The resurgence of Solana has cast a spotlight on Ethereum’s relatively underwhelming market performance. With ETH’s exchange rate against Bitcoin hitting new lows and frequent ETH sales from known Ethereum Foundation (EF) addresses—reporting an annual budget of around $100 million—the community has been buzzing with questions. Even Vitalik Buterin revealed his salary is approximately 182,000 Singapore dollars annually, adding fuel to the speculation.
Eight months after their last public session, the Ethereum Foundation research team returned to Reddit for their 12th AMA, directly addressing pressing concerns about ETH’s price potential, funding sustainability, blob technology (EIP-4844), zero-knowledge (ZK) proofs, and rollup scalability. This article synthesizes key insights from that discussion, offering clarity on Ethereum’s long-term vision and economic model.
Core Ethereum Keywords
- ETH price growth
- Ethereum Foundation funding
- EIP-4844 blobs
- zkEVM
- Rollup scalability
- L1 execution expansion
- Data availability
- MEV and network security
These keywords reflect both technical development priorities and investor sentiment drivers shaping Ethereum's future.
What Supports Future ETH Price Growth?
The Value Proposition Behind ETH
Dankrad Feist emphasized Ethereum's role as a neutral financial platform—open to issuing assets, trading them, and building permissionless financial products like derivatives. This foundational utility creates value, which can be captured through mechanisms such as transaction fees or data availability charges.
Anders Elowsson added that ETH gains value when it facilitates sustainable economic activity—transactions that provide real utility and persist over time. As more economic value is settled in ETH, part of that value is burned via EIP-1559, effectively redistributing it to all ETH holders.
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Justin Drake succinctly stated: "ETH is money." He believes ETH must become the de facto programmable internet currency for Ethereum to fulfill its destiny as the settlement layer of the "internet of value."
Why ETH Price Matters
While the Ethereum Foundation doesn’t officially take a stance on price, individual researchers acknowledge its importance:
- Network security: A higher ETH price strengthens economic security since the network is secured by staked ETH.
- Monetary credibility: For ETH to serve as reliable, trustless money, it must maintain or increase its purchasing power.
- Investment gravity: Much future investment in the ecosystem will likely be held in ETH, including EF’s own treasury.
- Market signaling: Sustained price appreciation signals success and attracts broader adoption.
Drake stressed that monetary premium—the extra value assigned to a dominant global currency—is essential for:
- Supporting trillions in decentralized stablecoins ("economic bandwidth")
- Ensuring robust security against nation-state attacks ("economic safety")
- Gaining attention from major financial players ("economic significance")
Could Ethereum Succeed Without ETH Appreciation?
A hypothetical scenario was posed: What if Ethereum achieves full scalability with cheap rollup transactions (<$0.01), a thriving dApp ecosystem, but ETH’s price remains flat?
Dankrad Feist compared this to running a startup: even without personal profit, success lies in delivering user value. A vibrant rollup ecosystem benefiting millions would still count as a win.
However, he sees the relationship between rollups and L1 as symbiotic, not parasitic. While rollups handle volume, high-value transactions—like large settlements or cross-rollup bridges—will naturally settle on L1, generating significant fee revenue.
Anders Elowsson argued that long-term sustainable economic activity and ETH price growth are intrinsically linked. Design one well, and the other follows. Short-term focus on price without substance risks long-term devaluation.
Justin Drake highlighted two drivers of price growth:
- Cash flow: Total daily fees matter more than per-transaction cost. At 10 million TPS with $0.002 average fee, Ethereum could generate **$2 billion in daily revenue**.
- Monetary premium: Measured by ETH’s use as collateral in DeFi protocols.
“If Ethereum succeeds but ETH doesn’t appreciate, I’d be surprised—and it might just be a buying opportunity.”
How Long Can the Ethereum Foundation Last Financially?
Funding Transparency and Reserves
Justin Drake provided rare insight into EF’s finances:
- Annual spending: ~$100 million
- Main ETH wallet: ~$650 million worth of ETH
- Additional fiat reserves: Sufficient for several years of operations
- Previous ETH sales paused due to regulatory scrutiny but recently resumed
Based on current holdings and burn rate, EF likely has ~10 years of runway, though this depends heavily on ETH’s market price.
