THE CLARITY ACT CAME OUT: WHY CAN THE ETHER HOUSE BE THE BIGGEST WINNER
Author:Adriano Feria
Other Organiser
On 12 May, the Senate Banking Commission released the full text of a 309-page revised Digital Asset Market Clarity Bill。
Most of the reports will focus on which currencies have not passed the new decentrization test, which issuers will face a new disclosure burden and which projects will need to be reorganized over a four-year transitional certification window. These reports are correct but incomplete。
The more important story is how the bill affects the only asset that has passed every test and that happens to have a programmable smart contract platform。
ONCE THE FRAMEWORK BECOMES LAW, THE ETHERAF WILL OCCUPY A REGULATORY CATEGORY IN THE UNITED STATES LEGAL SYSTEM WITH ONLY ONE MEMBER. OVER THE PAST FIVE YEARS, THE LOGIC OF ETH, WHICH DOMINATES THE MARKET, WILL COLLAPSE SIMULTANEOUSLY, AND THE MARKET HAS NOT YET FINISHED PRICING IT。
Two bills, one framework
Before addressing substance, it is necessary to briefly review the broader regulatory framework, as public discussion tends to confuse two different pieces of legislation。
THE GENIUS ACT (GUIDANCE AND ESTABLISHMENT OF THE UNITED STATES STABILISATION CURRENCY NATIONAL INNOVATION ACT) WAS SIGNED INTO LAW BY THE PRESIDENT ON 18 JULY 2025。
It establishes the first federal regulatory framework for the payment of stabilization currencies: it requires a reserve of 1:1 in liquid assets, monthly disclosure of reserves, the requirement for distributors to obtain federal or state licences, the prohibition of algorithm stabilization currency, and a key limitation that the issuer cannot pay interest or earnings directly to the holder。
THE GENIUS ACT COVERS USDC, USDT AND STABLE CURRENCY ISSUED BY BANKS. IT DOES NOT INCLUDE ANY OTHER ELEMENTS。
The CLARITY Bill covers everything that remains. It deals with the division of jurisdiction between SEC and CFTC, decentrization testing of non-stabilized currency coins, exchange registration, the DeFi Rules, the rules of trusteeship and the framework of ancillary asset。
The two Acts are complementary parts of the broader regulatory framework。
MOST FINANCIAL MEDIA COVERAGE OF THE CLARITY BILL HAS FOCUSED ON THE ISSUE OF THE PROCEEDS OF THE STABILIZATION CURRENCY, AS THE SECTION OF CHAPTER 4 OF THE BILL ON "RETENTION OF THE STABLE CURRENCY HOLDER INCENTIVE" HAS ALMOST STRANGULATED THE POLITICAL FOCUS OF THE BILL。
Banks have promoted the prohibition of indirect gains through exchange and DeFi agreements, as stable currencies that can generate returns compete with bank deposits. The Encryption Exchange, for its part, strongly advocates retaining this creation. The bipartisan compromise reached on 1 May 2026 The obstacles to the bill were cleared, but after several reviews and extensions, the bill remained in thin ice。
Although important, this debate is only part of the nine-chapter bill. For any person who actually held and traded non-stabilized coins, the more far-reaching provisions were hidden in section 104, with little talk of its secondary effect on asset valuation。
Five tests
Section 104(b)(2) of the Act directs the SEC to weigh five criteria in determining whether the network and its tokens are under coordinated control:
Open digital system。Is the agreement open-source code publicly available
There is no need for permission and a credible neutrality。Are there any coordination groups that can review users or give them priority access to hard code
Distributional digital network。Is there any coordination group that has the benefit of 49 per cent or more in circulation or voting rights
Autonomous distributed booking system。Has the network reached a state of self-government, or has some retained the unilateral power of escalation
Economic independence。Are the main value capture mechanisms operational
A network that fails to pass the test will produce a "network token", which is presumed to be "subsidiary asset", meaning that the value of the token depends on the entrepreneurial or managerial efforts of the particular sponsor。
Such classification triggers a semi-annual disclosure obligation, internal staff resale restrictions modelled on the 144 rule, and requirements for registration of first issuance. Secondary market transactions on exchanges can continue without interruption。
THE 49% THRESHOLD IS THE CORE DATA, WHICH IS MUCH MORE TOLERANT THAN THE 20% RED LINE OF THE HOUSE OF REPRESENTATIVES VERSION OF THE CLARITY ACT. THE NETWORK THAT FAILED TO PASS THE TEST AT THE 49% THRESHOLD WAS FOR REAL STRUCTURAL REASONS RATHER THAN TECHNICAL DETAILS。
Bitcoin and the Ethera adopted all the standards without controversy. Solana hovered on the edge, and the Foundation ' s influence on the upgrade, the heavy distribution of early internal staff and the historical record of coordinating the suspension of the network ran counter to its standards of autonomy and credible neutrality。
All other mainstream smart contracting platforms have failed for structural reasons that are difficult to easily correct. This list includes XRP, BNB Chain, Sui, Hedera and Tron, and thus extends to most L1 competitors。
Only one of the assets tested happens to have a functioning economy of original smart contracts。
Changes in the valuation system
Currency transactions are based on two fundamentally different valuation frameworks。
The first is the commodity/currency premium system, the value of which is derived from scarcity, network effects, value storage properties and reverse demand, without a base-based valuation cap。
The second is the cash flow/equity system, the value of which derives from income capitalized through a standard multiplier and is subject to strict ceilings imposed by realistic income projections。
MOST NON-BITCOIN TOKENS HAVE BEEN IN THE STRATEGIC AMBIGUITY BETWEEN THE TWO SYSTEMS, AND WHATEVER FRAMEWORK PRODUCES HIGHER VALUATIONS, THEY USE THEM TO MARKET THEMSELVES. THE CLARITY ACT ENDED THIS AMBIGUITY THROUGH THREE MECHANISMS。
First, disclosure requirements impose a cognitive framework. Section 4B(d) requires semi-annual disclosure, including audited financial statements (over $25 million), a continuing business statement by the Chief Finance Officer (CFO), a summary of related party transactions and forward-looking development costs。
ONCE THE TOKEN HAS AN SEC FILE SIMILAR TO THE 10-Q FORM, THE INSTITUTIONAL ANALYST EVALUATES IT AS THE ENTITY THAT SUBMITTED THE 10-Q FORM. THE PAPER FORMAT DETERMINES THE VALUATION FRAMEWORK。
Secondly, a statutory definition is itself a qualification. Auxiliary assets are defined as a token of "its value depends on the entrepreneurial or management efforts of the sponsor of the subsidiary asset". This definition is conceptually incompatible with the currency premium, which requires that its value be independent of the efforts of any issuer。
It is not possible for a token to claim convincingly that it has a pricing right to a currency premium while meeting the legal definition of ancillary assets。
Third, visible scarcity is fragile scarcity. Currency premiums are counterproductive, which requires reliable and scarce narratives that the market can collectively trust。
WHEN A TOKEN DISCLOSES TREASURY INFORMATION TO THE SEC, A WELL-KNOWN INTERNAL LOCK-OUT SCHEDULE AND QUARTERLY REPORTS ON RELATED PARTY TRANSACTIONS, ITS SCARCE STORY BECOMES CLEAR; ONCE IT BECOMES CLEAR, THE ANTI-BODYITY CEASES TO EXIST. INVESTORS CAN SEE EXACTLY HOW MUCH INTERNAL PERSONNEL ARE IN POSSESSION AND WHEN THESE TOKENS WILL BE SOLD. THIS VISIBILITY STIFLES THE PURCHASE。
