The Core Essence of ETH: From Information Encryption to Web3 Economic Driving Force

When discussing cryptocurrencies, many people often only see the price figures and overlook their true nature. ETH—short for Ethereum—is not just a speculative asset, but the core of how information is encrypted and data is processed within the entire modern blockchain ecosystem. To better understand its role, we need to analyze more deeply what is happening beneath the “shell” of this technology.

What Is ETH: More Than an Asset, It’s a Fundamental Platform

ETH is the native currency of the Ethereum network, functioning as the “fuel” to sustain the entire system. It is used to pay for transaction fees (gas fees), execute smart contracts, and support the operation of decentralized applications—from DeFi lending platforms and NFT marketplaces to decentralized autonomous organizations (DAOs).

The most important point is how ETH supply is controlled through two key mechanisms. First, the staking mechanism allows network validators to lock up their ETH to secure the network. Second, the fee-burning mechanism (introduced via the EIP-1559 update) burns a portion of each transaction fee—removing it from circulation—instead of awarding it to miners. Combining these two factors, ETH has become both a tool for network security and a means of supply control and balance.

Currently, ETH price hovers around $1,960, down -1.27% in the past 24 hours. This price reflects the ongoing growth of the Web3 economy, with ETH as its core foundation.

Layer 2 Has Changed: From Solution to New Challenge

Layer 2 solutions like Arbitrum (ARB), Optimism (OP), and zero-knowledge proof (ZK) based chains were initially created to address Ethereum’s limitations—mainly slow speed and high fees. However, Ethereum’s successive updates have resolved many of these issues. As a result, the strategic vision of Layer 2 is no longer as relevant as before.

This reality raises a big question for investors betting on Layer 2. ARB is currently trading at $0.11 (down -0.80% in 24h), while OP is at $0.18 (down -1.03% in 24h). Both show selling pressure from projects that have already realized significant profits. When a project has gained substantial gains, releasing positions is a natural action. But the question we must ask ourselves is: how will these Layer 2 tokens develop as their initial necessity gradually diminishes?

Where Are the Opportunities: When the Main Platform Still Dominates

History has shown that core platforms tend to have long-lasting vitality. ETH once traded between $3,900 and $4,000, and the journey from then until now has created a generation of successful investors. Although ETH is currently trading at around $1,960, its history indicates that the core platform—the foundation upon which Layer 2 also depends—tends to generate stronger long-term opportunities.

In the next three months, investors will have the chance to reflect on the true nature of what they are holding. That’s why understanding the essence of information encoding—how ETH controls and secures the network—is crucial in the journey to discover real value.