Huobi Tech Livio: Why is the market underestimating the value of the Ethereum Fusaka upgrade?

In the late autumn of 2025, the global crypto asset market experienced a sharp correction, with price panic and liquidity concerns reaching their most “extreme” point since 2022. However, while widespread pessimism shrouded the market, the public collectively overlooked another event of greater strategic significance—the Fusaka upgrade completed on Ethereum on December 3.

In previous years, Ethereum upgrades were always hyped up at least six months in advance; this year, due to bearish sentiment, the upgrade barely entered the public’s view. However, after our analysis, we found that Fusaka is not a simple technical patch—it is an adjustment to Ethereum’s economic model and ecosystem performance, systematically solving the two core bottlenecks that have plagued it for years: “value capture” and “user experience.”

What exactly was upgraded—making the “roads” for L2 wider and cheaper, plus adding “speed limits” and “guardrails.”

Fusaka’s strategic significance lies in completely eliminating the two major core barriers that have hindered Ethereum’s entry into mainstream global and application markets: excessively high costs and complexity of use.

First, it brings a complete cost revolution. The core mechanism of this upgrade can be vividly understood as “widening the highway” for L2s without significantly increasing the L1 mainnet burden, while sharply reducing the “toll” for passage.

This design is expected to keep L2 transaction fees at an ultra-low level over the long term, with the theoretical cost per transaction as low as about $0.001. This extreme cost advantage is a breakthrough for high-frequency operations. Whether it’s on-chain gaming, decentralized social, AI agent settlements, or the frequent settlement of RWA (real-world assets) that financial institutions care about, all now truly have the economic foundation to “run on-chain.” At the same time, Fusaka also brings a delicate balance to the L1 mainnet. By “speeding up” and “weight limiting” (setting transaction caps), it improves efficiency while optimizing node storage requirements, lowering hardware barriers, and ensuring a balance between efficiency and decentralization.

Second, it achieves a leap in user experience, which is key to large-scale adoption. Fusaka solves the long-standing, much-criticized issue of blockchain technology: complex private key management. The upgrade natively supports the Passkey solution, enabling a leap from “memorizing seed phrases” to “fingerprint unlocking.” Users no longer need to write down and keep track of complicated seed phrases; instead, they can use fingerprint, FaceID, and other secure modules on their phones to sign transactions. This innovation makes wallet usage more like everyday apps, and when combined with the pre-confirmation mechanism, brings the goal of “making transfers as smooth as using an app” even closer. The entire Ethereum ecosystem is moving from “technically usable” toward “truly user-friendly,” a foundational step for attracting more Web2 users and enabling mass-market applications.

Ethereum’s economic model shifts from “hyperinflationary” to “deflationary”

Of course, there’s another key aspect of the Fusaka upgrade that the market has greatly underestimated: its disruptive improvement to Ethereum’s ETH token economic model, shifting Ethereum from “hyperinflationary,” to “slightly inflationary,” or even “deflationary.”

To use an apt analogy, if Ethereum was previously in a “warlord era,” it is now entering a “market economy era.” The previous economic relationship between L1 and various L2s was somewhat like the “king and feudal lords” of ancient times: nominally loyal to the king, but in reality, the lords ruled independently. Economic activity generated by L2s did not effectively benefit ETH on the mainnet through fees and burns. After the Fusaka upgrade, these relationships have been linearized and institutionalized, returning the economic model to a proper market logic—L2s become tenants who must periodically and stably “pay taxes to the center” for the security and data throughput provided by L1. Once L2 transaction volume and activity grow, this fee mechanism directly translates into economic value captured by L1 (ETH).

This institutionalized “tax payment” creates an underestimated, hidden buyback mechanism for ETH. Fees paid by L2s are burned, which essentially acts as a stable, endogenous “buyback” for ETH tokens. Although the proportion of L2 burns was previously very low, with Fusaka’s ultra-low fees and the resulting stimulation of L2 activity, L2 transaction volume will grow exponentially, significantly increasing L1 burn rates. We estimate that relevant fees alone could bring an additional 3,000–10,000 ETH burned per year, effectively giving ETH a long-term buyback mechanism linked to business volume. Fusaka’s design means ETH supply is adjusted according to network usage—a healthier and more resilient valuation foundation than a simple deflationary narrative.

The current ETH scaling strategy is correct and resolute. Combined with future upgrades, the Ethereum L2 ecosystem as a whole could reach TPS in the 10,000 range, or even 100,000+ in the long term, while network gas fees remain highly user-friendly. This means ETH will no longer be just the “network fee for DeFi” or a “deflationary narrative asset,” but will gradually become the risk center and settlement layer of the entire L2 economy. This strategic elevation is the strongest long-term value support brought by Fusaka.

Conclusion: Anchor Core Value, Embrace the Era of Change

We believe the strategic value brought by Fusaka far exceeds the current market pricing and is worth all institutions re-evaluating the long-term investment value of the Ethereum ecosystem. The Ethereum Fusaka upgrade is a major reform of the underlying economic model of the crypto asset industry. Its extreme cost reduction and leap in user experience are the “final push” needed for large-scale Web3 commercialization. Institutions focused on long-term value and foundational innovation will ultimately take the lead in the next round of industry transformation.