As a result, a double market has emerged. The first tier (Tier 1) assets are traded on the basis of a currency premium and do not have valuation ceilings derived from fundamentals. Tier 2 assets are traded on the basis of an income multiplier with a reasonable ceiling on valuation。
The token currently priced according to Tier 1 logic but classified as Tier 2 will face a structural re-rating. This re-rating may be very drastic in the most typical cases of weak but mainly narrative-driven valuation tokens, LINK and SUI。
TWO ETHS, LOOK AT THE END OF SPACE LOGIC
FOR FIVE YEARS, THE REASON FOR LOOKING AT ETH LIES PRIMARILY ON TWO PILLARS。
The first logic is that ETH cannot ultimately be classified as a commodity, but rather as a security. Pre-mining, the continued influence of foundations, the public role of Vitalik, and the economics of the merged certifiers have given the SEC ample reason to block when needed。
FOR EACH ETH ARGUMENT, A DISCOUNT MUST BE MADE FOR THE TAIL RISK THAT THE INSTITUTIONAL ACCESS TO FUNDS MAY BE RESTRICTED。
The second logic is that ETH will be replaced by a faster and cheaper smart contracting platform. Each cycle produces new "Etherwood killers" like Solana, Sui, Aptos, Avalanche, Sei and BNB Chain, each with better user experience and lower cost as a selling point。
THIS ARGUMENT SUGGESTS THAT THE TECHNICAL LIMITATIONS OF ETH WILL FORCE ECONOMIC ACTIVITY TO MIGRATE AND THUS DILUTE ITS VALUE CAPTURE CAPACITY。
THE CLARITY ACT NOT ONLY WEAKENS THESE EMPTY LOGICS, BUT ALSO COMPLETELY SUBVERTS THEM STRUCTURALLY。
THE FIRST LOGIC WAS BROKEN BECAUSE ETH PASSED ALL FIVE CRITERIA IN SECTION 104. WITHOUT COORDINATED CONTROL, OWNERSHIP CONCENTRATION IS FAR LESS THAN 49 PER CENT, THE MERGER DOES NOT HAVE THE UNILATERAL POWER TO UPGRADE, IS FULLY OPEN AND THE VALUE CAPTURE MECHANISM IS FUNCTIONING。
LONG-STANDING REGULATORY TAIL RISKS TO PROVIDE REASONABLE ETH DISCOUNTS DISAPPEAR。
THE SECOND LOGIC IS MORE INTERESTING. THE ETA KILLERS CAN ONLY COMPETE WITH ETH WHEN USING THE SAME VALUATION SYSTEM。
If SOL is certified as a decentrized asset, the competition will continue. If it does not pass the test (and for the time being all other major smart contract competitors will not pass), they will be forced into the Tier 2 valuation system, while ETH will remain in Tier 1。
Competition patterns have changed as a result. Tier 2 assets cannot compete with Tier 1 assets in terms of currency premiums because the core significance of Tier 1 is that it is not subject to a base-based valuation ceiling。
THOSE FASTER AND CHEAPER PUBLIC CHAINS CAN STILL WIN OVER TRADE THROUGHPUT AND DEVELOPMENT INTEREST IN SPECIFIC VERTICAL AREAS. HOWEVER, THEY COULD NOT WIN THE MOST CRITICAL ASSET VALUATION FRAMEWORK FOR DETERMINING THE L1 MARKET VALUE。
Only tickets
Of the assets tested through section 104, the Ether Mill is the only asset with a functioning system of original smart contracts. Bitcoin has passed the test, but its base does not support programmable finance。
Each smart contract platform with a significant TVL has one or more substantive failed entries in the test. These include Solana, BNB Chain, Sui, Tron, Avalanche, Near, Aptos and Cardano。
As a result, the Act creates a new category of regulation: decentrized digital goods with a pre-existing smart contract economy, which currently includes only one member。
Each traditional financial institution exploring monetization, settlement, trusteeship or chain finance needs two things: programmability and regulatory clarity。
BEFORE CLARITY, THESE PROPERTIES WERE SEVERED. BITCOIN TITLE IS CLEAR BUT NOT PROGRAMMABLE. SMART CONTRACTING PLATFORMS CAN BE PROGRAMMED BUT LEGALLY AMBIGUOUS. AFTER CLARITY, THE TAIFANG BECAME THE ONLY ASSET TO PROVIDE BOTH ATTRIBUTES WITHIN A SINGLE STATUTORY CATEGORY。
Once the framework enters into force, any person who constructs a monetized national debt, a monetized fund, a chained clearing infrastructure or an institutional-level DeFi portal will have a clear first-choice base carrier。
This preference is not aesthetic or technical. It is driven by compliance. Asset management companies, trustees and bank-affiliated funds operate within a legal framework that favours commodity-based assets and excludes securities-like assets。
The movement of institutional funds follows the asset classification, which is now narrow to the sole programmable asset。
The question of sound currency
Once BTC and ETH share the Tier 1 classification, it is necessary to look closely at their comparison of monetary attributes, because traditional perceptions reverse causality。
THE PREFERENCE FOR BITCOIN HAS ALWAYS BEEN BUILT ON ITS 21 MILLION NOMINALLY FIXED SUPPLY PLANS AND A PREDICTABLE REDUCTION OF THE FOUR-YEARLY SUPPLY RATE BY HALF. IT'S REALLY VALUABLE AS A SCARCE NARRATIVE, AND THE SIMPLICITY OF THIS STORY IS ONE OF THE REASONS WHY BTC WAS ABLE TO TAKE THE LEAD IN OBTAINING A CURRENCY PREMIUM。
BUT THE BTC SUPPLY MODEL ALSO CARRIES THREE STRUCTURAL BURDENS THAT ARE RARELY MENTIONED WHEN DISCUSSING SCARCITY。
First, mining has generated sustained structural shocks. Cybersecurity depends on miners to bear the operating costs in the real world: electricity, hardware, hosting and financing。
THESE COSTS ARE DENOMINATED IN LEGAL CURRENCY, WHICH MEANS THAT, REGARDLESS OF PRICE, MINERS MUST CONTINUOUSLY SELL A LARGE PROPORTION OF NEWLY ISSUED BTCS TO THE MARKET。
Such sales are permanent, price-sensitive and rooted in the consensus mechanism itself. This is the cost of maintaining the security model of proof of workload。
SECOND, THE BTC DOESN'T PROVIDE RAW INCOME. HOLDERS WHO WANT TO RECEIVE THE PROCEEDS EITHER LEND BTC TO THEIR COUNTERPARTY (INDUCING CREDIT RISK) OR TRANSFER IT TO A NON-BTC PLATFORM (INDUCING HOSTING AND CROSS-BRIDGE RISK)。
THE OPPORTUNITY COST OF HOLDING BTC AS OPPOSED TO ASSETS CAPABLE OF GENERATING PRIMARY GAINS IS RECOVERED OVER TIME. THIS IS A REAL AND LASTING DRAG FOR INSTITUTIONAL HOLDERS THAT MEASURE PERFORMANCE AGAINST A BENCHMARK THAT INCLUDES BENEFITS。
Thirdly, the fall in mining subsidies is a long tail risk of decentrization, which is precisely what makes BTC eligible for classification as Tier 1。
Block incentives are halved every four years and close to zero in 2140, but the actual pressure is much earlier. By the 1930s, subsidized income will be only a small fraction of today ' s income, and the network will have to rely on fees to cover the gap to maintain security。
IF THE COST MARKET IS NOT FULLY DEVELOPED, THE LEAST COSTLY MINING COMPANIES WILL BE CONSOLIDATED, THE CONCENTRATION OF MINERS WILL INCREASE, AND THE FOCUS ON CREDIBLE NEUTRAL DECENTRIZATION IN SECTION 104 WILL BEGIN TO ERODE. THIS IS NOT AN IMMINENT RISK, BUT A STRUCTURAL RISK THAT THE BTC MODEL HAS NOT ADDRESSED。
It turns every one of them。
ETH HAS VARIABLE DISTRIBUTION WITHOUT A FIXED CEILING, WHICH IS THE CORE ARGUMENT USED BY SOUND MONETARY PURISTS AGAINST IT. THIS DISCOURSE IS SUPERFICIAL。
For holders, what is really important is the rate of change in their share of total supply, rather than whether there is a fixed end value in the supply plan。
Under the combined design of the Taifeng, all issued tokens are allocated to the certifying officer as pledge incentives. The rate of return obtained by the certificationer has historically been higher than the rate of inflation, which means that any participant in the pledge can maintain or increase its share of the total supply over time。
