Compiled by: Jia Huan, ChainCatcher

The author has liquidated all holdings of ETH. This article was published on May 24.

I recently read an article arguing that Ethereum would be the biggest winner if the US Clarity Act passes. (Related reading: Bankless founder's account: Why I sold my ETH? )

The core argument is that ETH may become the only asset under the US regulatory framework that possesses both the attributes of a "decentralized digital commodity" and a "programmable smart contract platform." Therefore, ETH's valuation framework should shift from a network revenue logic to a currency premium logic similar to that of BTC, gold, or even sovereign reserve assets.

I think this viewpoint is very insightful, but the conclusion may be somewhat over-exaggerated.

This does not mean that I am bearish on ETH or deny the positive aspects of CLARITY.

Conversely, regulatory clarity is undoubtedly a major boon for ETH. It will reduce compliance concerns for institutions allocating ETH and will help further develop ETFs, custody services, staking, institutional DeFi, RWA, and on-chain settlement businesses.

However, clear regulation does not equate to a currency premium.

CLARITY may solve the "regulatory discount" problem for ETH, but it will not automatically open up valuation space related to gold, real estate, or global reserve assets.

These are two completely different things and should be analyzed separately.

1. The market hasn't bought into this logic yet.

If ETH is truly viewed by the market as "programmable gold" or "interest-bearing monetary asset," its valuation should be closer to that of BTC.

But that's not the case.

When evaluating ETH, the market still focuses on specific metrics:

Ethereum mainnet revenue;
DeFi activity;
Are stablecoins and RWA primarily settled within the Ethereum ecosystem?
The flow of value from L2 to L1;
ETH staking yield;
Fund inflows into the ETH ETF;
Competition from ecosystems such as Solana, BNB Chain, and Base.

These are essentially the valuation logics for network assets, platform assets, and ecosystem assets.

Bitcoin is different. It has no cash flow, no application ecosystem, and no need to discuss network revenue. Its logic is simple: a supply of 21 million coins, non-sovereign, censorship-resistant, and digital gold. People may not agree with this narrative, but it is simple, clear, and easy to spread.

ETH's narrative is far more complex. ETH serves as a gas fee, collateral, DeFi collateral, L2 settlement asset, and infrastructure for institutional on-chain finance. While this multi-functionality is an advantage, a currency premium typically requires a minimalist narrative.

Complexity is beneficial to ecosystem development, but it does not necessarily contribute to the formation of a currency premium like that of gold and Bitcoin.

2. Legal classification is just an admission ticket.

The original article made a crucial leap: because ETH may be legally recognized as a decentralized digital commodity, it should be included in the valuation framework of first-tier currency premium assets.

I believe this inference is problematic.

The legal classification addresses the following questions: Can an institution legally hold shares? Can it legally trade shares? Can it legally manage assets? Can it legally develop related products?

The question that currency premiums address is: are global markets willing to hold them as a long-term store of wealth?

These are two different questions.

Gold has a monetary premium not because any single law classifies it that way, but because of a huge consensus formed by thousands of years of historical consensus, physical scarcity, central bank reserve demand, and geopolitical safe-haven attributes.

BTC has a currency premium not because it can execute smart contracts, but because it is simple enough, pure enough, and similar enough to "digital gold".

For ETH to command a currency premium, regulatory classification alone is insufficient. It must also demonstrate that global capital is willing to hold ETH as a long-term store of value, rather than merely as an important on-chain financial infrastructure asset.

There is still a significant gap between these two states.

3. DeFi will weaken ETH's "sole source of income" narrative.

The original text emphasizes one of ETH's advantages: ETH can generate returns through staking, while BTC and gold cannot.

While this makes some sense today, the situation may change in the coming years.

With the development of DeFi and RWA, many assets will be tokenized in the future. Gold, government bonds, money market funds, real estate funds, income rights, commodity and stock ETFs can all be entered into the on-chain financial system as tokens.

Once these assets are on-chain, they will also gain new capabilities:

It can be used as collateral;
Loans and loans are available;
It can be used for market making;
They can be combined into structured income products;
It can be integrated with DeFi protocols;
It can form a closed loop of on-chain fund flows with stablecoins.

Therefore, ETH will not be the only asset that "generates yield" in the future.

Tokenized gold integrated with DeFi can also generate on-chain yields. Tokenized government bonds and money market funds inherently offer basic yields. Tokenized real estate funds and other RWAs can also generate cash flows.

