Hi Ben, It has been a while since I read your newsletter and I recognize that you are the absolute best. I really like the way you narrate. Very good.
I would like to bring up the ETH supply shock: I have yet to read the EigenLayer paper, so I won't go too far and just focus on what Burn and PoS are capable of.
When EIP-1159 was introduced it was August 2021, at that time ETH issuance was derived from PoW, when the market experienced year-end rally (no euphoric peak) net issuance was ~3.25k ETH/Day (I calculated November/December).
Before EIP-1159 the issuance was ~13k ETH/Day, in that case the issuance decreased by 75%, already this is a big supply shock and, in my opinion, we have the effect seen indirectly by how ETH held the lows after June 2022.
But with the introduction of PoS, there was a further reduction in supply which brought the net issuance from September 2022 to all of Q1 2023 negative and, in other cases, tending towards zero.
In this case, however, the market is not crazy, the rapid growth in prices you mention has yet to arise and we are already seeing a negative decline in supply.
So, from my point of view, a great narrative could come from the supply shock generated by the euphoria of the moment, with high gas prices and massive grid usage. In that case the Net Issuance will take negative proportions that we haven't experienced yet.
Don't you think this kind of narrative could be stronger than EigenLayer re-staking?
Hi Ben, It has been a while since I read your newsletter and I recognize that you are the absolute best. I really like the way you narrate. Very good.
I would like to bring up the ETH supply shock: I have yet to read the EigenLayer paper, so I won't go too far and just focus on what Burn and PoS are capable of.
When EIP-1159 was introduced it was August 2021, at that time ETH issuance was derived from PoW, when the market experienced year-end rally (no euphoric peak) net issuance was ~3.25k ETH/Day (I calculated November/December).
Before EIP-1159 the issuance was ~13k ETH/Day, in that case the issuance decreased by 75%, already this is a big supply shock and, in my opinion, we have the effect seen indirectly by how ETH held the lows after June 2022.
But with the introduction of PoS, there was a further reduction in supply which brought the net issuance from September 2022 to all of Q1 2023 negative and, in other cases, tending towards zero.
In this case, however, the market is not crazy, the rapid growth in prices you mention has yet to arise and we are already seeing a negative decline in supply.
So, from my point of view, a great narrative could come from the supply shock generated by the euphoria of the moment, with high gas prices and massive grid usage. In that case the Net Issuance will take negative proportions that we haven't experienced yet.
Don't you think this kind of narrative could be stronger than EigenLayer re-staking?
good..!!