For anyone involved in the certification node or holding a money pledge of a mobile nature, the argument that "infinite supply" is sound on rhetorical terms is not mathematically valid。
THERE IS NO EQUIVALENT SCALE OF STRUCTURAL FALLOUT ON ETH THAT PLACES A BURDEN ON BTC. THE OPERATING COSTS OF A CERTIFICATIONER ARE MINIMAL IN RELATION TO ITS BENEFITS. AN INDEPENDENT PLEDGE REQUIRES A ONE-TIME PURCHASE OF HARDWARE AND A SMALL AMOUNT OF CONTINUOUS ELECTRICITY. EVEN THESE COSTS ARE ABSTRACTED BY THE MOBILE NATURE AND POOL PLEDGE。
Increased tokens can accumulate to the group of certifiers and are largely retained instead of being sold to the market to cover costs. It is this same security model, which distributes benefits to the holder, which also avoids price-insensitive sales required for proof of workload。
SIMILARLY, THE PROBLEM OF SUBSIDIES FOR CLIFF BREAK-UPS DOES NOT EXIST. THE SECURITY BUDGET OF THE TAIFENG HAS BEEN EXPANDED WITH THE PLEDGE OF THE VALUE OF ETH AND IS FINANCED THROUGH CONTINUOUS INCREASES AND FEES. THERE IS NO TARGET DATE FOR THE SUDDEN DEPLETION OF SECURITY FUNDS。
THE MODEL IS SELF-SUSTAINING, WHILE THE BTC MODEL IS INCREASINGLY DEPENDENT ON THE DEVELOPMENT OF THE COST MARKET, WHOSE REALIZATION REMAINS UNCERTAIN。
THESE ARE NOT ARGUMENTS THAT ETH WILL REPLACE BTC. THEY PLAY DIFFERENT ROLES IN THE INSTITUTIONAL PORTFOLIO。
BTC IS A SCARCE ASSET THAT IS SIMPLER, CLEARER AND MORE POLITICALLY VIABLE. ETH IS A PRODUCTIVE MONETARY COLLATERAL THAT ACHIEVES VALUE BY PAYING THE HOLDERS INVOLVED IN THEIR SECURITY。
THE KEY IS TO THINK THAT DUE TO FIXED SUPPLY CEILINGS, THE BTC HAS A TRADITIONAL NOTION OF "HARDER CURRENCY" THAN ETH, AND IT'S SELF-DEFEATING AFTER CAREFUL EXAMINATION。
ETH'S VARIABLE DISTRIBUTION, COMBINED WITH PRIMARY GAINS, PROVIDES THE HOLDER WITH A BETTER REAL ECONOMIC ATTRIBUTE THAN BTC'S FIXED SUPPLY COMBINED WITH ZERO GAINS, AND IT DOES SO WITHOUT STRUCTURAL SALES PRESSURE OR LONG-TERM SECURITY FUND RISK。
This is very important for the configuration of institutions that create Tier 1 encrypted currency exposures. The reason to put ETH alongside BTC is not only "the programmable asset", but also "the asset that pays you to hold without forcing you to sell structurally to keep it safe."。
Treasury told the same story
THE STRUCTURAL DIFFERENCE BETWEEN BTC AND ETH IS NOT ABSTRACT. THEY ARE REFLECTED IN THE BALANCE SHEETS OF THE TWO LARGEST CORPORATE VAULTS BUILT AROUND THESE TWO ASSETS。
Strategy (formerly MicroStrategy) holds the largest bitcoin position in the world. BitMine Immersion Technologies (BMNR) holds the largest enterprise in the world in its position of Taifung。
Observation of their financial operations and patterns of behaviour reveals the bottom-up supply-side dynamics in real business finance。
As of May 2026, according to the reporting cycle, Strategy held between 780,000 and 81.88 million BTCs。
IT FINANCES THESE PURCHASES THROUGH THE COMBINED USE OF $8.2 BILLION IN CONVERTIBLE INSTRUMENTS (EXPIRED BETWEEN 2027 AND 2032) AND ABOUT $10.3 BILLION IN PREFERRED SHARES (COVERING THE STRF, STRK, STRD AND STRC SERIES)。
Convertible instruments must be converted to equity on maturity (which dilutes the interests of existing shareholders) or refinancing (which requires access to markets on acceptable terms)。
PRIORITY UNITS ARE SUBJECT TO ONGOING DIVIDENDS OBLIGATIONS, AND STRC ALONE IS REQUIRED TO PAY APPROXIMATELY $80 MILLION TO $9 MILLION PER QUARTER。
Strategy's main software business is small compared to its treasury position and generates a small cash flow compared to its debt obligations. As a result of the decline in Bitco prices, the company has reported losses for three consecutive quarters, including a net loss of $12.5 billion in the first quarter of 2026。
On May 5, 2026, Executive Chairman Michael Saylor, at a first-quarter financial conference, clearly broke his five-year doctrine of "never selling bitcoin" and told analysts Strategy that some bitcoin might be sold to pay dividends。
In a few days, he changed his wording to "never become a net seller" and "for every bitcoin sold, 10 to 20" but this shift in direction is real。
Polymarket on the probability that Strategy will sell any bitcoin by the end of the year, from 13% before the teleconference to 87% after the conference。
The structural reality is simple. Strategy ' s ability to continue to hoarding bitcoin depends on its ability to issue new debt or priority shares on a reimbursable basis。
At a teleconference in the first quarter of 2026, Sailor clearly described the balance points of the model: Bitcoin needs to appreciate by about 2.3 per cent annually, and Strategy's existing hold will be able to cover STRC's dividends obligations indefinitely without having to sell ordinary shares。
This figure is widely reported and reflects the calculations published by Saylor himself, but it is one of three conditions that must be met simultaneously。
the premium of mNAV (market value to net asset ratio) must be maintained at about 1.22 times to justify continued distribution, market demand for SRC priority shares must remain strong and bitcoin must cross the 2.3 per cent threshold。
IN ISOLATION, THESE ARE NOT CATASTROPHIC RISKS, AND THE RATIO OF 2.3 PER CENT IS WELL BELOW THE HISTORICAL AVERAGE OF BITCOIN. BUT THIS RATIO IS ALSO A MOVING TARGET. AFTER SEVEN MONTHLY INCREASES, THE REAL DIVIDENDS OF STRC HAVE RISEN FROM 9 PER CENT AT THE TIME OF ISSUANCE TO 11.5 PER CENT, PUSHING THE BALANCE OF GAINS AND LOSSES OVER TIME。
Underlying assets do not provide organic revenue streams to finance operations. Strategy must successfully refinance, reissue or convert to maintain its position。
There are fundamental differences in the operational posture of Bitmine Immersion Technologies. According to the latest disclosures, BMNR held approximately 3.6 million to 5.2 million ETHs (depending on the reporting period) and actually had zero obligations. The company holds between $400 million and $1 billion in unsecured cash。
ABOUT 69 PER CENT OF THE ETH HELD IS IN ACTIVE PLEDGE STATUS, GENERATING APPROXIMATELY $400 MILLION ANNUALLY IN PRE-ASSESSED PLEDGE INCOME THROUGH ITS DEDICATED MAVAN INFRASTRUCTURE。
THE STRUCTURAL DIFFERENCE HERE IS THAT BMNR GENERATES PRIMARY GAINS FROM ITS BOTTOM ASSETS. WHATEVER THE SPOT PRICE OF ETH, THE PLEDGE INCENTIVE GENERATES COMPOUND INTEREST。
It does not need to renew its obligations, refinance priority shares or maintain mNAV premiums to finance its operations. It could become a passive holder of indefinite cash flows and could actively deploy capital。
In January 2026, Mr. Beast invested $200 million in Best Industries and the planned "MrBeast Financial" DeFi platform on the Ether Workshop, representing the latter. BMNR is using its treasury position to participate in and accelerate the economic ecosystem of the ETA, not just to hold the asset。
This distinction is important for the long-term trajectory of development. A recent comment by Chairman Tom Lee at the Miami Consensus Conference in 2026 suggests that BMNR may slow down its build-up of ETH, because "there are other things to do in the encryption field" suggests that the company sees an expansion path beyond simple accumulation。
Bitcoin Treasury lacks such a path. No primary gains can be calculated for compound interest, no protocol-level ecosystems can be involved, no certification infrastructure achieved by ETH or equivalents of DeFi integration。
