ETH is a store of value and scaling Ethereum will make it undeniable
As we scale on L1 and L2, there's a couple things to keep in mind about how it affects ETH, tokenomics, and how it's viewed by the world:
- As L1 gas limits and blobs increase, the deflationary threshold decreases proportionally. For example, right now the L1 gas limit is at 36M and the deflationary threshold it 14.5 gwei. At a 300M gas limit the deflationary threshold becomes 1.74 gwei (14.5gwei*36M/300M).
- As it becomes cheaper to use L1 and L2, that scaling creates potential/opportunity for new/different usecases which increases demand. For example, this game or this game where every action is onchain is a new possibility that will fill in low cost blockspace. Unbanked usecases like subscriptions and payment streams such as access to games, blogs, licensing (music, shows, patents, trademarks), services (food delivery, hosting), rentals (physical goods), etc will consume medium cost blockspace. Complex compounded defi strategies and arbitrage will consume high cost blockspace.
- As Ethereum scales and gas prices become lower, the willingness to pay a demand premium increases. For example, if normal gas prices are $0.01 a user will be much more willing to opay a 100% demand premium ($0.02) at times of higher congestion than they would pre-scaling ($5 -> $10). The lower prices get, the more price insensitive people become to congestion pricing.
- These previous 3 points will lead to a substantial increase in burn rate, increasing scarcity and demand of ETH. Increased acceptance and usage of defi will further increase demand for ETH as a credibly neutral and permissionless collateral.
- 30% of ETH supply is locked in staking to secure the network and the activity on top of it, further increasing scarcity and demand for ETH.
- As Ethereum scales and the world comes onchain, this increased demand for ETH will secure it's place as a store of value and carry immense monetary premium.
See you at 6-digit ETH.
submitted by /u/hanniabu
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