EthFinance

1/ There is a famous investment truism that every day that you don’t sell is a day that you buy. As an early adopter, long-time hodler, and solo staker of ETH, I often remind myself that by not selling, I am constantly reinvesting in ETH. And in doing so, I keep examining my alignment with the Ethereum vision. A personal 🧵:

2/ There are weeks where the relentless FUD challenges my belief in Ethereum, especially as some of it is irrefutable. For example, the ETH/BTC ratio has been down only for two consecutive years now.

PhD in aviation ∩ climate science | Aviator, diver, ETH maxi, nexialist | Host of /diving /ethfinance /eth-staker /geopolitics /science /singapore /thomas

2/ There are weeks where the relentless FUD challenges my belief in Ethereum, especially as some of it is irrefutable. For example, the ETH/BTC ratio has been down only for two consecutive years now. https://x.com/evan_ss6/status/1846592303143776269

But, I'm quite interested in the question as a thought experiment.

Relative to the rough cultures bitcoin and Ethereum have settled on, too.

Bitcoin has the carnivore diet, guns loving, libertarian and drug user vibe.

Ethereum is the tree-hugging hippie who wants to go global and be inclusive.

Bitcoiners are quite ridiculous to sophisticated people. Yet it's not a barrier for the bitcoin asset.

Ethereans are more serious about business. However there's Vitalik, our 30 years old guide - a baby to baby boomers, and an attack vector for bitcoin propaganda making him as a sort of defacto CEO with controlling share.

Hearing some version of the above, several times, in good faith, by reasonably intelligent elderly investors gives me appreciation for the case a blockchain needs an anon founder.

I don't agree with it, mind you, and I would never trade 1 Buterin for 1 MassAppeal.

But it's interesting to think of.

Ethereum's culture of openness has yet to manage making everyone feel welcome.

3/ But then I remind myself that this particular metric is not meaningful to me. I don’t measure Ethereum’s success as a ratio of its native token’s price over that of Bitcoin, for the same reason that I don’t judge a fish by its ability to climb a tree. Bitcoin can chart its own path independently of Ethereum, and vice versa. They serve different use cases, markets, and cultures, and I know which one I belong to:

3/ But then I remind myself that this particular metric is not meaningful to me. I don’t measure Ethereum’s success as a ratio of its native token’s price over that of Bitcoin, for the same reason that I don’t judge a fish by its ability to climb a tree. Bitcoin can chart its own path independently of Ethereum, and vice versa. They serve different use cases, markets, and cultures, and I know which one I belong to: https://warpcast.com/phimarhal/0x3cded1c5

4/ If you think this is just cope and that the ratio matters, listen to @justindrake remind us of the importance of zooming out. At ICO, one BTC bought us 2,000 ETH. Now, one BTC buys not even 20 ETH. ETH has outperformed BTC 100x over the period.

5/ The other source of nagging doubt is whether the fat protocol thesis (“value accrues to the Ethereum network”) will prevail over the thin protocol thesis (“value accrues to the L2s and dapps”). Nobody wants to invest in Ethernet, or TCP/IP, even though they carry our entire digital world on their shoulders. They’re commoditized to the extreme.

6/ My answer to this concern is, as often the case, in the middle. We need L2s and dapps to accrue value because that incentivizes innnovation, which itself drives adoption. We also need Ethereum to accrue value because, in a PoS world, its security budget is a function of ETH staked times ETH price. There is no global settlement layer if the token is worthless and/or nobody cares to stake it.

7/ Will we find that sweet-spot equilibrium, and how soon? That’s the burning question these days. I have a distinctively low time preference, so I naturally align with projects that build for a distant but sustainable future over those that give in to short-term hype. Ethereum is one such project.

8/ In particular, I believe it is smart to keep capacity one step ahead of demand. “Build it, and they will come” has been a proven business mantra (consider Dubai as an example). I don’t want L1 blobs to saturate and “price discovery” to make L2 dapp builders search for cheaper L1s. I want blob space to be plentiful and commoditized.

9/ In other words, I’m content with Ethereum shifting from a (historically) high-margin business (low TPS, scarce block space, high gas fees oversized security budget) to a high-volume business (high TPS, plentiful block space, low gas fees, and good-enough security budget).

10/ So I support a roadmap that focuses on scaling *both* L1 and L2s, over one that favors short-term stunts that manifest in extortionary MEV and database-like TPS, at the expense of censorship resistance, credible neutrality, and decentralization.

Possible futures for the Ethereum protocol, part 2: The Surge

https://vitalik.eth.limo/general/2024/10/17/futures2.html

11/ @vitalik.eth’s latest blog post on the scaling roadmap got me enthusiastic again about the long-term future. One where blob space is plentiful and cheap with PeerDAS and 2D sampling, L2s are seamlessly interoperable, rollups are based, the L1 gas limit is increased, and blocks come every eight seconds. One where Ethereum has become the de facto settlement layer for the world.

11/ @vitalik.eth’s latest blog post on the scaling roadmap got me enthusiastic again about the long-term future. One where blob space is plentiful and cheap with PeerDAS and 2D sampling, L2s are seamlessly interoperable, rollups are based, the L1 gas limit is increased, and blocks come every eight seconds. One where Ethereum has become the de facto settlement layer for the world. https://warpcast.com/vitalik.eth/0xc30b89a4

4/ If you think this is just cope and that the ratio matters, listen to @justindrake remind us of the importance of zooming out. At ICO, one BTC bought us 2,000 ETH. Now, one BTC buys not even 20 ETH. ETH has outperformed BTC 100x over the period. https://youtu.be/lrFgjOc_Gkw