NEITHER COMPANY HAS BEEN SPARED FROM THIS CYCLE OF RECESSION. BMNR FELL BY ABOUT 80% FROM ITS PEAK IN JULY 2025. MSTR HAS SUFFERED LOSSES FOR THREE CONSECUTIVE QUARTERS. WITH THE PREVAILING PRESSURE ON THE DIGITAL ASSET POOL, BOTH NET ASSET PREMIUMS HAVE BEEN REDUCED。
The analysis here is not to say that one company is winning and another is failing. Rather, structural mechanisms vary in a way that directly maps the underlying asset properties they hold。
Strategy's flexibility comes from the ability to access capital markets on a sustainable basis. BMNR's flexibility comes from the continued pledge proceeds。
Strategy must roll the debt to maintain its position. BMNR must keep its certifier online. Strategy's business needs are embedded in structural sales pressure. BMNR owns structural buy-in pressure from reinvesting pledge incentives in hold。
These are not narrative preferences. They are the mechanical consequences of the attributes of the bottom asset supply。
Where will the industry narrative go from here to here, probably depending on the evolution of the next 12 to 24 months。
If bitcoin appreciated sharply, Strategy's model would continue to perform very well, and the leveraged BTC logic would remain the narrative of the mainstream institution's encrypted currency。
If Bitcoin crosses or falls, Strategy's debt overhang will become ever more onerous, and the lack of primary income will become more evident as a structural disadvantage。
THE ETA MODEL IS BROADER IN TERMS OF ITS VIABILITY, AS THE PLEDGE PROCEEDS PROVIDE A LOWER LIMIT THAN THE PURELY BTC BUILD-UP MODEL LACKS。
FOR AN INDUSTRY THAT IS ABOUT TO ACQUIRE ITS FIRST COMPREHENSIVE REGULATORY FRAMEWORK UNDER THE CLARITY ACT, THE TREASURY’S COMPARISON PROVIDES A USEFUL INSIGHT INTO HOW ABSTRACT SUPPLY-SIDE ARGUMENTS CAN BE TRANSLATED INTO REAL BUSINESS BEHAVIOUR FOR AN INSTITUTIONAL AUDIENCE THAT IS ABOUT TO EMBARK ON A DECADE-LONG ALLOCATION DECISION BASED ON THAT FRAMEWORK。
Treasury is a precursor to the movement of assets at the bottom。
Boundaries between cyberphilosophy and legal classification
A delicate but important point needs to be addressed directly. Even if Solana was ultimately decentralised under section 104, this legal classification alone would not allow SOL to sit on the same footing as ETH on the valuation basis。
Legal classification is a necessary but insufficient condition for Tier 1 currency premium treatment. The deeper question is what is the goal of true optimization of each network and what value its own founders and ecosystem participants believe it should be given。
ON THESE ISSUES, ETH AND SOL MADE CONSCIOUS AND DIVISIVE CHOICES。
From the outset, the Ethera has placed credible neutrality, reliability and durability above original performance. The network has achieved 100 per cent of normal running time in 10 years, without major interruptions since its launch。
After the upgrading of Pectra in May 2025, the number of active certifiers was over one million, spread around the globe, with the largest concentration in the United States and Europe, but on many continents. The average running time of a certifier is approximately 99.2 per cent。
The Consensus Mechanism places finality and security above speed by carefully designed constraints to ensure that no single entity (including the Taifung Foundation) can unilaterally change the agreement。
Solana gave priority to throughput and trade speed. Its structure optimizes as much as possible per second transaction at the lowest possible cost. These are real engineering achievements that give examples that cannot be satisfied with the Etherwood base. But they also pay the price, and Solana's ecosystem itself increasingly recognizes this。
Since 2021, the network has experienced at least seven major disruptions, including several hours of shutdown in January, May, June, 2022, September (18 hours), February 2023 (over 18 hours) and February 2024 (5 hours). Each time, a coordinated certificationer is required to restart。
The Solana Foundation reported that 16 months had passed since the crash, a real advance, but a fundamental difference in design priorities rather than a temporary gap in engineering capacity compared to the Ethera never stopped。
A similar story has been told by the Certification Indicator. The number of active certificationers in Solana fell from about 2560 at the beginning of 2023 to about 795 at the beginning of 2026, a decrease of 68 per cent。
The minimum number of entities required to measure critical shares of the control network has been reduced from 31 to 20. It is a valid explanation that the Solana Foundation characterizes it as a health trim to a subsidized witch node that has never made a meaningful contribution to decentralisation。
Another explanation is that the economic model of operating Solana certifiers has become less economical for small operators whose voting fees alone exceed $49,000 per year, which is supported by data。
Both interpretations are partly correct, but they do not produce the kind of network of geographical diversity and diversity of operators that is maintained by the Taifung。
Client diversity is the clearest point of comparison and the most worth studying, as it relates directly to the structural resilience required for monetary collateral。
At the Ether Workshop, the consensus layer has healthy diversity. Lighthouse owns about 43% of the certifiers, Prysm 31%, Teku 14%, Nimbus, Grandine and Lodestar share the remainder. No single client has an absolute majority。
The executive level, though concentrated, is improving: Get is about 50 per cent (less than 85 per cent in history), Nethermind is 25 per cent, Besu is 10 per cent, Reth is 8 per cent and Erigon is 7 per cent。
This diversity is not in theory. In September 2025, a key loophole in the Reth client led to the stagnation of 5.4 per cent of the Etherwood node, but the network did not interrupt, as other clients independently achieved the agreement。
The design concept of the Taifeng clearly foresees that any single realization may fail, and that there are no loopholes in the network's continued operation without relying on the code of any single team。
In Solana, the historical diversity of clients is virtually non-existent. For most of the time on its main network, each certifier runs a variant of the original Agave code library。
The interruption in February 2024 caused the entire network to collapse, as the network could be maintained during the repair error without independent realization。
Today, the Agave branch Jito-Solana, which optimizes the MEV, has some 72 to 88% interest. The original Agave occupied another 9%. The two shared the same code ancestors, which meant that the gaps in the core Agave logic could affect about 80% of the network at the same time。
Firedancer, developed by Jump Cripto, as the first truly independent client of Solana, was placed on the main online line in December 2025 and held approximately 7 to 8% interest。
Frankendancer is a hybrid that combines Firedancer's network function with Agave's execution function, and accounts for an additional 20 to 26 percent。
The Solana ecosystem goal of achieving a 50 per cent share of Firedancer in the second to third quarters of 2026 will be an important step towards true client diversity, but until that threshold is crossed, the network remains structurally vulnerable to single failures。
These differences are not incidental to engineering capability. They reflect considered philosophical choices。
