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hikaru
@hikaru
More “eth is money” narrative. Less “eth is ultrasound money / deflationary” narrative.
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Patrick
@patrickayelle.eth
I’ve never been sold on this eth is money concept. I’ve always looked at bitcoin as holding that primary function. I do however liken eth to oil or the petrol dollar.
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hikaru
@hikaru
The problem with this view is that it would become unsustainable if L1 revenue tends to zero, which would be the case unless scaling is limited.
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Patrick
@patrickayelle.eth
Agreed with the idea of l1 rev to zero. The security of the system would rely on monetary premium if the uses didn’t drive the revenue. But what if the revenue was driven by the use cases and less monetary premium? If ethereum was useful then do you need monetary premium
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hikaru
@hikaru
I do think the use cases on top of ethereum will be very valuable, but this is different from revenue and value capture. Revenue can be fees and mev capture, both of which tend to zero assuming a sufficiently long time frame — even with a valuable ecosystem.
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Patrick
@patrickayelle.eth
Revenue tends to zero in a scenario ethereum is a platform that has many many valuable use cases? Ethereum sells block space. Maybe I am misunderstanding.. are you saying Revenue for block space goes to zero when you have a bunch of use cases competing for that block space?
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hikaru
@hikaru
Yes, the current technical landscape suggests that scaling could effectively reduce L1 fees to negligible levels or, at best, result in weak security. Moreover, there's another problem with revenue-based security, which is systemic complexity, as the app layer might be able to intervene in the consensus layer.
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hikaru
@hikaru
If security was primarily derived from money, then it would be separate and far larger than the value of the ecosystem. Of course, this is based on a long time frame, so you could say it's speculative.
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Patrick
@patrickayelle.eth
Thanks for this thought! I have to digest this.
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