In-depth analysis of Etherealize: How Ethereum's "second foundation" is winning over Wall Street?

Author: Frank, PANews

Recently, Etherealize, known as the "second Ethereum Foundation," announced the completion of a $40 million financing round led by top venture capital firms Electric Capital and Paradigm. Since its establishment in 2024, this startup, which was initiated with the support of Vitalik Buterin and the Ethereum Foundation, has attracted market attention due to its strong team background and close ties to the Ethereum ecosystem.

What kind of company is this? How will it achieve its mission of "restructuring Wall Street with Ethereum"?

The second Ethereum Foundation or Ethereum Investment Center

Etherealize was established in 2024, positioned not only as a technology startup but also as a strategic attempt for the entire Ethereum ecosystem. Etherealize was jointly funded by Ethereum founder Vitalik Buterin and the Ethereum Foundation, and from its inception, it has been strongly tied to the Ethereum ecosystem. This is also reflected in its name, as Etherealize is a combination of Ether and Realize, symbolizing the realization of Ethereum's goals and dreams.

Etherealize's official vision is positioned as "Reinventing Wall Street with Ethereum," and this background and goal far exceed that of an ordinary ecological startup. Therefore, from its inception, Etherealize has been humorously referred to as "the second Ethereum Foundation."

In terms of team background, it is even more of a direct force. In March of this year, Danny Ryan joined Etherealize as a co-founder and president. Danny previously served as the chief researcher at the Ethereum Foundation and was a key leader in the Ethereum "Merge" upgrade, enjoying a very high reputation within the community. Vitalik also gave a thumbs up to welcome his joining.

Before Etherealize, the Ethereum Foundation was controversial for being overly focused on technical research and lacking effective marketing strategies, while public chains like Solana far surpassed Ethereum in terms of ecological activity and token market performance at that time. However, constrained by the foundation's neutral role and the value of decentralization that the Ethereum ecosystem upholds, the Ethereum Foundation has never been able to make positive adjustments.

Against this backdrop, conducting marketing and market promotion for the Ethereum ecosystem through an independent third-party enterprise has become the optimal solution. Etherealize was born.

From the perspective of role positioning, Etherealize's main goal is to accelerate the bridging of Ethereum with traditional financial institutions such as Wall Street through product development, institutional sales, market education, and policy lobbying. It is more like the "business development department" of the entire Ethereum ecosystem.

In terms of the configuration of its members, Etherealize also embodies this vision. In addition to Danny Ryan, who is well-known in the Ethereum ecosystem, Etherealize's CEO Vivek Raman has over ten years of experience on Wall Street, having served as a fixed-income trader at top investment banks such as Morgan Stanley, UBS, and Deutsche Bank. Another co-founder, Zach Obront, is a top security researcher and zero-knowledge technology engineer, who has been dedicated to building completely private over-the-counter (OTC) solutions for Wall Street institutions.

Open Wall Street capital markets with RWA

As of now, Etherealize has not publicly released any fully developed commercial products. The main purpose of its $40 million financing completed in September was to accelerate the development of its institutional-level infrastructure. However, from the three major product roadmaps announced by the official and its past operational results, we may also be able to interpret Etherealize's upcoming operational ideas.

Etherealize has three main directions in its products:

1. Upgrading Markets (: Simply put, it refers to asset tokenization, understood as helping Wall Street issue and manage real-world assets (RWA) on Ethereum. The Etherealize project aims to "bring the least efficient categories of institutional assets on-chain," particularly mortgages, credit, and other fixed-income products. The technology they are developing is designed to enable financial institutions to transform these real assets into "digital certificates" that can be efficiently traded on the Ethereum network, and to facilitate reliable management and settlement.

2. Automated Infrastructure ) Automating Infrastructure (: Building a modern settlement engine, addressing the drawbacks of traditional financial market transaction settlement that typically takes one to two days (T+1 or T+2) and time-limited trading. Etherealize is building a "settlement engine designed for institutional workflows," aiming to achieve "automated execution and instant settlement without compromising compliance." By leveraging Ethereum's technology (especially its Layer 2 network L2), this engine can provide uninterrupted, near-real-time settlement services 24/7, significantly enhancing capital efficiency for institutions.