It always chooses a slower and more conservative path, giving priority to the ability of the network to function properly regardless of the code of any individual team or the intentions of any individual participant。
Solana always chooses a faster and more performance path in exchange for greater coupling and operational dependency。
Both are effective engineering methods. They generate assets with different attributes。
The impact on assets follows. Solana ecosystems themselves, including the VanEck and 21 Shares main analyst frameworks, are increasingly valued as capital assets on a cash-flow basis。
SOL HOLDERS RECEIVE RETURNS FROM NETWORK INCOME, TOKEN DESTRUCTION AND PLEDGE PROCEEDS, AND THE ASSET IS PRICED ON THE BASIS OF ITS ABILITY TO GENERATE THESE CASH FLOWS。
This is consistent with the financial infrastructure of Solana, which is positioned as a high-volume-absorption application. This is also a Tier 2 valuation framework。
The co-founder, Anatoly Yakovenko, openly defined Solana as a "global financial atomic machine" and stressed that the value of the executive layer was captured rather than a currency premium. The Solana community has largely accepted the framework。
In contrast, ETH has always been positioned as a productive currency collateral. The pledge proceeds, ultrasound currency words, deflation mechanisms and certificationer distributions serve the framework positioning of Tier 1, where ETH is held as a monetary asset and is paid for its participation in network security。
ALTHOUGH THIS FRAMEWORK IS MORE CONTROVERSIAL WITHIN THE ETH COMMUNITY THAN WITHIN THE SOL COMMUNITY, IT IS SUPPORTED BY THE DESIGN OF THE BOTTOM-UP NETWORK。
In practice, this means that even if Solana is certified as a decentrized digital commodity under the CARITY Act, its own ecosystem will be positioned as a Tier 2 asset。
THIS CERTIFICATION WILL UNLOCK ACCESS TO INSTITUTIONS AND ELIMINATE REGULATORY TAIL RISKS, BOTH OF WHICH ARE PRICE-FRIENDLY, BUT IT DOES NOT INCORPORATE SOL INTO THE REFERENCE SYSTEM THAT DRIVES THE PRICING OF CURRENCY PREMIUMS. MARKETS DO NOT GIVE MONETARY PREMIUMS TO CAPITAL ASSETS THAT EVEN THEIR OWN CREATORS AND ECOSYSTEMS SEE AS GENERATING CASH FLOWS。
THAT'S WHY ETH IS THE ONLY PLACE OF THE KIND THAT IS MORE PERSISTENT THAN SIMPLY IMPLIED BY THE LEGAL FRAMEWORK。
Legal classifications, network design concepts, ecosystem positioning and emerging market preferences all point in the same direction. If a competitor wants convincingly to challenge the Tier 1 status of ETH, it needs to pass legal tests, maintain the same level of reliability and decentrization, and position the asset in its own ecosystem as a currency premium rather than a cash-flow asset。
In existing networks, no candidate meets all three conditions, and meeting the philosophical commitments they need cannot be remedied in the short term。
DeFi, the real meaning of dominance
The enduring DeFi dominance has been seen as a legacy effect. The traditional view is that the Ether Workshop won DeFi early with its pre-emptive advantage, but that dominance will be eroded with the interest and user activity of faster public chain competitions。
Every move of TVL to Solana, every summer of DeFi in the chain of competition, every article on "the market is coming out of the ETH wheel" reinforces this view。
The actual results were not consistent with such narratives。
Despite years of well-funded competitors and more technically superior executive layers, and despite the high cost era of L2 fragmentation and L1, the ETA and its Rollup ecosystem still dominate stable currency settlement, DeFi TVL, RWA monetization and institutional chain activity。
BELET'S BUIDL FUND WAS RELEASED ON THE ETHER. FRANKLIN TEMPLETON'S MONETIZED MONEY MARKET FUND WAS LAUNCHED AT THE ETHER HOUSE. ALL THE COMPETITION CHAINS COMBINED ARE DWARFED BY THE AVAILABILITY OF STABLE CURRENCY ON THE MAIN L2 BY THE NETWORK OF OWNERS OF THE TAIFENGS. THE VAST MAJORITY OF THE MONETIZATION OF REAL WORLD ASSETS TAKES PLACE IN THE ETHER HOUSE。
This technologically superior alternative can maintain the persistence of the advantage and is not merely a legacy. Markets have been pricing something that is not clear at the legal level: builders and institutions value credible neutrality and regulatory defensibility far more than performance。
THE RESULT OF THEIR BETS IS THAT THE CURRENT CLARITY ACT IS FORMALLY ESTABLISHED。
Those qualities that slow down the operation of the Taifeng (including strict decentrization, lack of unilateral upgrading powers, conservative consensus change mechanisms, and considered certificationer go to centre planning) are precisely the qualities that are currently being praised in section 104。
EVERY ARTICLE IN THE LAST THREE YEARS CLAIMING THAT "ETH IS LOSING TO THE FASTER CHAIN" MEASURES THE WRONG VARIABLE. THE REAL KEY VARIABLES HAVE ALWAYS BEEN CREDIBLE AND NEUTRAL, AND ONCE THE REGULATORY DIRECTION HAS BECOME CLEAR, CREDIBLE NEUTRALITY IS BOUND TO BE THE DEFINING QUALIFICATION。
Market preferences are right. It had only previously lacked a self-defensible legal framework, and the bill currently before the Senate was the very framework within which that consensus was enshrined。
Change of reference system
HISTORICALLY, ETH NATURALLY HAS BEEN COMPARED TO OTHER INTELLIGENT CONTRACTUAL PLATFORMS SUCH AS SOL, BNB, SUI AND AVAX. UNDER THAT FRAMEWORK, ETH IS "THE SLOW AND EXPENSIVE ONE" AND FACES CONSTANT NARRATIVE PRESSURE AS COMPETITORS CONTINUE TO PUSH OUT FASTER EXECUTIVE LAYERS。
THE VALUATION MULTIPLIER IS ANCHORED IN INCOME, TVL SHARE AND DEVELOPER ACTIVITY, ALL OF WHICH HAVE A NATURAL VALUATION CEILING。
After the Clarity Act, the reference system was broken. Tier 2's public chain competes with each other in cash flow multipliers and value capture. The ETH reference system, on the other hand, became the Tier 1 monetary base asset with a functional premium: primarily BTC, which conceptually includes gold and, in extreme cases, sovereign reserve assets。
None of these frameworks would generate market value based on revenue anchors. They all generate market values that anchor monetary roles in larger economic systems。
This is a revaluation of trillions of dollars. Over the past cycle, competitive pressures have dragged ETH down to Tier 2 valuation logic. By establishing a frame of reference in which their competitors no longer belong to the framework, the CLARITY Act lifts ETH up to Tier 1 valuation logic。
It also solves a conflict that has troubled ETH for years. Since L2 Rollup returns L1 ETH value capture is considered to be theoretical and controversial, the value of base L1 has been underestimated in relation to active L2 ecology。
UNDER THE NEW FRAMEWORK, THIS ISSUE IS LESS IMPORTANT. THE VALUE OF ETH DOES NOT ANCHOR THE L2 COST CAPTURE. IT ANCHORS ITS MONETARY ROLE AS THE ONLY PROGRAMMABLE DIGITAL COMMODITY。
L2 ECOSYSTEMS EXPAND THE ECONOMIC TENTACLES OF ETH WITHOUT DILUTING ITS CURRENCY PREMIUM, WHICH ORIGINATES IN REGULATORY CATEGORIES RATHER THAN IN TRANSACTION REVENUE。
Measuring the size of the currency premium pool
The phrase "revaluation of the trillions of United States dollars" deserved in-depth reading, since the difference between Tier 1 and Tier 2 was not the size of the multiplier. It lies in the potential market size of the asset being contested。
CASH FLOW VALUATION ANCHORS ARE SET AT A LOW OF BILLIONS OF DOLLARS PER YEAR FOR THE CURRENT ETH. IF ANY REASONABLE MULTIPLIERS WERE APPLIED, THE IMPLIED MARKET VALUE WOULD FALL WITHIN THE TENS OF BILLIONS OF DOLLARS。
