Monetary Sovereignty and Ethereum: Why ETH Must Be the Currency of Its Realm
In the architecture of any sovereign system—whether a nation-state or a decentralized protocol—monetary control is foundational. Just as a country requires a strong, widely accepted currency to maintain economic sovereignty and national power, a blockchain ecosystem relies on its native utility token to secure its infrastructure, incentivize participation, and align incentives. For Ethereum, this token is ETH, and it must remain central to the economy of both Ethereum Layer 1 (L1) and its associated Layer 2 (L2) networks. When L2s begin to accept or promote alternative tokens as gas, they risk undermining Ethereum’s economic integrity, security model, and long-term alignment—potentially setting a course for secession from the Ethereum ecosystem altogether.
This issue mirrors a geopolitical analogy: imagine if the United States were to accept all foreign currencies as legal tender within its borders. Doing so would dilute the role of the U.S. dollar, expose the country to external manipulation via currency policy, and erode the central levers of economic governance. It’s precisely this concern—monetary sovereignty—that has driven the U.S. to aggressively protect the global dominance of the dollar through military, political, and financial influence. In decentralized systems, where enforcement must come from code, culture, and incentives rather than coercive power, the stakes are no less existential. A blockchain without control over its monetary base becomes fragile, fragmented, and vulnerable to capture.
Ethereum, as a foundational Layer 1 network, provides the decentralized security, credible neutrality, and final settlement layer for a growing constellation of L2s. ETH is not just a token—it is the trust anchor that powers and secures this system. When L2s choose ETH as their gas token, they reinforce this alignment and contribute back to Ethereum’s network effect and monetary premium. They treat Ethereum not just as a launchpad but as a shared home whose strength benefits all participants. This is the essence of healthy interdependence.
Conversely, when L2s adopt their own native tokens for gas—particularly when those tokens are not economically or technically bound to ETH—they begin to diverge from Ethereum’s trajectory. This is not inherently malicious, but it is strategic. It should be understood clearly as a signal of intent: to reduce reliance on Ethereum, to capture more of the economic upside internally, and ultimately to explore a path toward sovereign operation. This isn’t speculation—it’s been seen before in crypto history, where projects incubated on Ethereum gradually spun out their own validator sets, abandoned ETH as their primary currency, and forked off into independent ecosystems. It’s a valid playbook—but it must be recognized for what it is: an exit strategy.
The community must remain vigilant to these developments—not to condemn them, but to anticipate and respond wisely. Projects that remain deeply rooted in Ethereum’s architecture and use ETH as gas and collateral deserve to be viewed as Ethereum-aligned. Their success strengthens the ecosystem. In contrast, those that opt for native tokens as gas and begin to build independent security infrastructure may be on a trajectory toward becoming their own chains—potentially competitors rather than collaborators.
Consider a project like MegaETH. Its architecture depends on Ethereum L1 for decentralized security and consensus finality. In doing so, MegaETH embraces Ethereum not just as a brand or origin, but as a critical dependency that it reinforces and relies upon. This is the positive-sum model Ethereum should seek to cultivate: high-performance innovation on L2s that push the frontier while still anchoring back to Ethereum’s trust and value.
On the other hand, an L2 that sets up its own validator set, eliminates ETH from its fee markets, and bypasses L1 security commitments is essentially preparing to function as a separate chain. It may still be EVM-compatible, but that doesn’t make it Ethereum-aligned. Compatibility is not commitment. Alignment means feeding value, trust, and usage back into Ethereum—not simply extracting liquidity or developer mindshare and re-routing it elsewhere.
Just as the U.S. wouldn’t allow other countries’ currencies to dictate domestic policy, Ethereum must be careful not to allow non-ETH gas tokens to dilute its monetary sovereignty. ETH must remain the settlement currency of the Ethereum economy. Without this, Ethereum loses its leverage, weakens its security guarantees, and erodes its role as a trust platform for global decentralized coordination.
Importantly, Ethereum does not need to resort to coercion or central planning to enforce this alignment. Instead, Ethereum’s community and projects should lead by example—building systems that adopt ETH natively, educating users on the importance of ETH as a shared trust asset, and applying soft-power coordination through social consensus and economic incentives.
The success of Ethereum in the long run hinges on preserving ETH’s centrality across the stack—from L1 to L2, from rollups to restaking. This doesn’t mean ETH must be the only token in every use case—but it must remain the dominant trust and fee asset for infrastructure that claims to be Ethereum-native.
To be clear, evolution and divergence are part of open systems. Some L2s will choose to go their own way, and that is their right. But Ethereum must not subsidize or enable its own displacement. The community should be clear-eyed about who is aligned, who is diverging, and what the implications are. Sovereignty—in geopolitics and in crypto—is not something to give away lightly.
In the end, ETH is not just money—it is Ethereum’s immune system, incentive layer, and sovereignty rolled into one. If we want Ethereum to remain credible, secure, and foundational to the internet of value, then ETH must remain its currency of the realm.
(Re-written based on an X post by Joe Lubin)