3. Embedding Privacy ): A customizable zero-knowledge environment. Privacy is the biggest concern for institutions adopting public blockchains. To address this, Etherealize indicates that it is leveraging cutting-edge "zero-knowledge proof" (ZK) technology to build a "customizable privacy environment." This technology allows for the on-chain verification of transaction compliance without disclosing any transaction details (such as the parties involved, amounts, and other sensitive information). This may be aimed at addressing the core need of institutions to protect commercial secrets while pursuing transaction efficiency.

In addition to the three product lines mentioned above, Etherealize has also been busy with product development. On one hand, they will produce in-depth research reports on the Ethereum ecosystem, such as the June report "The Bull Market Case for Ethereum," which compares ETH to digital oil driving the digital economy. They may also publish articles and opinions suggesting that ETH will reach $80,000, laying the groundwork for collaboration with Wall Street.

On the other hand, Etherealize also represents communication between the Ethereum ecosystem and regulatory agencies. CEO Vivek Raman has testified before the U.S. House Committee on Financial Services on behalf of the Ethereum ecosystem regarding the CLARITY Act. In addition, the company has proactively submitted written comments to the U.S. Securities and Exchange Commission (SEC) crypto task force, advocating for the update of regulatory rules to recognize blockchain as a primary record-keeping system.

Overall, Etherealize seems to be the ambassador of the Ethereum ecosystem, expanding cooperation opportunities with Wall Street on one hand, and actively promoting various matters within the ecosystem on the other hand.

( Is Ethereum's ecosystem a blood-producing machine?

Although the performance results of Etherealize have not yet been fully realized, we may be able to see some potential impacts that Etherealize could have on the ecosystem in the future based on its key ecological position and current operational direction.

The first aspect, and the most direct angle, is to promote the continued expansion of RWA business within the Ethereum ecosystem. Although Ethereum is currently the leading public chain in the RWA field, the development of RWA is still in its early stages in terms of scale and narrative. At this stage, it still faces multiple obstacles such as a single type of asset, insufficient liquidity of on-chain assets, and high entry barriers. Etherealize, as a business representative with an official background in Ethereum, has strong technical advantages and resource coordination capabilities, and is likely to introduce more traditional financial assets into the Ethereum ecosystem.

Once this goal progresses as expected, it can bring more on-chain real assets to the Ethereum ecosystem on one hand, and on the other hand, it can promote the use of native assets in the Ethereum ecosystem, enhancing the ecosystem's activity.

The second aspect is related to the current hot narrative of DAT (listed company crypto treasury strategy), which, like the RWA business, primarily targets listed companies as the main customer base. Therefore, for Etherealize, promoting the crypto treasury strategy with listed companies comes naturally. A clear example is that Etherealize is serving as a member of the "DeFi Committee" for ETHZilla (a listed company planning to transform into an Ethereum treasury reserve), providing professional advice on how to generate revenue from its ETH treasury assets.

The third aspect is the deeper potential impact on the ecosystem. Once Etherealize advances the above two business progressions, it will indirectly promote the development of Ethereum L2, especially regarding the performance and privacy demands from traditional financial institutions. Additionally, it will also bring more institutional-level players to the most important business area of Ethereum at this stage, the DeFi ecosystem.

However, behind Etherealize's grand vision, there are also considerable resistance and competitive pressure.

On one hand, in the current market, institutions' vision for public blockchain has no longer been limited to the Ethereum ecosystem; multiple L1s including Solana and Sui are favored by traditional financial institutions, and they inherently possess better performance capabilities from a technical perspective.

On the other hand, there is a long implementation path in the progress between vision and realization. Since its establishment, Etherealize has developed for more than half a year. However, it has still not demonstrated any mature product prototypes or achieved cooperation with a large traditional financial institution. The current operational content is still limited to reports or opinion outputs, and this progress is somewhat mismatched with the rapidly changing market.

However, the larger the goal, the more energy and time it often requires. For Etherealize, it is still at an extremely early stage, and whether it can successfully realize its vision and lead the Ethereum ecosystem to become the infrastructure of the Web3 era remains to be tested by time.