Its core mission is to provide finality and data availability guarantees for hundreds of L2s. L2s handle massive transactions and then submit the compressed "proof" back to L1 for final confirmation.

In this new model, the value capture mechanism of ETH has become more indirect, but possibly more robust. Its value no longer primarily comes from transaction friction, but rather from its role as a provider of security "rents." Although the fees paid by individual L2 to L1 have decreased, the overall scale of this total "rent" remains considerable with the emergence of thousands of L2s in the future. More importantly, the security of the entire ecosystem relies entirely on the total value of ETH staked on L1. A modular ecosystem with trillions of dollars in economic activity must be protected by a security layer of the same scale, or even a higher magnitude. Therefore, the demand for ETH has shifted from "transactional demand" to "security demand." It is no longer gasoline, but rather the concrete that supports the entire interstate highway network (all L2s), with its value positively correlated to the total economic flow of the highway network (the TVL and activity of all L2s). This shift liberates the value of ETH from short-term fee fluctuations and anchors it to the longer-term macro growth of the entire ecosystem.

The Rise of "Internet Bonds": When the "Ultrasound" Falls Silent

If the narrative of "digital oil" is undergoing a profound self-evolution, then the story of "value storage" is almost being completely rewritten. Once upon a time, "Ultrasound Money" was the slogan that the community was most proud of. Under the dual effects of "The Merge" significantly reducing new issuance and EIP-1559 continuously burning fees, ETH once entered a state of net deflation, being hailed as a more "sound" asset than Bitcoin's "sound money." The continuously fluctuating negative inflation rate on the ultrasound.money website is the core belief that countless investors have in ETH's ability to surpass BTC.

However, the L2 paradox mentioned earlier has also cast a shadow over this beautiful deflationary myth. The reduction in L1 fees has significantly diminished the power of the burning mechanism. Data shows that since the Dencun upgrade, ETH has returned to a slightly inflationary state during multiple periods. This makes the slogan of "ultrasound money" seem somewhat awkward and forces the market to seek a more resilient value support.

Thus, the narrative of "The Internet Bond" has emerged and quickly become a more attractive story in the eyes of institutional investors. The core of this concept lies in the fact that through the Proof of Stake (PoS) mechanism, anyone holding ETH can participate in network validation by staking, and thereby receive stable returns denominated in ETH. As of mid-2025, the annualized staking yield (APR) for Ethereum remains stable at around 3% - 4%. This yield does not come from nowhere; it is derived from the transaction fees (tip portion) paid by users and the ETH rewards issued by the protocol, which is a reasonable compensation for the services provided by validators to maintain network security.

This inherent, protocol-native asset-valued yield makes ETH a productive capital asset. It is no longer just a static commodity waiting for appreciation, but an income-generating asset that can continuously produce "cash flow" (albeit in ETH denomination). For traditional financial investors accustomed to dividends and bond interest, this is a model that is easy to understand and highly attractive. Analysts at VanEck have explicitly pointed out that the staking yield of ETH can be viewed as the "risk-free rate" in the digital world, and the yields of all DeFi protocols built on Ethereum can be priced based on this.

The narrative of "Internet Bonds" has become stronger due to the boom of liquid staking tokens (LSTs). LSTs like Lido's stETH and Rocket Pool's rETH allow ordinary users to earn staking rewards while maintaining the liquidity of their assets. These LSTs have subsequently been deeply integrated into every corner of DeFi, serving as collateral and trading pairs, creating the so-called "LSTfi" ecosystem. This has formed a powerful value flywheel: ETH is heavily staked due to its yield-generating properties, which enhances the network's security and decentralization; the resulting LSTs in turn become the cornerstone of the DeFi world, further increasing the demand for ETH as an underlying asset.