The valuation of the currency premium is anchored in entirely different categories and on larger dimensions。
Gold is the clearest reference. The global supply of gold totalled approximately 244,000 tons, with a market value of approximately $32.8 trillion at current prices. The industrial demand for gold is only a small part of this。
The overwhelming part is purely monetary: its value exists because gold can remain purchasing power for centuries, something that statutory currencies, sovereign bonds and most other financial instruments cannot do。
Gold does not pay the proceeds. It does not generate cash flows. This does not, however, prevent it from supporting the 32 trillion-dollar valuation, because the market will give a currency premium to assets that can convincingly preserve wealth, regardless of their function。
THE MONETARY PREMIUM FUNCTION OF GOLD IS ACCOMPANIED BY OFTEN UNDERESTIMATED OPERATIONAL FRICTION COSTS. MATERIAL GOLD REQUIRES IDENTIFICATION AT EACH TRANSACTION. GOLD BARS REQUIRE ANALYTICAL TESTS TO CONFIRM PURITY AND WEIGHT. GOLD COINS NEED TO BE VERIFIED. THE LBMA GOOD DELIVERY STANDARD EXISTS PRECISELY BECAUSE, WITHOUT INSTITUTIONAL INFRASTRUCTURE, THE TRUST OF THE COUNTERPARTY IN THE QUALITY OF GOLD CANNOT BE ASSUMED。
Trade in retail gold is usually 2 to 5 per cent higher than spot prices to compensate for identification and distribution costs. Cross-border transfers require customs declarations, security and transport insurance。
PAPER GOLD (ETF, FUTURES, DISTRIBUTIONS AND UNDISTRIBUTED ACCOUNTS) SOLVES THE PROBLEM OF CERTIFICATION, BUT RE-INTRODUCES COUNTERPARTY RISKS AND BREAKS THE ANONYMOUS ASSET ATTRIBUTES THAT MOTIVATED PEOPLE TO INITIALLY HOLD GOLD. THE GAP BETWEEN PAPER GOLD AND PHYSICAL POSSESSION IS PRECISELY THE GAP BETWEEN INSTITUTIONS OF TRUST AND INSTITUTIONS OF MISTRUST, WHICH BECOMES IMPORTANT IN THE NEXT SECTION。
Real estate is the place for more interesting analysis. At the beginning of 2026, the global real estate valuation was approximately $39.3 trillion, the largest asset class in the world. Of this amount, $287 trillion was spent on residential property, another $48 trillion on agricultural land and the rest on commercial property。
Real estate has three distinct layers of value that must be distinguished. Use value is the cost you pay for housing or productive land. The value of the cash flow is what you pay for rental income or agricultural output. The currency premium is the cost you pay above it, because the asset preserves wealth and cannot be diluted by inflation。
The currency premium portion of real estate is the reason why high-quality properties in Manhattan, London, Hong Kong and Tokyo are traded at a capitalization rate of 2 to 3 per cent. Rent gains alone cannot support these prices. It is the implicit wealth storage function that supports its price logic。
A reasonable estimate is that 30 per cent to 50 per cent of the global real estate value (about $12 trillion to $20 trillion) represents a currency premium, because there is no alternative, and it implicitly absorbs real estate, not because real estate itself is the most appropriate vehicle。
This absorption occurs because there are no large-scale alternatives. Wealth must be stored, and for most of modern history the only option to absorb global liquidity is gold, equities, sovereign bonds and real estate。
Equities are cash-flow assets. Bonds carry sovereign credit risk. The gold market is too small to absorb all the spillover funds. Real estate had no choice but to absorb the remainder。
Asymmetrical holding costs make the deposition of such funds increasingly fragile. In the United States, property taxes typically account for 1 to 2 per cent per year, and are higher in some jurisdictions. The cost of maintenance increases by an average of 1 to 2 per cent per year. Insurance costs have increased significantly as climate-related re-pricing has accelerated。
The total holding cost is in the range of 2 to 4% per year before calculating the cost of an empty, maintenance shock or management。
The problem of holding costs is further exacerbated by trade frictions. U.S. residential transactions usually generate between 7 and 10 per cent of two-way friction costs, once real estate agent commissions, transfer taxes, equity insurance and settlement costs are taken into account。
International friction tends to be higher, with a stamp duty of between 12 and 17 per cent on British high-value or two units, while Singapore has an additional buyer stamp duty of up to 60 per cent on foreign buyers。
Under good market conditions, the realized time is 30 to 90 days, and in bad markets it is much longer. Prices were found to be non-transparent. The number of hands is large and indivisible。
The currency premium function for real estate has been subsidized for decades as a result of these operational frictions. This is irrelevant when no alternatives exist. But once alternatives are available, all of this will change。
The ongoing migration of wealth
The currency premium pool is not static. In response to two related dynamic changes that have become apparent over the past decade, wealth is shifting proactively between different pools: a decline in institutional trust and increased geopolitical tensions。
The level of trust in institutions has been declining in a number of dimensions. Edman's trust barometers consistently show that institutional confidence is at or near historical lows in most developed economies。
Geopolitical tensions have accelerated this trend. The 2022 freeze on the reserves of the Russian Central Bank was a watershed for sovereign asset managers. Recognizing that the dollar-denominated reserves kept in the Western financial infrastructure depend on the adjustment of political positions, this has changed the risk preferences of the central banks of each of the non-aligned countries。
This response is measurable in three different asset classes。
The central bank’s most obvious response to the increase in gold. In 2025, the global central bank net gold holdings exceeded 700 tons, resulting in the highest annual increase since 1967。
By the end of 2025, the People ' s Bank of China had become a net buyer for 14 consecutive months, and its total foreign exchange reserves were now reported at 2308 tons. India has also synchronized the increase。
In addition to this increase, central banks in several countries have taken action to bring back physical gold stored in offshore vaults. Germany returned half of its gold reserves from New York and Paris between 2013 and 2020. Similar initiatives were taken in Poland, Hungary, the Netherlands and Austria。
This model shows that the way to deal with the decline in institutional trust is not just to hold more gold, but to place it clearly outside the control of institutions that may collapse or be weaponized。
The movement of bond markets is larger but less mentioned. For nearly 80 years, United States Treasury debt has in fact played a role as a currency premium asset。
The positioning of "risk-free interest rates" in the global financial system effectively proclaims the United States Treasury debt as the ultimate value instrument for dollar wealth. Governments, large enterprises and high net-value people put trillions of dollars into the market, not as a percentage of their returns, but as the world ' s deepest, most liquid and most institutionally trusted reservoirs。
