In-Depth Analysis of Etherealize: How Ethereum’s “Second Foundation” Conquered Wall Street

Etherealize, backed by Vitalik Buterin and the Ethereum Foundation, has raised $40 million in a round led by Electric Capital and Paradigm. Its mission is to reshape Wall Street by integrating traditional finance with the Ethereum ecosystem. The company focuses on three core product lines:

Upgrading Markets: Tokenizing real-world assets (RWAs) like mortgages and credit, enabling them to be traded as digital certificates on Ethereum.
Automating Infrastructure: Building a settlement engine for near-instant, 24/7 trade settlement using Ethereum's Layer 2 networks.
Embedding Privacy: Developing a customizable zero-knowledge proof environment to allow compliant on-chain transactions without revealing sensitive data.

Beyond product development, Etherealize acts as an ecosystem ambassador, producing research, engaging with regulators, and promoting Ethereum's narrative. While it aims to expand RWA adoption and attract institutional players to DeFi, it faces competition from other blockchains like Solana and has yet to launch a major product or secure key Wall Street partnerships.

By Frank, PANews

Etherealize, known as the "second Ethereum Foundation," recently announced the completion of a $40 million funding round led by top venture capital firms Electric Capital and Paradigm. Since its founding in 2024, this startup, backed by Vitalik Buterin and the Ethereum Foundation, has attracted market attention with its strong team and close ties to the Ethereum ecosystem.

What kind of company is this, and how will it accomplish its self-proclaimed mission of “reshaping Wall Street with Ethereum”?

The second Ethereum Foundation is still the Ethereum Investment Center

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

Etherealize's official vision is to "reshape Wall Street with Ethereum." This background and goals far exceed those of an ordinary ecosystem startup. Therefore, Etherealize was nicknamed "the second Ethereum Foundation" from its inception.

The team is a well-established team. In March of this year, Danny Ryan joined Etherealize as co-founder and president. Previously the Chief Researcher at the Ethereum Foundation, he was a key leader in the Ethereum "merge" upgrade and enjoys a high reputation within the community. Vitalik also welcomed his joining.

Prior to Etherealize, the Ethereum Foundation was facing controversy for its excessive focus on technical research and development and its lack of effective marketing. At the same time, public chains like Solana far surpassed Ethereum in both ecosystem activity and token market performance. However, constrained by the Foundation's neutral role and the Ethereum ecosystem's core values of decentralization, the Ethereum Foundation was unable to make proactive adjustments.

In this context, having an independent third-party company conduct marketing and market promotion for the Ethereum ecosystem became the optimal solution. This is how Etherealize came into being.

In terms of its role, Etherealize's primary goal is to accelerate the building of bridges between Ethereum and traditional financial institutions like Wall Street through product development, institutional sales, market education, and policy lobbying. It's more like the "business development department" of the entire Ethereum ecosystem.

Etherealize's membership embodies this vision. In addition to Danny Ryan, a familiar figure in the Ethereum ecosystem, Etherealize's CEO, Vivek Raman, has over a decade of experience on Wall Street, having worked as a fixed income trader at top investment banks such as Morgan Stanley, UBS, and Deutsche Bank. Co-founder Zach Obront is a top security researcher and zero-knowledge technology engineer who previously worked on building fully private over-the-counter (OTC) trading solutions for Wall Street institutions.

Opening up Wall Street capital markets with RWA

To date, Etherealize has not publicly released any commercial products. Its $40 million funding round in September was primarily aimed at accelerating the development of its institutional-grade infrastructure. However, the three major product lines officially announced and its past operational results may offer insights into Etherealize's future operational strategies.

Etherealize has three main product directions:

1. Upgrading Markets: Simply put, this refers to asset tokenization, commonly understood as helping Wall Street issue and manage real-world assets (RWAs) on Ethereum. Etherealize plans to bring "the least efficient institutional asset classes" onto the blockchain, specifically mortgages, credit, and other fixed-income products. The technology they are developing aims to enable financial institutions to convert these real-world assets into "digital certificates" that can be efficiently traded on the Ethereum network and reliably managed and settled.