The transition of this narrative is crucial. It shifts the value proposition of ETH from a speculative story reliant on network congestion and scarcity expectations to an investment story based on actual economic activity and predictable returns. Even as the deflationary aura of "ultrasound money" fades, as long as the Ethereum ecosystem continues to thrive, its yield attributes as an "internet bond" remain. This provides a solid value foundation for ETH and leaves enormous imaginative space for future ETF products—a spot ETF that can directly distribute staking rewards to investors will undoubtedly become the nuclear weapon that ignites the next wave of institutional demand.

"Anchor of Trust": The Ultimate Settlement Layer of the Digital Economy

No matter how the metaphor of "oil" evolves or how enticing the yields of "bonds" may be, the third and most robust pillar of value for Ethereum lies in its position as the "anchor of trust" in the global digital economy. This role, that of a "global reserve asset", is built upon decentralization, security, and unparalleled network effects, making it the most trusted underlying settlement layer in the digital world.

First of all, in the DeFi world, which has reached a scale of hundreds of billions of dollars, ETH is the undisputed king of collateral. In core lending protocols such as Aave and MakerDAO, ETH and its LST derivatives dominate the total amount of collateral. A report by Galaxy Research points out that the market trusts ETH due to its deep liquidity, relatively low volatility (compared to other crypto assets), and time-tested security. Users confidently lend out billions of dollars in stablecoins because they believe in the solidity of the ETH collateral behind it. This status as the "DeFi central bank reserve" has created a huge, sustained, and sticky demand for ETH.

Secondly, Ethereum is the focal point of the global stablecoin ecosystem. Although chains like Tron hold a significant share of USDT issuance, the vast majority of innovations and core stablecoins, such as USDC and DAI, have their ultimate value settlement occurring on Ethereum. Ethereum carries a stablecoin market value of over a hundred billion dollars, and these stablecoins form the lifeblood of the digital economy, while ETH serves as the vascular system that ensures the safe flow of this lifeblood.

More significantly, traditional financial giants are voting with their feet. When BlackRock chose to launch its first tokenized money market fund BUIDL on Ethereum, it was not the transaction speed or cost of Ethereum that attracted it. On the contrary, it chose the "diamond-like" trust and security of Ethereum. Consensys CEO Joseph Lubin has stated that Ethereum provides a trust "powerful enough to withstand nation-state level adversaries." This "Lindy effect"—the longer something exists, the more likely it is to continue existing—that has been developed over a decade, is a moat that any emerging public chain cannot replicate in the short term. With the rise of the tokenization of real-world assets (RWA), Ethereum's position as the ultimate settlement layer for global value will become increasingly unshakable, and its value as a reserve asset will be continuously solidified.

Conclusion: Join forces to forge the "Bull", rather than going it alone.

Now, let's look back at the "bull" that Vitalik sent out. It no longer simply represents the expectation of a bull market, but rather a subtle summary of the sources of Ethereum's value. This bull is driven by three forces working together:

It has the strong pulse of the "economic heart": as the security cornerstone of the entire modular ecosystem, its value grows in sync with the total scale of an ever-expanding digital economy. It possesses the robust returns of "internet bonds": the endogenous staking returns provide it with a solid value base and a clear valuation model, attracting long-term capital seeking stable returns. It bears the immense weight of the "anchor of trust": as the ultimate collateral in DeFi and the settlement layer of global value, it embodies the most precious consensus and trust of the market.

The three pillars do not exist in isolation, but are interdependent and reinforce each other. The strong position of the "trust anchor" attracts the prosperity of DeFi and RWA, driving the growth of the "economic heart"; while the income-generating ability of "internet bonds" incentivizes massive capital to be staked, providing an unbreakable security guarantee for the entire system.

The bullish argument for Ethereum has bid farewell to an era that could be simply summarized with a single word (like "deflation"). It has become more mature, more diverse, and more resilient. It no longer relies on a single narrative, but instead builds a value matrix with an internally coherent logic that can withstand external shocks. For institutional investors accustomed to analyzing complex systems, this grand narrative filled with inherent tension and synergy may just be beginning to reveal its true charm. The bull that V God has mounted signifies the arrival of such an era.