Ten years of refinement, Ethereum has become the foundational layer of the on-chain Capital Market.

Author: Paul Veradittakit, Partner at Pantera Capital; Translated by: Golden Finance

Key Points

• Entering its second decade, Ethereum is establishing its position as the foundational layer for stablecoins, DeFi, and tokenized assets.
• Digital Asset Treasury (DAT) is reducing the token circulation and driving institutional demand for ETH, thereby creating structural price support.
• Regulatory clarity and reforms by the Ethereum Foundation will position Ethereum as the core infrastructure for on-chain capital markets, enabling long-term growth.

The Origin of Ethereum's Vision

Before Ethereum, Vitalik Buterin was an early Bitcoin enthusiast who worked at Bitcoin Magazine. There, he noticed the demand for scripting capabilities in Bitcoin application development. He embraced this vision and built Ethereum with a general-purpose scripting language, sharing his blueprint for running computers on a decentralized, permissionless network. At the time, the idea was ambitious and raised some skepticism, as this young man had no experience with any large tech company but was eager to create something entirely new.

What shifted my focus, along with many other early investors, is that applications tend to be built on Ethereum rather than Bitcoin and its Layer (Layer 2), indicating that Ethereum is more suitable for application development. Augur is one of the first killer applications to confirm this view; it is a decentralized prediction market. Augur demonstrates that Ethereum can build powerful, permissionless applications based on transparency, automation, and financial logic. Ethereum also allows developers to issue tokens, coordinate governance, and conduct native financing, which triggered the ICO boom. At Pantera, we launched one of the first ICO funds and supported some early DeFi applications like 0x, thereby always staying at the forefront of Ethereum's development.

Ethereum Ten Years

Ethereum celebrates its tenth anniversary, enjoying a long-awaited moment of glory. Launched in 2015, Ethereum pioneered programmable smart contracts and established a developer community that laid the foundation for applications like DeFi, gaming, and NFTs. Over the past decade, the ecosystem has continuously innovated, hosting the majority of DeFi protocols and becoming a pillar for stablecoins. The infrastructure supporting stablecoins has matured significantly, with the GENIUS Act providing regulatory clarity, introducing royalties to Ethereum, and boosting its demand. Although stablecoins like USDC and USDT exist across multiple chains, Ethereum remains the dominant platform for stablecoin activity, accounting for nearly 50% of the global stablecoin market cap. Driven by the popularity of stablecoins and innovative scalability solutions, Ethereum's robust ecosystem continues to drive prices upward, while strategic investments from Pantera Capital further amplify this growth.

Pantera's Ethereum Ecosystem Investment

Over the past decade, Pantera Capital has consistently invested in the Ethereum ecosystem, supporting transformative projects and founders. We are also one of the few companies that have continued to invest while Ethereum has been developing. Major investments include Circle, which powers USDC. USDC is the leading stablecoin, with a market cap of over $60 billion, and it is a driving force behind Ethereum's application in DeFi and payments. The leading Layer 2 solution, Arbitrum, has captured 100% of Ethereum's incremental transaction growth in 2023, with transaction processing speed increased by 40 times and costs reduced by 20 times, completing over 1.89 billion transactions since its launch, with cumulative DEX trading volume exceeding $54.5 billion, showcasing Ethereum's scalability. In recent years, Pantera Capital has become a key player in the migration of capital infrastructure, supporting Robinhood in issuing stock tokens on Arbitrum and becoming the underlying infrastructure for Robinhood Chain. Ondo has made significant contributions to the multi-billion dollar tokenized treasury market and launched USDY in 2023, highlighting Ethereum's critical role as core infrastructure connecting real-world assets like U.S. treasuries with on-chain finance. Morpho has significantly enhanced the lending experience on Ethereum, achieving nearly $1 billion in deposits just one year after its launch, becoming one of the fastest DeFi protocols to reach this milestone. Pantera participated in the seed round investment for Bitwise's Ethereum spot ETF, which is one of the first ETFs to receive approval, opening new channels for institutional capital inflow. As of 2025, Bitwise manages over $4 billion in assets, utilizing Ethereum's blockchain technology to support DeFi and tokenized asset strategies. Finally, BitMine, in collaboration with companies like Bit Digital, has added over 840,000 ETH to corporate treasuries, demonstrating its commitment to Ethereum as a reserve asset value.

