CoinVoice has learned that, according to the latest data from Coinglass, the return rate of Bitcoin in Q4 2025 is -23.07%, far below the historical average of 77.07% and the median of 47.73%. This marks the second-worst quarterly return rate in history, only behind Q4 2018's -42.16%. Meanwhile, Ethereum's Q4 return rate is -28.28%, the fourth-worst quarterly return rate in history. Additionally, Bitcoin's single-month return rate in December 2025 is -2.97%, and Ethereum's is -0.65%.

Ethereum Economic Model: Burning, Staking, and the "Ultrasound Money Theory" 💰Introduction💰 If Bitcoin's success lies in its extremely simple rules and its near-immutable nature, then Ethereum's success is more about its continuous reconstruction of its own economic model. Blockchain Finance · 02 | Detailed Explanation of Bitcoin's Economic Model: Halving, Scarcity, and Miner Games From the earliest PoW mining to today's PoS staking; from the long-standing debate over "inflationary tokens" to transaction fee burning; from simple on-chain fuel to a core asset with yield properties. Ethereum was not originally designed as it is now; its economic model is more like a result of ongoing correction and evolution during real operation. In this article, we will systematically analyze: What changes occurred in Ethereum's economic structure after PoW → PoS? What exactly is being "burned" in the EIP-1559 "burning mechanism"? Where do staking rewards come from? Who pays whom? Why does ETH sometimes experience "deflation"? What are the fundamental differences between ETH and BTC's economic attributes? What new risks do liquid staking tokens (LST) bring? 💰1. PoW → PoS: Structural Shift in Ethereum's Economic Model During the PoW era, Ethereum's security mainly depended on miners' computational power. Miners participated in block production by consuming real-world electricity and hardware costs, earning block rewards and transaction fees as incentives. This mechanism is reliable in terms of security, but its costs are also obvious: high energy consumption, high inflation, and persistent selling pressure. Because miners need to pay for electricity and hardware depreciation, the ETH mined is often sold continuously, creating a structural sell pressure. This made ETH for a long time more like a "consumed fuel" asset rather than a currency with long-term store of value properties. After The Merge, Ethereum officially shifted to PoS, which is not just a change in consensus mechanism but a fundamental reconstruction of its economic model. Network security is no longer provided by energy costs but by staked ETH from validators. Malicious behavior costs are no longer "wasted computing power" but "assets directly confiscated." From an economic perspective, this means Ethereum's security costs are significantly reduced, and the new coin issuance needed to maintain security also drops sharply. 💰2. EIP-1559: Why Are Transaction Fees Being "Burned"? EIP-1559 is not just a simple fee optimization proposal; it fundamentally reshapes the economic relationship between ETH and network usage. Under this mechanism, each transaction's fee is split into two parts: the base fee, which is directly burned by the system, and a small tip paid to validators. This means that as long as the Ethereum network continues to be used, ETH will be permanently destroyed. Every on-chain transaction results in a permanent reduction of the total ETH supply. The core purpose of this design is not merely to "reduce supply." More importantly, it establishes a clear value feedback loop: the value created by on-chain activity no longer mainly flows to block producers but is returned to all ETH holders through the burning mechanism. In other words, the busier the Ethereum network, the more scarce ETH becomes, logically tying network usage value directly to asset value. 💰3. Where Do Staking Rewards Come From? How Is ETH's "Yield Attribute" Formed? Under the PoS mechanism, validators participate in block production and transaction validation by staking ETH and earn corresponding rewards. These rewards are not generated out of thin air but are a result of system incentives and user behaviors. On one hand, the system issues a small amount of new ETH as basic rewards; on the other hand, tips paid in transactions and MEV (Maximal Extractable Value) generated in certain scenarios also become validators' income sources. Compared to the PoW era, the key difference is that the cost to maintain network security is greatly reduced, so the system no longer needs high inflation to "pay for security." This directly results in a large amount of ETH being locked in staking contracts long-term, reducing circulating ETH, while holders can earn relatively stable yields through staking participation. ETH thus begins to have two attributes simultaneously: it is both a necessary fuel for network operation and an asset capable of generating cash flow. 💰4. Why Does ETH Sometimes Experience "Deflation"? Under the simultaneous existence of PoS and EIP-1559, the total supply change of ETH depends on two variables: the amount of new issuance and the amount burned. When network activity is relatively stable, new ETH issued may slightly exceed the burned amount, keeping total supply growing modestly; when on-chain transactions are frequent and gas fees high, the burned ETH may surpass new issuance, causing the total supply to decrease temporarily. It is in this context that the phenomenon of "ETH deflation" begins to appear. The "Ultrasound Money Theory" is thus born—it does not claim that ETH will necessarily be deflationary in the long term, but emphasizes the possibility within the mechanism: the more the network is used, the stronger ETH's scarcity may become. 5. ETH vs. BTC: Two Completely Different Economic Designs To better understand Ethereum's positioning, it can be compared with Bitcoin's economic model: Dimension Bitcoin (BTC) Ethereum (ETH) Supply Rules Fixed cap of 21 million No hard cap, dynamically adjusted Inflation Logic Halving-driven Usage-driven Security Mechanism PoW (hash power) PoS (staking) Yield Attribute No native yield Staking rewards Core Positioning Store of value Decentralized economic core asset Change Flexibility Very low Relatively flexible It is clear that Bitcoin pursues extreme rule certainty, while Ethereum pursues system evolvability. This is not a matter of superiority but two entirely different design paths. 💰6. Unavoidable Risks: Centralization and the Complexity of LSTs Of course, Ethereum's current economic model is not without concerns. As staking scales up, staking power gradually concentrates among large institutions, exchanges, and leading protocols, which somewhat weakens decentralization. Meanwhile, the emergence of liquid staking tokens (LST) improves capital efficiency but also introduces new systemic risks, such as de-pegging risk, protocol dependency risk, and liquidity crunches in extreme cases. These issues may not immediately destroy Ethereum, but they remind us that more complex economic models often entail higher management and governance challenges. Conclusion: What Kind of Economy Is Ethereum Building? To summarize Ethereum's current economic design in one sentence: It is attempting to build an on-chain economy that "becomes more scarce and more secure the more it is used." Bitcoin defined what a decentralized currency is, while Ethereum is exploring the decentralized economy itself.

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