Ethereum Poised to Become Wall Street's Digital Backbone, Experts Say

Ethereum is increasingly being recognized not just as a cryptocurrency, but as the foundational infrastructure for the future of finance. Former BlackRock executive Joseph Chalom highlights Ethereum's strengths in trust, security, and liquidity, making it the preferred choice for traditional financial institutions looking to embrace digitization. This shift signifies a potential paradigm change, moving beyond the traditional finance (TradFi) and decentralized finance (DeFi) labels towards a unified financial landscape powered by blockchain technology.

Key Takeaways

• Ethereum's robust features make it attractive for institutional adoption.

• The network is undergoing significant upgrades to enhance scalability and efficiency.

• Major financial players are investing in and building on Ethereum.

• Ethereum's native asset, Ether (ETH), offers yield through staking, making it a "productive asset.

Ethereum: The Infrastructure for Traditional Finance

Joseph Chalom, former head of digital assets at BlackRock and now co-CEO of Sharplink, asserts that Ethereum is the essential infrastructure for Wall Street's digital future. He emphasizes that Ethereum possesses the critical qualities financial institutions seek: trust, security, and liquidity. Chalom points to Ethereum's dominance in stablecoins, tokenized assets, and smart contract activity as evidence of its suitability for digitizing finance. His experience at BlackRock, including his role in scaling the Aladdin platform and leading the firm's crypto initiatives, has solidified his conviction in Ethereum's capabilities.

Unlike Bitcoin, which Chalom describes as a "great store of value," Ethereum is viewed as a "multi-purpose" platform capable of supporting a wide range of financial applications, including lending, trading, NFTs, and complex decentralized applications (dApps).

Ether as a Productive Asset

A key differentiator for Ethereum is Ether's native yield generated through staking. With Ethereum's transition to a proof-of-stake consensus mechanism, Ether offers an annual yield of approximately 3%. Chalom refers to Ether as a "productive asset," suggesting that this yield can be returned to stakeholders. Sharplink, holding over $3 billion in Ether, is actively exploring staking and "restaking" strategies through partnerships with Consensys, Linea, and EigenLayer to maximize yield while maintaining asset security with regulated custodians. This approach allows institutions to offer DeFi-level returns with reduced risk, particularly for capital locked with no short-term redemption pressure.

Institutional Adoption and Future Outlook

Major financial institutions like BlackRock and Fidelity are increasingly placing their bets on Ethereum. BlackRock's BUIDL Fund, for instance, tokenizes U.S. Treasury bonds directly on the Ethereum network, enabling investors to earn yield through decentralized rails. This growing institutional interest in tokenization has led to a significant increase in assets under management for such products. Fidelity Digital Assets has noted that beyond Bitcoin and Ethereum, stablecoins and tokenized real-world assets (RWAs) are key areas of development in digital assets.

Upcoming Upgrades and Scalability

Ethereum is continuously evolving to meet the demands of increased adoption. The upcoming "Fusaka" upgrade, scheduled for December 2025, focuses on practical scaling and predictable fees for Layer-2 (L2) solutions. Key features include:

• PeerDAS (Data Availability Sampling): This will reduce the burden on full nodes by allowing them to sample rather than store all L2 blob data, theoretically increasing L2 scalability by 8x.

• Blob-Only Parameter (BPO) Forks: These will enable faster tuning of blob targets between major network upgrades, allowing L2s to access more blob space as demand grows.

• L1 Hardening: Measures such as a transaction gas limit cap (16,777,216 gas), an execution block size cap (10 MiB), and MODEXP input limits will enhance network stability and predictability.

• Default Gas Limit Guidance: A coordinated default gas limit of approximately 60 million gas is being recommended for client releases, balancing performance with network security.

These upgrades are designed to support higher transaction throughput and maintain network decentralization, further solidifying Ethereum's position as a leading blockchain for financial applications.

Sources

• Ethereum (ETH) Is ‘The Infrastructure’ for Wall Street, Says Ex-BlackRock Exec, CoinDesk.

• Ethereum Is ‘The Infrastructure’ for Wall Street, Says Former BlackRock Executive, Yahoo Finance.

• Blackrock Crypto Ambitions Rest On Ether: Ethereum Price Prediction And ETH News, Yahoo Finance.

• BlackRock and Fidelity Are Betting Big – Are They Preparing for a Massive ETHMove?, Cryptonews.

• Ethereum’s December ‘Fusaka’ Upgrade: 8× L2 Scale, 60M Gas Default, 16.7M Tx Cap, CryptoNinjas.