At that point, the issue will no longer be "ETH can generate returns, but gold cannot."

The real questions will become: Which are better collateral? Which have lower volatility? Which have clearer revenue streams? Which have higher regulatory approval? Which fit better on institutional balance sheets? Which are more likely to be held by global capital for the long term?

From this perspective, ETH may not have an advantage over tokenized gold, tokenized government bonds, or tokenized money market funds.

ETH staking rewards come from cybersecurity mechanisms, not from traditional risk-free returns. It carries risks related to protocol risk, validator risk, forfeiture risk, liquidity staking protocol risk, regulatory risk, and price volatility risk.

For institutions, ETH staking is certainly a valuable feature, but it should not be directly equated with "superior to gold".

4. The currency premium applies to BTC, gold, and tokenized gold.

I am more inclined to believe that future currency premiums will primarily belong to BTC, gold, and potentially tokenized gold.

BTC's positioning is very clear: digital gold.

Gold's role is also clear: the most important non-sovereign store of value in the traditional world.

If tokenized gold takes off, the situation could be very attractive. It would inherit the historical credit of gold while gaining on-chain liquidity, composability, and collateralization capabilities. In this scenario, the monetary premium of gold wouldn't necessarily flow to ETH; instead, it could be further amplified by tokenized gold.

This may not be a bad thing for ETH. These tokenized assets also require on-chain infrastructure and can be issued, traded, and staked on Ethereum or Ethereum L2.

However, this means that ETH is more of an infrastructure asset than an ultimate currency premium asset.

Infrastructure certainly has value. However, the valuation of infrastructure typically comes down to usage metrics, revenue, network effects, and value capture, rather than direct analogies to the total market capitalization of gold, the currency premium of real estate, or global reserve asset pools.

5. Ethereum's value capture problem remains unresolved.

The original article argues that CLARITY will widen the gap between ETH and other smart contract platforms, with other L1 platforms potentially moving into the second tier of valuation, while ETH remains in the first tier.

This kind of judgment also needs to be treated with caution.

The real world will not choose blockchains solely based on US regulatory classifications.

Different countries, assets, and institutions will choose the underlying network based on a variety of factors:

cost;
performance;
Compliant interfaces;
KYC/AML requirements;
Local regulatory attitude;
Ecological resources;
Liquidity;
Relationships with asset issuers and service providers;
Is a licensed environment required?

Many RWAs, stablecoins, and payment scenarios may not necessarily choose the Ethereum mainnet. They may opt for L2, application chains, consortium chains, or other L1 platforms that better meet local regulations and business needs.

More importantly, even with a lot of activity within the Ethereum ecosystem, there is no guarantee that ETH will capture value proportionally.

As we have seen in recent years, while L2 has expanded the Ethereum ecosystem, it has also raised a question: once L2 is scaled up, how much value will actually flow back to ETH?

If a large volume of transactions occurs on L2 with decreasing fees, and the application layer and L2 itself capture more user value, while the ETH mainnet only handles final settlement and security, then ETH's value capture capability remains to be proven.

It cannot be assumed that the value of ETH will increase in tandem with the growth of the Ethereum ecosystem.

This is why I believe ETH's valuation must return to specific issues such as network revenue, settlement needs, staking needs, staking rewards, and the flow of ecosystem value.

6. Using Ethereum ≠ Buying ETH

It is also necessary to make a distinction: the entry of institutions into on-chain finance does not mean that they will allocate ETH as a core asset.

The organization may:

Use the Ethereum network;
Use Ethereum L2;
Issuing tokenized funds;
Settle using stablecoins;
Use on-chain custody and compliant transfer tools;
Use DeFi or permissioned DeFi;
Indirect access to on-chain finance through service providers.

None of these require them to purchase large amounts of ETH.

Just as companies that heavily utilize cloud services may not necessarily buy stock in cloud service companies, institutions that use blockchain infrastructure may not necessarily need to hold the underlying tokens for the long term.

For ETH to transform from a "network that is used" to an "asset that is held for the long term," it needs a clear value capture mechanism.

If this mechanism remains unclear, the market will continue to evaluate ETH based on revenue, fees, staking rewards, and ecosystem growth.

7. Grand narratives can no longer support valuations.

In the previous cycle, the market was willing to value grand narratives.

"World computer," "Internet of value," "global settlement layer," "cornerstone of decentralized finance"—these narratives are very powerful. Ethereum is undoubtedly the most important representative of them.

