Ethereum Must Choose: Asset or Platform, Says EY’s Paul Brody

Ethereum can either be a robust decentralized platform for enterprises and financial applications or a high-value investment asset—but it cannot effectively be both, according to Paul Brody, Global Blockchain Leader at EY.

"People's expectations are unrealistic. They want Ethereum to both be a computing platform and some kind of asset on the equivalent of Bitcoin," Brody said in a recent interview. "The ‘ultrasound money’ crowd wants deflation and surging asset prices. I think it is unrealistic to expect an ecosystem to be both an exceptionally good asset and an exceptionally good computing platform."

Instead, he believes Ethereum’s strength lies in its role as a programmable blockchain, akin to an operating system for digital assets and applications.

Since starting his role as EY Global Blockchain Leader in 2015, Brody has been a key advocate for enterprise adoption of blockchain technology, focusing on how businesses can leverage public blockchains like Ethereum. Brody is also the chairman of the Enterprise Ethereum Alliance (EEA), an industry consortium dedicated to driving the adoption and standardization of Ethereum-based solutions for businesses. Under his leadership, EY has developed privacy-focused blockchain technologies like Nightfall and Starlight, which enable enterprises to conduct private transactions on public networks.

DeFi and TradFi Convergence

Brody is closely watching regulatory developments, particularly in the United States, where he sees a significant shift toward a more open and competitive financial system.

"There’s a significant acceleration taking place, especially in the US market, that is going to break down most of the traditional barriers between DeFi and traditional finance organizations," he said. "For enterprises and individual users, they’re really not going to be able to tell the difference between what is a traditionally regulated bank and what is a DeFi application in the near future."

He pointed to stablecoin legislation as a key driver of this transformation.

"The stablecoin bill and some of the other rulemaking that’s going on right now is going to allow traditional banks to enter the crypto space, to custody crypto, to offer crypto assets and digital assets to their customers," Brody explained. "And it’s going to similarly allow DeFi applications to integrate into the banking system in a relatively straightforward way."

This shift, he said, means that "the regulatory environment is going to be one that supports a genuinely permissionless system that will be, from a technical standpoint, more secure, substantially more innovative, and much more competitive."

If passed, the GENIUS Act would create a regulatory framework for stablecoins in the U.S., allowing banks to issue and custody stablecoins while also integrating DeFi applications into the traditional financial system. It mandates that stablecoins be fully backed 1:1 by high-quality assets like U.S. dollars or Treasury bills, establishes licensing requirements for issuers, and enforces consumer protections, such as public redemption policies. The bill is designed to encourage competition by preventing regulatory favoritism toward traditional banks while ensuring stablecoins remain interoperable and permissionless.

Payments is King

Brody, who is closely involved with how enterprises are using blockchains via his roles at EY and EEA, says the primary blockchain use case for companies right now is payments.

"There’s a clear ROI because you can reduce your costs by shifting from traditional banking rails to crypto rails quite substantially—like 80 or 90% in terms of the transmission cost of the transaction," Brody explained. "What matters is that you need automation in place to make that useful. It’s pretty useless if you have to manually process every crypto payment."

And increasingly, organizations are coming to accept that any use case needs to be developed on public chains, he said. For years, enterprises have experimented with private blockchains, but Brody sees little future for them.

"Private blockchains had a 100% failure rate, and frankly, private enterprise-specific L2s are likely to have a 100% failure rate too," he said.

“Enterprise L2s Are Likely to Fail”

He dismissed the idea that enterprises will build their own L2s.

"There’s a lot of people who think, 'Oh, everyone’s gonna have their own L2.' I don’t see the point," he said. "It’s not clear to me that it’s in any way more efficient. Private blockchains were an incredibly expensive way to do essentially the same stuff you can do on public blockchains. And they created zero value."

The reason, he explained, is that the true value of blockchain technology comes from shared, public infrastructure.

"The whole point of a blockchain is to have a shared space in which you can operate with other companies with shared smart contracts, digital assets, and composability across enterprise boundaries," he said. "If every company sets up their own blockchain, what was the point?"

Instead, he expects enterprises to adopt Ethereum’s Layer 2 solutions to reduce costs and improve scalability.

Picking the Right Chain for the Job

As enterprises move toward public blockchain adoption, they will need to navigate Ethereum’s growing L2 ecosystem. Brody emphasized that different L2s serve different purposes.

"If you are transferring a $100,000 asset, I would do it on the mainnet," he said. "That’s not something you want to mess around with—you want the absolute maximum level of security, decentralization, and verifiability possible. Period. End of story."

However, for high-volume, low-value transactions, L2s will be critical. "We’ve talked to a client about bringing supply chain components online for a single product line. They would need to process 2 million NFTs a day," Brody said. "The gas fees for that on the mainnet would be astronomical. Even on an L2, that’s a challenge. You need to get to well below a penny per transaction."

Ethereum’s Future: Dominant Platform, Not Scarce Asset

Brody believes Ethereum’s long-term success will come from its role as a computing platform, not from being a scarce asset like Bitcoin.

As Ethereum Layer 2s have helped the chain scale, block space supply has increased by a factor of 1,000x, but demand hasn’t kept up, Brody said. That has put pressure on ETH, the asset, contributing to its underperformance versus other cryptocurrencies, which has in turn spurred debate on whether Ethereum’s economic model will lead to ETH appreciation in the long term.

While Brody said block space demand will increase and contribute to ETH price, he disagrees with the view that ETH can compete with Bitcoin as “sound money” or scarce asset.

"Bitcoin is the asset. Ethereum is a platform," he said. "Ethereum doesn’t need to be highly valuable, but fundamentally, the valuation of Ethereum is based on a discounted cash flow model. It generates transaction fees. You stake it, you get yield. It’s actually really simple."

Comparing Bitcoin to gold, Brody suggested that Ethereum is more like a technology standard.

"The tech industry loves a standard. Android is 90% of the mobile market, Windows is 90% of the PC market," he said. "I fully expect Ethereum will eventually be 90% of the blockchain computing platform market."