For thirty years, the internet has changed the way information flows, but it has never addressed a fundamental issue—the lack of a neutral and native trust foundation for the confirmation of value, the definition of ownership, and the enforcement of transaction responsibilities. After traditional finance moved online, it was still trapped by a fragmented ledger system, high reconciliation costs, and deep reliance on intermediaries.

Ethereum changed this situation. It encoded financial logic into code, enforced by global validators, gradually evolving into a universal financial operating system.

**Paradigm Shift: Capital-Intensive → Code-Driven**

How do traditional financial institutions operate? They establish compliance teams, reconciliation departments, monitors, and dispute resolution centers. Every institution is doing the same thing—building firewalls, creating databases. Repetitive investments, astronomical costs.

Ethereum is different. Developers don’t need to build clearing networks or settlement systems themselves; a single smart contract can issue assets with definite economic properties. This is a watershed moment. The barrier to financial services has shifted from "requiring large capital to build credit and infrastructure" to "just writing good code." New projects can directly access Ethereum’s global liquidity and security mechanisms at very low costs, focusing all efforts on product experience rather than tinkering with underlying systems.

**Eliminating the Three Major Frictions**

Economists categorize transaction costs into three types: coordination friction, transfer friction, and trust friction.

For coordination, traditional methods involve intermediaries, complex negotiations; Ethereum uses open market protocols and decentralized mechanisms to enable direct connection between parties. Transfers become instant and transparent, and trust comes from code rather than institutional ratings—this is the true game changer.