2. Automating Infrastructure: Building a modern settlement engine addresses the drawbacks of traditional financial markets, where trade settlement 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" with the goal of achieving "automated execution and instant settlement without compromising regulatory compliance." By leveraging Ethereum (specifically its Layer 2 network), this engine can provide 24/7, near-real-time settlement services, significantly improving institutions' capital efficiency.

3. Embedding Privacy: A Customizable Zero-Knowledge Environment. Privacy is a major concern for institutions adopting public blockchains. To this end, Etherealize stated that it is leveraging cutting-edge zero-knowledge proof (ZK) technology to build a customizable privacy environment. This technology allows for on-chain verification of transaction compliance without revealing any transaction details (such as buyer, seller, and amount). This may address the core need of institutions to protect trade secrets while pursuing transaction efficiency.

In addition to the three product lines mentioned above, Etherealize is also busy developing products. They produce in-depth research reports on the Ethereum ecosystem, such as the June report " The Bull Case for Ethereum ," which compares ETH to the digital oil that drives the digital economy. They also publish articles and opinions that promote a dominant narrative, such as ETH reaching $80,000, to pave the way for collaboration with Wall Street.

Etherealize also represents the Ethereum ecosystem in its communications with regulators. CEO Vivek Raman testified before the U.S. House Financial Services Committee on behalf of the Ethereum ecosystem regarding the CLARITY Act. Furthermore, the company proactively submitted written comments to the U.S. Securities and Exchange Commission (SEC)'s Crypto Task Force, advocating for updated regulations to recognize blockchain as a primary record-keeping system.

Overall, Etherealize seems to be an ambassador for the Ethereum ecosystem. On the one hand, it expands cooperation opportunities with Wall Street, and on the other hand, it actively promotes various matters that promote the ecosystem.

The blood-making machine of the Ethereum ecosystem?

Although the results of Etherealize have not yet been fully realized, from its key ecological niche and existing operational direction, we may be able to see some of the impacts that Etherealize may have on the ecosystem in the future.

The first and most direct aspect is to promote the continued expansion of the RWA business within the Ethereum ecosystem. While Ethereum is already the leading public blockchain in the RWA space, its development is still in its early stages in terms of scale and narrative. Currently, RWA faces multiple obstacles, including a limited asset type, insufficient on-chain asset liquidity, and high barriers to entry. As a business representative with official Ethereum background, Etherealize possesses strong technical advantages and resource coordination capabilities, potentially introducing more traditional financial assets to the Ethereum ecosystem.

Once this goal is achieved as expected, it will not only bring more real assets to the Ethereum ecosystem, but also promote the use of native assets in the Ethereum ecosystem and enhance the activity of the ecosystem.

The second aspect is related to the currently hot DAT narrative (crypto treasury strategies for listed companies). Like the RWA business, its primary client base is publicly listed companies. Therefore, for Etherealize, promoting crypto treasury strategies with listed companies is a natural progression. A clear example is Etherealize's current membership on the "DeFi Committee" for ETHZilla (a publicly listed company planning to transition to an Ethereum treasury reserve), providing direct professional advice on how to generate returns from its ETH treasury assets.

The third aspect is the potential more far-reaching impact on the ecosystem. Once Etherealize achieves practical progress in the two aforementioned businesses, it will indirectly boost the development of Ethereum's Layer 2, particularly in light of the performance and privacy demands of traditional financial institutions. Furthermore, it will attract more institutional players to the DeFi ecosystem, Ethereum's most important business area at this stage.

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

On the one hand, in the existing market, institutions’ vision for encrypted public chains is no longer limited to the Ethereum ecosystem. Multiple L1s, including Solana and Sui, are favored by traditional financial institutions, and they inherently possess better performance capabilities in terms of technical characteristics.

On the other hand, there's a long road ahead between vision and realization. Etherealize has been developing for over six months since its founding, yet it has yet to demonstrate a mature product prototype or secure a partnership with a major traditional financial institution. Currently, operations are limited to reporting and opinion production, a pace that's somewhat out of sync with the ever-changing market.

However, bigger goals often require more effort and time. For Etherealize, we are still in the early stages. Whether we can successfully realize our vision and lead the Ethereum ecosystem to become the infrastructure of the Web3 era remains to be seen.