Research Study

Ethereum Investment Thesis

Ethereum’s Potential as Digital Money and a Yield-Bearing Asset

by Fidelity Digital Assets

While users may get technological utility from the Ethereum network by accessing the various applications in the ecosystem, some may wonder, “how does utility translate into value for ether the token?” In this paper, we consider this question and discuss the following set of observations:

  • Ethereum may be best understood as a technology platform that uses ether (ETH) as a means of payment.
  • Ethereum’s overall platform usage may pass value on to token holders.
  • Ether’s perceived value is tied to network usage and supply and demand dynamics, which have changed since The Merge.
  • Ethereum’s switch to proof-of-stake (The Merge) now lets token holders receive yield, some of which is driven by increased network usage.
  • Ethereum is not complete, so yearly upgrades are expected, introducing recurring technical risks and unknowns that degrade its prospects as a store of value asset.
Read full report here.


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