But the market has changed.

Investors are increasingly asking: Where is the revenue? Where are the users? Where is the value capture? Where is the real demand? Where is the regulatory path? Where is the closed loop of the business logic?

As we have repeatedly emphasized in recent years, Web3 cannot remain merely a vision; it must ultimately return to fundamental values and basic business logic.

Can it make money? Can it provide a better user experience? Can it create real economic value? If these questions cannot be answered, even the grandest narrative will struggle to sustain its valuation in the long run.

This also applies to ETH.

While it is certainly one of the most important Web3 infrastructures, the market may need to see what it needs to achieve a higher valuation:

The resurgence of DeFi;
The recovery of mainnet revenue;
A clearer flow of value from L2 to L1;
The real settlement needs of stablecoins and RWA within the Ethereum ecosystem;
Continued growth in demand for ETH staking;
Institutions don't just use Ethereum; they genuinely need to hold ETH.

None of these can be achieved automatically through a single piece of legislation.

8. The true meaning of CLARITY is to fix regulatory discounts.

Therefore, I am more inclined to view the impact of CLARITY on ETH as a reduction in regulatory discounts rather than unlocking the potential for a multi-trillion dollar revaluation of the currency premium.

ETH has indeed faced regulatory uncertainty in the past. If US regulators more clearly recognize ETH's commodity attributes, it would be a significant positive development.

However, this will transform ETH from a "network asset with regulatory tail risks" into a "network asset with clearer regulation."

This is already of great significance.

However, this does not mean that ETH will automatically become a substitute for gold, BTC, or global reserve assets.

If the market continues to evaluate ETH based on network revenue, staking yield, L2 value flow, DeFi activity, RWA settlement volume, and institutional usage, then ETH's valuation will continue to be constrained by fundamentals.

This isn't necessarily a bad thing. Excellent infrastructure assets should have high value. However, they are not the same as assets with a currency premium.

9. My stance on ETH

I still believe that ETH is one of the most important assets in the digital asset industry.

Its long-term value stems from the following aspects: First, it is the most important open smart contract network.

Secondly, it is a key settlement layer for DeFi, stablecoins, RWA, and on-chain finance.

Third, from a regulatory perspective, it is one of the most defensive decentralized infrastructures.

Fourth, it has accumulated long-term recognition from developers, applications, assets, and institutions.

Fifth, as Web3 enters large-scale commercial applications, it may become an extremely important underlying trust and settlement asset.

However, these values are more similar to infrastructure value, network value, ecological value, and collateral value.

It may enjoy some scarcity premium, regulatory clarity premium, and network effect premium, but not necessarily the pure monetary premium enjoyed by BTC or gold.

ETH has significant long-term value, but its valuation framework should not be mistakenly replaced.

10. Clarity is good for ETH, but don't treat ETH like gold.

My core judgment on this matter is very straightforward:

CLARITY is good for ETH, but that doesn't mean ETH should be valued like gold.

Clear regulation is a positive factor, but it is not equivalent to a currency premium.

ETH is an extremely important on-chain financial infrastructure asset, but it will not necessarily become the ultimate store of global wealth.

In the future, the assets that will truly benefit from currency premiums will likely remain primarily BTC, gold, and potentially tokenized gold and other high-credit-value stores. ETH is more likely to serve as the core infrastructure for the on-chaining, circulation, collateralization, settlement, and portfolio construction of these assets.

This status is already important enough; there's no need to force ETH into a narrative that it's "superior to gold."

A more robust valuation framework for ETH might be: Clearer regulation drives discount correction; Institutional entry drives increased demand; DeFi, RWA, stablecoins, and L2 ecosystems determine network usage; Network revenue, staking demand, and value flow determine long-term valuation; Currency premiums can be considered an optimistic scenario, but should not be a fundamental assumption.

This is my main reservation about the ETH revaluation argument.

The Web3 industry often exaggerates real positive developments into huge valuation stories. While imagination is valuable, getting back to the fundamentals is more crucial.

What problem does this asset actually solve? Who will hold it long-term? What are the returns and risks of holding it? Where does its value actually come from? If the ecosystem develops, will value truly accumulate in this token?

If these questions cannot be answered clearly, relying solely on regulatory classification will hardly support a genuine leap in valuation.

A whale withdrew 5,099 ETH from Kraken, worth $15.14 million.

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