Institutional Demand, DAT and the Shift in Ethereum Supply

Ethereum soared 53% in July, but this surge was not driven by speculation. It is a structural trend, primarily due to institutional investors increasingly allocating to ETFs and digital asset treasury (DAT), the turnaround by the Ethereum Foundation, and the recent clarification of regulations.

Institutional investors have shown interest in investing in cryptocurrencies through ETFs and DATs. Just last week, the U.S. spot ETH ETF attracted $1.8 billion in inflows. DAT has also started to significantly increase its holdings of ETH. SharpLink (SBET)'s reserves have grown to 361,000 ETH, while BitMine's Ethereum holdings surpassed the $2 billion mark in just 16 days. As BitMine's Tom Lee emphasized in a conversation with Pantera's Cosmo Jiang, these asset management firms have inherent advantages: cheap capital, equity premiums, staking yields, merger arbitrage, and operational income, which allow each new issuance to compound the value per ETH. This unique structure continuously compresses the circulating supply of Ethereum, providing price support that goes beyond simple demand.

Source of information:

DAT is no longer a novelty in the native cryptocurrency space, but rather a point of entry for institutional investors into cryptocurrency and Ethereum, allowing them to gain exposure before purchasing spot or engaging in on-chain transactions. As I mentioned in my previous blog post "The Blockchain IPO Wave: The Fusion of Public Markets and Digital Assets," these tools concentrate immense buying power, often absorbing more ETH than their issuance, thereby exacerbating scarcity and triggering a broader capital flow into altcoins.

Regulatory Clarity and the Strategic Shift of the Ethereum Foundation

The clarity of regulation has also turned historical headwinds into tailwinds. In July this year, the GENIUS Act granted federally chartered status to regulated payment stablecoins. Stablecoins have quietly become a killer application for cryptocurrencies, with a circulation exceeding $250 billion, of which Ethereum has settled about half of the global USD stablecoin transfers.

Finally, the new leadership and rapid development of the Ethereum Foundation (EF) are driving the rapid growth of Ethereum. This transformation includes leadership restructuring, protocol team reorganization, stringent financial policies, and an accelerated technology roadmap to address community criticisms regarding inefficiency, transparency, and competitiveness. By focusing on Layer-1 scalability, blobspace, user experience, and DeFi integration, the EF aims to demonstrate Ethereum's dominance amidst increasing institutional adoption (such as Robinhood's launch of stock tokens on Arbitrum) and competition from blockchains like Solana. Although challenges remain, such as retaining talent and managing community expectations, the EF's strategic shift will enable Ethereum to capitalize on the on-chain migration of capital markets, as exemplified by innovations like Robinhood Chain and Pantera's ecosystem investments.

Final Thoughts

Stablecoins have finally locked in a reliable trajectory and have seen enhanced regulatory clarity through legislation such as the GENIUS Act, which has boosted their demand. Digital asset treasuries are the engines driving this demand. They absorb floating capital, push prices up, and provide institutions with a convenient way to hold cryptocurrencies. In today's market, which values structural returns, tokens that have deflationary pressure and are linked to actual cash flows will become attractive candidates for DAT underlying assets. As demand for the Ethereum blockchain surges, this will further drive up the price of Ethereum.

We are at the forefront of a significant infrastructure transformation that requires not a magical solution, but a series of solutions capable of addressing numerous challenging problems. Pantera Capital is committed to investing in solutions that empower the next phase of on-chain capital markets, simplify financial infrastructure, and expand the horizons of blockchain innovation. Ethereum is at the center of this transformation; it is the backbone of stablecoins, the platform of choice for institutions, and a catalyst for the continuous development of the digital asset economy.