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This financial buffer allows EF to maintain neutrality and continue funding critical research without immediate pressure for self-sustainability.
Is There Still Room to Scale Ethereum L1?
Despite the rollup-centric roadmap, L1 development remains active.
Execution Scaling via zkEVM
Dankrad Feist believes L1 execution should scale alongside rollups. While data availability can scale nearly infinitely, execution faces bottlenecks—mainly state access limits.
With zkEVM and parallelization, he expects L1 capacity to grow 10x to 1000x current levels.
Justin Drake envisions SNARK-based EVM execution as the ultimate solution. By replacing full transaction re-execution with lightweight proof verification, validators could run efficiently on mobile devices while gas limits soar.
This opens the door to infinite horizontal scaling using EVM-in-EVM precompiles—enabling programmable "native rollups" with custom governance and ordering logic.
What Is EF’s Current Focus in ZK Research?
George Kadianakis outlined several cutting-edge ZK initiatives:
- Stateless clients using STARKed Merkle trees
- Recursive SNARKs for large-scale signature aggregation
- Anonymous credentials for validator privacy
- Post-quantum aggregate signatures via STARKs
- Privacy-preserving leader election (Whisk protocol)
- Long-term goal: ZK-based L1 execution
The EF cryptography team maintains an active research pipeline, detailed at crypto.ethereum.org.
Antonio Sanso noted that Verifiable Delay Functions (VDFs) are not currently recommended for Ethereum integration due to unresolved theoretical risks. However, progress continues.
Justin Drake expressed excitement about ongoing work on MinRoot VDF ASICs, which could enable provably fair global lotteries—a low-hanging application with high visibility.
EIP-4844 and Blob Market Dynamics
Are Blob Fees a Problem?
Davide Crapis confirmed that blob pricing is under active research. While current demand is below target (3 blobs/block), this isn’t alarming—it reflects early-stage usage patterns.
If blob fees rise, rollups will pass costs to users, reducing demand and naturally cooling prices—a self-correcting mechanism similar to L1 congestion dynamics.
Dankrad Feist sees blobs as creating a new data availability market, where Ethereum competes with Celestia, EigenLayer, and others. While Ethereum leads in security, competitors aim to undercut on price.
Still, he doubts blobs will be Ethereum’s primary value capture mechanism. Instead, he sees L1 becoming the financial hub for high-value transactions, where most protocol revenue will originate.
Should Blob Targets Be Adjusted?
No. The mechanism is designed to price congestion; low prices during low demand are normal. However, insufficient demand hampers price discovery during congestion events.
Proposals like EIP-7762 suggest increasing the minimum base fee per blob gas slightly to improve market efficiency without discouraging use.
Frequently Asked Questions
Q: Is the Ethereum Foundation running out of money soon?
A: No. With ~$650M in ETH and additional fiat reserves, EF has an estimated 10 years of funding at current spending levels.
Q: Will rollups make Ethereum irrelevant?
A: Quite the opposite. Rollups depend on Ethereum for data availability and settlement. This creates a symbiotic relationship where L1 becomes the high-value transaction hub.
Q: Can ETH become deflationary even with low transaction fees?
A: Yes. High transaction volume—even at sub-cent fees—can generate massive total fee burn. At scale, this could outweigh issuance, leading to deflation.
Q: What’s the role of zkEVM in Ethereum’s future?
A: zkEVM enables secure, scalable L2s and paves the way for SNARK-based L1 execution, reducing validator burden and enabling near-infinite scaling.
Q: Are blob fees hurting Layer 2 projects?
A: Not significantly. Temporary spikes are absorbed by rollups and passed to users, which reduces demand and stabilizes prices organically.
Q: Why isn’t VDF being used in Ethereum yet?
A: Despite potential uses in random number generation and lotteries, VDFs face unresolved security questions. Research continues, but priority is lower than SNARKing L1 or MEV mitigations.
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