Great report as always! Thank you, Alex...Quick question: How do factors such as Ethereum’s switch to POS and its maximum supply becoming unlimited (as I understand) impact the dynamics of M0 and M1 outlined in your report and on Eth’s price in general? Thank you
Nice Q there. I avoided talking about ETH's monetary policy to stay focused on the supply discussion... and bc I would sound like an ETH maxi if I got into it - meaning it has one of the best policies in the space to date imo.
As far as ETH's PoW to PoS transition, it was very good. For a miner, the usage of ETH is to pay capital expenses in a non-ETH economy (electricity, hardware, rent). So the transition not only puts a cap on supply, it puts network rewards in the hands of those that apply ETH to higher forms of usage.
And while the supply cap seems great at first blush.. it does have a double edge sword. As gas fees rise, it hinders development... it's economy inflation on steroids. High inflation, reduced output -> stagflation. All blockchains fall victim to this... However, Ethereum wants this because it transitions development to L2s. This is part of their plan.
This allows Ethereum to undergo deflationary dynamics (advances in tech -> lower gas costs / higher throughput) while its token becomes deflationary as well. I don't think the community appreciate how wise this is... It's a conscious decision that will push development ot L2s and not damage its monetary thinking.
What this will ultimately do is encourage higher forms of usage for ETH as this L1 becomes the more expensive part of town. I expect ETH yields to rocket as ETH will get unstaked in time to go seek higher forms of yield throughout the ecosystem.
Great report as always! Thank you, Alex...Quick question: How do factors such as Ethereum’s switch to POS and its maximum supply becoming unlimited (as I understand) impact the dynamics of M0 and M1 outlined in your report and on Eth’s price in general? Thank you
Thanks, Alex
Nice Q there. I avoided talking about ETH's monetary policy to stay focused on the supply discussion... and bc I would sound like an ETH maxi if I got into it - meaning it has one of the best policies in the space to date imo.
As far as ETH's PoW to PoS transition, it was very good. For a miner, the usage of ETH is to pay capital expenses in a non-ETH economy (electricity, hardware, rent). So the transition not only puts a cap on supply, it puts network rewards in the hands of those that apply ETH to higher forms of usage.
And while the supply cap seems great at first blush.. it does have a double edge sword. As gas fees rise, it hinders development... it's economy inflation on steroids. High inflation, reduced output -> stagflation. All blockchains fall victim to this... However, Ethereum wants this because it transitions development to L2s. This is part of their plan.
This allows Ethereum to undergo deflationary dynamics (advances in tech -> lower gas costs / higher throughput) while its token becomes deflationary as well. I don't think the community appreciate how wise this is... It's a conscious decision that will push development ot L2s and not damage its monetary thinking.
What this will ultimately do is encourage higher forms of usage for ETH as this L1 becomes the more expensive part of town. I expect ETH yields to rocket as ETH will get unstaked in time to go seek higher forms of yield throughout the ecosystem.