The outstanding size of the United States Treasury debt market is approximately $39 trillion, with overseas holdings ranging from $8.5 to $9.5 trillion, depending on statistical methods。
In this offshore pool, the trend towards rotation of assets is already evident. China ' s national debt peaked at $1.32 trillion in November 2013, but by the beginning of 2026 that figure had fallen to about $760 billion, a 42 per cent decrease。
The actions of the People's Bank of China and the large State-owned banks have been interpreted as “an orderly liquidation” of the United States debt position, and the process was further accelerated by clear policy guidance in early 2026. The same applies to other major sovereign holders, although policy orientation is less evident。
The People ' s Bank of China, while reducing its debt to the United States, has shifted to increasing its holdings of gold in kind, the clearest example of cross-asset rotation: lowering the United States debt position while buying gold for 15 months。
The United States dollar share of global foreign exchange reserves tells the same story at the macro level. By the third quarter of 2025, the United States dollar ' s share of disclosed global foreign reserves had fallen to 56.92 per cent, down from the peak of 72 per cent in 2001。
This decline, although gradual, continues. An analysis released by the Federal Reserve in 2025 indicates that the lost market share of the United States dollar is largely absorbed by smaller currencies (e.g., Australian dollars, Canadian dollars, renminbi) rather than by gold flows (except in China, Russia and Turkey)。
This is an important revelation: the trend towards de-dollarization is real, but its impact is often exaggerated. The current trend is more manifested in the diversity of configurations than in the total abandonment of the dollar, which continues to dominate。
However, the data for the past two decades show a sustained trend and the underlying drivers (such as fiscal deficit, risk of currency weaponization, and structural deficit expansion) have not improved。
The third response is the gradual rise of digital currency premium assets as the fourth largest reservoir of wealth. Bitcoin has absorbed this excess。
SINCE 2017, THE CORE LOGIC BEHIND THE BITCOIN HAS BEEN THAT THE BTC PROVIDES AN ALTERNATIVE TO GOLD FOR THE MONETARY PREMIUM FUNCTION OF THE DIGITAL AGE, AND THE MARKET IS GRADUALLY MEETING THIS EXPECTATION. AT PRESENT, THE MARKET VALUE OF BITCOIN HAS REACHED APPROXIMATELY $2 TRILLION, AN ACHIEVEMENT THAT HAS BEEN ACHIEVED FROM SCRATCH IN JUST 15 YEARS。
THE RISE OF BITCOIN TREASURY, THE INFLOW OF CASH ETF AND RECENT REPORTS FROM THE BUSINESS COMMUNITY ALL MIRROR THE SAME BOTTOM LOGIC: THE CURRENCY PREMIUM IS LOOKING FOR THE FATE OF A DIGITAL AGE THAT MUST SIMULTANEOUSLY ADDRESS THE HIGH COST OF HOLDING REAL ESTATE, THE CUMBERSOMEITY OF THE GOLD VALIDATION PROCESS AND THE HEAVY DEPENDENCE OF TRADITIONAL FINANCIAL INSTRUMENTS ON INSTITUTIONS。
Such movements of assets are therefore by no means confined to the theoretical phase. It is a large-scale reconfiguration that is ongoing, that will span decades and involve multiple assets. This trend has long been evident in data on central bank gold flows, changes in national debt holdings and the composition of foreign reserves。
The central concern now is no longer whether the pool is moving, but where the next alternative destination will be opened。
ETH POSITIONING AND POTENTIAL MARKET SIZE MEASUREMENT
UNTIL NOW, ETA HAS BEEN EXCLUDED FROM THIS CATEGORY DUE TO REGULATORY UNCERTAINTY AND COMPETITIVE NARRATIVE PRESSURE. THE IMPLEMENTATION OF THE CARITY ACT REMOVES REGULATORY BARRIERS。
AS NOTED EARLIER, ONCE REGULATORY CLASSIFICATION REDUCES THE NUMBER OF COMPETITORS, COMPETITION-BASED NARRATIVES WILL NOT BREAK THEMSELVES. THE REMAINING CORE ISSUE IS: WHAT ARE THE UNIQUE ADVANTAGES THAT ETH OFFERS COMPARED TO TRADITIONAL CURRENCY PREMIUM ASSETS
THE ANSWER IS THAT ETH IS THE FIRST IN HISTORY TO HAVE A NEGATIVE NET HOLDING COST (OWNING OR EARNING) AND INSTITUTIONAL INDEPENDENCE AS A CANDIDATE CURRENCY PREMIUM。
Gold is held at a positive cost without any benefit and there are frictions during the identification process, which can only be partially resolved through institutionalized product packaging。
Real estate, while generating some rent returns, is offset by high holding costs; at the same time, it faces transaction friction costs of between 7 and 17 per cent, depending on the region in which it is located, and is fully subject to local government property protection policies。
National debt can provide positive returns, but it is highly dependent on specific issuing agencies, as demonstrated by the 2022 freeze on reserves。
IN RETROSPECT, ETH, WHOSE HOSTING COSTS ARE CLOSE TO ZERO, CAN ALSO PROVIDE ABOUT 3-4 PER CENT OF THE ANNUALIZED PROCEEDS OF PLEDGE, A RATE THAT BEATS THE AGREEMENT ' S OWN INFLATION RATE; ITS TRANSACTION COSTS ARE BASED ON THE BASIS OF GLOBAL INSTANTANEOUS LIQUIDITY, AND ITS PASSWORD-BASED IDENTIFICATION MECHANISM IS COMPLETELY FREE OF DEPENDENCE ON ANY INSTITUTIONAL INFRASTRUCTURE, MUCH LESS ON ANY PROPERTY RIGHTS REGIME UNDER ANY GOVERNMENT JURISDICTION。
THE HOLDING OF ETH AND PARTICIPATION IN THE MAINTENANCE OF CONSENSUS IN ITS NETWORK WOULD YIELD POSITIVE NET GAINS BEFORE ASSETS WERE APPRECIATED, AND MORE CRITICALLY, THE ATTRIBUTES OF SUCH ASSETS WOULD BE SAFE EVEN IN TIMES OF CRISIS IN INDIVIDUAL INSTITUTIONS OR COUNTRIES。
This combination of advantages is unprecedented. In the past, any currency premium asset had made compromises while resolving certain problems。
Gold is independent from financial institutions, but is accompanied by cumbersome identification and no proceeds. Real estate can provide revenue but is subject to jurisdiction and high trade friction. National debt has excellent liquidity and income performance, but is highly dependent on the credit of issuing agencies。
ETH IS THE FIRST ASSET TO SUCCEED IN OVERCOMING ALL OF THESE LIMITATIONS, AND THE CLARITY ACT WAS INTRODUCED PRECISELY TO MAKE ITS ATTRIBUTES ACCEPTED BY THE INSTITUTIONAL SYSTEM THAT HAS THE POWER TO ALLOCATE CAPITAL。
The potential market size derived from this is not a projection, but a measurement of market volumes。
ASSUMING THAT ETH COULD CAPTURE 10 PER CENT OF THE CURRENT MARKET VALUE OF GOLD, THAT WOULD MEAN ABOUT $3 TRILLION IN MARKET VALUE, WHICH IS 7 TO 10 TIMES THE CURRENT MARKET VALUE. IF ETH WERE TO CAPTURE A CONSERVATIVE ESTIMATE OF 2 PER CENT OF THE CURRENCY PREMIUM ON REAL ESTATE, THAT WOULD BE APPROXIMATELY $2.4 TRILLION. IF 5 PER CENT WERE CAPTURED UNDER MORE OPTIMISTIC EXPECTATIONS, IT WOULD MEAN A $10 TRILLION MARKET。
IF ETH WERE TO BE ALLOCATED ONLY 1 PER CENT OF FOREIGN NATIONAL DEBT STOCK AS ASSETS ROTATED, IT WOULD ALSO BE ABLE TO GENERATE AN ADDITIONAL $85 BILLION。
NONE OF THESE SCENARIOS REQUIRES ETH TO COMPLETELY REPLACE GOLD, REAL ESTATE OR NATIONAL DEBT. THEY NEED ONLY A FRACTION OF THE CURRENT LARGE GLOBAL CURRENCY PREMIUM POOL, WHICH WAS IN A WHEELING PROCESS, TO BE ABLE TO MOVE FROM A SLIGHTLY AWKWARD TRADITIONAL INVESTMENT VEHICLE TO A NEW AND MORE ADVANTAGEOUS DESTINATION IN THE NEXT DECADE。
The introduction of a cash-flow valuation framework does not allow the performance of such quantitative figures. Even if, according to the traditional logic, the market value ceiling is calculated by reference to the valuation multiplier of the stock market, with the annual fee income of the Taifung network needs to grow across the board, it is well below the range of performances based on the currency premium framework。
