Pantera Capital Partner: The Decade of Ethereum's Transformation Towards the Core of on-chain Capital

Original Author: Paul Veradittakit, Partner at Pantera Capital

Reprint: Daisy, Mars Finance

Key Highlights

Entering its second decade, Ethereum is establishing its position as the foundational layer for stablecoins, DeFi, and tokenized assets.

Digital Asset Treasury Bonds (DAT) are reducing token circulation and driving institutional demand for ETH, thereby creating structural price support.

The clarity of regulation and the reforms of the Ethereum Foundation will gradually make Ethereum the core infrastructure of on-chain capital markets, thus achieving long-term growth.

The Origin of the Ethereum Vision

Before creating Ethereum, Vitalik Buterin was an early supporter of Bitcoin and worked at Bitcoin Magazine. There, he realized that Bitcoin lacked scripting capabilities to meet the needs of application development. Thus, he proposed a bold idea: to create Ethereum through a universal scripting language and design it to run on a decentralized, permissionless network of computers. This concept seemed extremely avant-garde at the time and raised a lot of skepticism—after all, this was just a young man without the backing of a large company trying to create an entirely new technological framework.

However, the key to changing the perspective of many early investors lies in the increasing number of applications choosing to build on Ethereum rather than Bitcoin and its Layer 2, which indicates that Ethereum is more suitable for application development. One of the first "killer applications" to validate this viewpoint is Augur—a decentralized prediction market. Augur showcases the powerful potential of Ethereum: it can support robust applications based on transparency, automation, and financial logic, while allowing developers to issue tokens, coordinate governance, and raise funds natively, which directly sparked the ICO (Initial Coin Offering) boom.

The Decade of Ethereum

Ethereum is celebrating its tenth anniversary, enjoying a long-anticipated glorious moment.

Since its launch in 2015, Ethereum has pioneered programmable smart contracts, gathering a developer community and laying the foundation for areas such as DeFi, gaming, and NFTs. Over the past decade, this ecosystem has continued to innovate, not only supporting the majority of DeFi protocols but also becoming a core pillar for stablecoins. With the maturation of stablecoin infrastructure, the introduction of the GENIUS Act has brought regulatory clarity while introducing royalty income to Ethereum and enhancing its demand.

Although stablecoins like USDC and USDT exist on multiple chains, Ethereum remains the dominant platform for stablecoin activity, accounting for nearly 50% of the global stablecoin market capitalization. Ethereum's robust ecosystem continues to drive price growth, propelled by the adoption of stablecoins and innovative scaling solutions, while strategic investments from Pantera Capital further fuel this growth momentum.

Pantera's Ethereum ecosystem investment

Over the past decade, Pantera Capital has continuously invested in the Ethereum ecosystem, supporting transformative projects and founders, closely tied to the growth of Ethereum. Key investments include:

· Circle: The driving force behind USDC, with a market capitalization of over $60 billion, promoting the widespread adoption of Ethereum in the DeFi and payments sectors.

· Arbitrum: A leading Layer 2 solution that captured 100% of the new Ethereum transaction growth in 2023, increased transaction speed by 40 times, reduced costs by 20 times, processed over 1.89 billion transactions, and the trading volume on decentralized exchanges exceeded $54.5 billion, showcasing Ethereum's scalability.

· Ondo: Standing out in the multi-billion dollar tokenized asset management market, launched USDY in 2023, connecting real assets like U.S. Treasury bonds with on-chain finance, reinforcing Ethereum's role as a core infrastructure.

· Morpho: Optimizing the lending experience on Ethereum, with deposits nearing $1 billion after one year, becoming one of the fastest DeFi protocols to reach this milestone.

· Bitwise: Pantera provides early funding support for its spot Ethereum ETF, becoming one of the first approved ETFs, attracting institutional capital inflow. As of 2025, Bitwise manages assets exceeding $4 billion, leveraging the Ethereum blockchain to drive DeFi and tokenized asset strategies.

· BitMine and other companies: Together with companies like Bit Digital, added over 840,000 ETH to the corporate treasury, highlighting the value of Ethereum as a reserve asset.

Pantera Capital, through strategic investments, promotes Ethereum's core position in on-chain finance, scaling solutions, and real asset linkages, supporting the continuous development and innovation of its ecosystem.

Institutional demand, changes in digital asset treasury and Ethereum supply pattern.

Ethereum surged 53% in July, and the strong rise of Ethereum is not just speculation, but driven by structural factors: institutional investment in ETFs and Digital Asset Treasury (DATs), the transformation of the Ethereum Foundation, and the recent clarification of the regulatory environment.

Institutional interest in crypto assets is focused on the ETF and DAT sectors. Last week, the U.S. spot ETH ETF attracted $1.8 billion in inflows, while DAT also began accumulating ETH on a large scale. SharpLink (SBET) increased its reserves to 361,000 ETH, and BitMine surpassed $2 billion in Ethereum holdings in just 16 days. As Tom Lee from MicroStrategy and Cosmo Jiang from Pantera mentioned in a conference call, these asset management companies have built-in advantages: low-cost capital, equity premiums, staking yields, merger arbitrage, and operational income, allowing each new stock issuance to increase their per-share ETH holdings. This unique structure continuously reduces the circulating supply of Ethereum, providing support for prices that goes beyond simple demand.

Source:

DAT is no longer a novelty in the native realm of cryptocurrencies, but rather a starting point for institutional investors to enter the cryptocurrency and Ethereum space, allowing them to gain exposure before purchasing spot or conducting on-chain transactions. As I mentioned in my previous blog "The Wave of Crypto Project Listings in the U.S.: How to Reasonably Value to Attract Wall Street's Attention?", these tools concentrate massive buying power, often absorbing more ETH than the issuance volume, driving scarcity and triggering broader capital rotation into other altcoins.

Clarification of regulation and the strategic shift of the Ethereum Foundation

The improvement of the regulatory environment is transforming past resistance into support. 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 settled about half of the tokenized dollar transfers globally.

At the same time, the new leadership and rapid development of the Ethereum Foundation (EF) are driving the rapid iteration of the chain. This transformation includes leadership restructuring, adjustments to the protocol team structure, strict treasury policies, and an accelerated technical roadmap to address community criticisms regarding efficiency, transparency, and competitiveness. By focusing on Layer 1 scaling, Blobspace (data storage space), user experience (UX) optimization, and DeFi integration, it aims to solidify Ethereum's dominance in institutional adoption (such as Robinhood's stock tokens on Arbitrum) and blockchain competition (such as Solana). Despite still facing challenges such as talent retention and community expectation management, EF's strategic transformation lays the groundwork for Ethereum to seize opportunities in capital market chain migrations, such as the emergence of innovative cases like Robinhood Chain and Pantera's ecological investments.

Final Thoughts

Stablecoins have finally locked in a reliable trajectory, bolstered by regulatory clarity from legislation such as the GENIUS Act, thereby boosting their demand. Digital asset treasuries are the engines behind this demand. They absorb market liquidity, drive up prices, and provide institutions with a one-stop solution for holding crypto assets. In a market that increasingly values structural returns, tokens that exhibit deflationary pressure and are linked to real cash flows will become ideal underlying assets for DATs. This trend will further propel the price of Ethereum upward, while the demand for the Ethereum blockchain will surge accordingly.

We are at a critical moment of significant infrastructure transformation, and this change requires not a magic bullet, but a series of solutions that can address numerous challenging issues. At Pantera Capital, we are always 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 core pillar of stablecoins, a favored platform for institutions, and a catalyst for the continuous development of the digital asset economy, leading the industry towards a new future.