This is the fundamental difference between the first and second tiers at the core. The base levels of assessment vary fundamentally. The two valuation frameworks do not permeate or transform each other. The valuation logic is different for any asset。
Two potential risks need to be highlighted。
FIRST OF ALL, THE CURRENCY PREMIUM IS A REVERSE PHENOMENON. THE MARKET GIVES A MONETARY PREMIUM TO AN ASSET BECAUSE IT IS CONFIDENT THAT IT WILL CONTINUE TO BE RECOGNIZED, BUT THAT RECOGNITION MAY ALSO DISAPPEAR AT ANY TIME. THE MONETARY PREMIUM STATUS CURRENTLY ESTABLISHED BY ETH IS NOT A GUARANTEE OF PERPETUITY; IN ORDER TO PRESERVE IT, IT IS NECESSARY TO MAINTAIN THE STABLE FUNCTIONING OF THE NETWORK, ADHERE TO THE PRINCIPLE OF DECENTRIZATION AND MAINTAIN CREDIBLE NEUTRALITY。
Secondly, the process of financial migration is long. Even if a large share of the existing pool of currency premiums eventually flowed to digital alternatives, the evolution would be calculated for decades rather than quarters. This profound impact on valuation is objective, but the path to this goal is by no means a straight line。
This analysis has revealed the large size of the target pool and has indicated the established direction of resource flows。
DURING THE LAST MARKET CYCLE, ETH VALUATIONS WERE PRICED ON THE TOTAL VALUE OF THEIR FEES EARNED AND LOCKED (TVL), WHICH OFTEN PUT HUNDREDS OF BILLIONS OF DOLLARS ON THEIR MARKET VALUE。
HOWEVER, THE CLARITY BILL WILL FREE THE TAIFENG FROM THIS CONSTRAINT BY INCREASING THE SIZE OF THE POOL TO A FULL OF TWO ORDERS OF MAGNITUDE. THIS POOL IS CURRENTLY UNDERGOING DECADES-LONG LARGE-SCALE RECONFIGURATIONS, UNTIL WHICH GOLD, BITCOIN (BTC) AND, TO SOME EXTENT, SOME GLOBAL RESERVE CURRENCIES HAVE BEEN THE MAIN BENEFICIARIES。
This is the central point of this re-engineering of the valuation system。
Risk factors
In three cases, the framework may be weakened or even overturned。
The bill may not be passed。The Polymarket report that the probability of passing the Act in 2026 is approximately 75 per cent and that the review is scheduled for Thursday, although there are still political obstacles surrounding the absence of ethical restraints。
Since mid-2025, the decentrization framework has remained broadly consistent in different versions of the Senate and Houses. The 49 per cent threshold may be adjusted, but there is little likelihood of a substantial change in the basic structure of the five elements。
If the bill were eventually rejected in its entirety, the structural arguments of this paper would be seriously weakened. However, the framework remains valid as long as the bill is adopted in any identifiable form。
Solana may be certified。If the Solana Foundation takes radical reform measures over a four-year transition period in the context of the Foundation's reorganization, the decentralization of certifying officers and the reallocation of funds, ETH may lose its absolute dominance in this area of the Decentralised Programming Platform。
However, as discussed above, mere certification is not sufficient to place SOL in the group with the Tier 1 valuation, because the Solana ecosystem itself is positioned on the basis of cash flow considerations and the network design concept tends to increase throughput rather than the high reliability on which the currency premium depends。
Despite this, the success of certification will significantly reduce the gap between it and ETH, especially in competition for institutional investment vouchers and ETF inflows. In the next 24 months, Solana ' s governance decision-making will be critical to its approval chances and to any shift in the ecosystem ' s position on its asset valuation framework。
Even if a certain category allowed a currency premium, the market would not necessarily follow up blindly。Legislation simply provides space for the valuation framework; it does not force market acceptance。
IF THE INSTITUTIONAL ANALYST REMAINS COMMITTED TO THE TRADITIONAL VALUATION MODEL, EVEN IF ETH SUCCESSFULLY PASSES ALL STANDARD TESTS, IT MAY STILL BE ABLE TO TRADE ONLY ON THE LOGIC OF CASH FLOW。
While successful cases of gold, BTC and specific reserve currencies have proved that the currency premium is widely accepted, institutional infrastructure such as ETF, hosting services and the main broker have been prepared to provide first-class (Tier 1) treatment for eligible assets. But this is not an automatic transition。
ETH ITSELF STILL FACES STRUCTURAL CHALLENGES. THE DIFFICULTY OF FRAGMENTATION, THE PLEDGE ECONOMICS THAT SOME CONSIDER TO BE UNDERVALUED FOR L1 ETH, CONSERVATIVE DEVELOPMENT ROUTES THAT DISCOURAGE DEVELOPERS, AND LESS THAN EXPECTED DEFLATION MECHANISMS。
NONE OF THESE ISSUES CAN BE RESOLVED THROUGH THE CARITY ACT. THE EFFECT OF THE BILL WAS TO REMOVE THE TWO LARGEST STRUCTURAL MOUNTAINS AND ELIMINATE THE INFLUENCE OF COMPETITORS WHO WERE LOWERING THE ETH VALUATION FRAMEWORK. IT DOESN'T MAKE IT PERFECT。
Where are we going next
ITS DIRECT IMPACT IS LIMITED. THERE IS NO AUTOMATIC EXIT FROM THE MARKET, NO RENEWAL OF CARDS OVERNIGHT, AND NO FORCED TRANSFER OF FUNDS. THE SEC HAS 360 DAYS TO COMPLETE THE RULE ON THE DEFINITION OF "COMMON CONTROL" IN PRACTICE. THE FOUR-YEAR TRANSITION PERIOD HAS GIVEN THE PROJECTS AMPLE TIME TO MAKE STRUCTURAL ADJUSTMENTS。
The first wave of authentication and rejection will not take place until 2027。
THE SHIFT IN THE FRAMEWORK IS LIKELY TO BE MUCH FASTER THAN THE PACE AT WHICH REGULATORY MECHANISMS LAND. IN A FEW MONTHS, THE ASSET MANAGERS, ETF ISSUERS, HOSTING SERVICE PROVIDERS AND BANK-AFFILIATED FUNDS WILL BEGIN TO ADJUST THE INTERNAL ASSET CLASSIFICATION AND ALLOCATION FRAMEWORK。
IN THE COMING WEEKS, IT IS EXPECTED THAT MAINSTREAM SELLER AGENCIES WILL PUBLISH THE FIRST STUDY DECLARING ETH THE ONLY PROGRAMMABLE DIGITAL COMMODITY. THE CREATION OF NARRATIVES DOES NOT DEPEND ON THE COMPLETE CLOSURE OF THE REGULATORY PROCESS. IT REQUIRES ONLY A CONVINCING REGULATORY WINDMARK。
IN RETROSPECT, ENCRYPTED MONEY MARKETS TEND TO REACT IN ADVANCE BEFORE REGULATION BECOMES CLEAR. BTC ETF WAS TRADED FOR TWO YEARS BEFORE IT WAS APPROVED. THE NEWS OF THE APPROVAL OF ETH ETF WAS ALSO INCLUDED IN THE SPOT PRICE SEVERAL MONTHS AGO. MAJOR REGULATORY GOOD EVENTS ARE OFTEN ABSORBED AHEAD OF SCHEDULE。
For those who hold or trade in these assets, the core of the problem is not whether the Act came into force officially on 4 July or in 2027. It is the far-reaching implications of whether the market will start to run, and the regulation will be finalized in advance。
THE UNDERLYING LOGIC THAT UNDERPINS ETH VALUATION IS QUIETLY GOING THROUGH A MAJOR CHANGE: FROM POSITIONING AS "A PLATFORM OF SMART CONTRACTS THAT CARRY THE RISK OF REGULATORY COMPLIANCE" TO BEING A "SINGLE PROGRAMMABLE DIGITAL COMMODITY WITH UNIQUE POTENTIAL FOR MONETARY PREMIUMS"。
This major shift has not yet been fully reflected in prices。
OVER THE PAST FIVE YEARS, THE POSSESSION OF ETH MEANT HAVING TO ENDURE DOUBLE STRUCTURAL OPPRESSION: REGULATORY UNCERTAINTY AND THE RISK THAT COMPETITORS WOULD LATER TAKE OVER。
THE BILL, WHICH IS ABOUT TO OPEN ON THURSDAY, IS EXPECTED TO BREAK THESE TWO SHADOWS SIMULTANEOUSLY, AND, MORE IMPORTANTLY, IT WILL MOVE AHEAD IN QUELLING ETH’S DIRECT RIVALS。
Sooner or later, the market will realize this. The only suspense now is that sooner or later。
