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Today marks 3 years since Ethereum’s Merge. One of the biggest technological achievements ever.
A network securing billions in assets switched from Proof-of-Work to Proof-of-Stake with 0 downtime.
The effects?
- Energy use ↓ 99.8%
- ETH issuance lower than the Gold mining rate
A network securing billions in assets switched from Proof-of-Work to Proof-of-Stake with 0 downtime.
The effects?
- Energy use ↓ 99.8%
- ETH issuance lower than the Gold mining rate
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ETH is an app on Ethereum that inherits *all* of its properties 1:1.
So, ETH as a future proof store of value requires Ethereum to become a future proof sanctuary for value.
This will further inspire other assets to seek shelter in the sanctuary, and be backed by ETH.
PQAI.
So, ETH as a future proof store of value requires Ethereum to become a future proof sanctuary for value.
This will further inspire other assets to seek shelter in the sanctuary, and be backed by ETH.
PQAI.
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ETH is also the most used app on Ethereum with over 300M direct ETH transactions in the last year alone
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Why does the world need another blockchain?
I get this question a lot since I started working on Vision Chain at Bitpanda. So we made a video series about it.
Here’s episode 1, in German with English subtitles.
Reasons: We have a big German speaking Community and I would love take them on the journey on how we’re doing it at Bitpanda.
So watch the video <3
BUT: If you’re too lazy - the tl;dr is below!
Build your own chain only if you need your own rules, want your product to feel like one thing instead of ten, and still want to stay connected to a bigger network.
If an existing chain already gives you that, launch on it.
And even if you do need your own, there’s a catch.
A new chain starts empty, and filling it is not that easy. For us, that’s where institutional demand and a clear regulatory framework come in.
Next time I'll talk about the foundation, answering the question whether you should built a completely new chain or build on top of an existing one :))
I get this question a lot since I started working on Vision Chain at Bitpanda. So we made a video series about it.
Here’s episode 1, in German with English subtitles.
Reasons: We have a big German speaking Community and I would love take them on the journey on how we’re doing it at Bitpanda.
So watch the video <3
BUT: If you’re too lazy - the tl;dr is below!
Build your own chain only if you need your own rules, want your product to feel like one thing instead of ten, and still want to stay connected to a bigger network.
If an existing chain already gives you that, launch on it.
And even if you do need your own, there’s a catch.
A new chain starts empty, and filling it is not that easy. For us, that’s where institutional demand and a clear regulatory framework come in.
Next time I'll talk about the foundation, answering the question whether you should built a completely new chain or build on top of an existing one :))
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I want to sharpen my own thinking around why I think ETH has the potential to become the best SoV in the world.
Would love to hear arguments for/against any of my conclusions!
First things first - at it's current stage, I cannot confidently call ETH the best SoV, yet.
Why?
- eats are real
- Price action in the past 5 years was worse than other SoVs
BUT, imho it has the best chances to become the leading SoV.
The AI and PQ threat is being worked on full steam - the Ethereum community agrees that this has top priority.
Once Ethereum has successfully transitioned to post-quantum cryptography, I currently don't see any other asset with better properties.
This transition could quickly grow the assets adoption (esp. if cryptography of banks and tradfi start to fail).
When I compare ETH against other SoV contenders, I'm coming to the following conclusions:
ETH vs real estate
- reals estate isn't transportable (I cannot just bring it with me when I travel/move)
- real estate markets are more inefficient
- local factors might heavily influence the value appreciation/depreciation of my property
- upkeep costs are necessary (but generally lower than the generated rental income) and are dependent on availability of workers
ETH vs Fiat
- higher inflation (varies by country, but basically all have them)
- depending on the currency, there might be issues with accessibility
- one would need to pick a basket of currencies in order to diversify geopolitical risk properly
- dependent on decisions from central banks
ETH vs Gold
- gold is hard to verify, hard to break down into smaller amounts, and harder to trade in general
- you cannot easily transfer gold without a physical handover
- won't be useful to AI agents
ETH vs BTC
- ETH is programmable, which allows you to use your ETH natively on the underlying blockchain (Ethereum) whereas swapping/borrowing/lending BTC introduces additional trust assumptions (because Bitcoin chain is a ledger for token transfers and you'd have to go through centralized exchanges or other 3rd parties for more expressivity)
- Bitcoin is also working on PQ solutions (BIP-360 & BIP-361), but the migration path appears less defined compared to Ethereums more explicit and time-bound roadmap
- Bitcoin's fixed supply and declining PoW block rewards create an unresolved long-term security-budget question
Other pro ETH points
- it's programmable
- it's green
- it has the coolest brand (the logo is just amazing and goes with anything)
- it is productive (i.e. it can generate a native staking yield)
As mentioned, would love to discuss this publicly to sharpen my own thinking.
Also: never put all your eggs in the same basket. Even if one asset has the best "properties", it doesn't mean that the chance for success is 100% - there are always risks involved.
Would love to hear arguments for/against any of my conclusions!
First things first - at it's current stage, I cannot confidently call ETH the best SoV, yet.
Why?
- eats are real
- Price action in the past 5 years was worse than other SoVs
BUT, imho it has the best chances to become the leading SoV.
The AI and PQ threat is being worked on full steam - the Ethereum community agrees that this has top priority.
Once Ethereum has successfully transitioned to post-quantum cryptography, I currently don't see any other asset with better properties.
This transition could quickly grow the assets adoption (esp. if cryptography of banks and tradfi start to fail).
When I compare ETH against other SoV contenders, I'm coming to the following conclusions:
ETH vs real estate
- reals estate isn't transportable (I cannot just bring it with me when I travel/move)
- real estate markets are more inefficient
- local factors might heavily influence the value appreciation/depreciation of my property
- upkeep costs are necessary (but generally lower than the generated rental income) and are dependent on availability of workers
ETH vs Fiat
- higher inflation (varies by country, but basically all have them)
- depending on the currency, there might be issues with accessibility
- one would need to pick a basket of currencies in order to diversify geopolitical risk properly
- dependent on decisions from central banks
ETH vs Gold
- gold is hard to verify, hard to break down into smaller amounts, and harder to trade in general
- you cannot easily transfer gold without a physical handover
- won't be useful to AI agents
ETH vs BTC
- ETH is programmable, which allows you to use your ETH natively on the underlying blockchain (Ethereum) whereas swapping/borrowing/lending BTC introduces additional trust assumptions (because Bitcoin chain is a ledger for token transfers and you'd have to go through centralized exchanges or other 3rd parties for more expressivity)
- Bitcoin is also working on PQ solutions (BIP-360 & BIP-361), but the migration path appears less defined compared to Ethereums more explicit and time-bound roadmap
- Bitcoin's fixed supply and declining PoW block rewards create an unresolved long-term security-budget question
Other pro ETH points
- it's programmable
- it's green
- it has the coolest brand (the logo is just amazing and goes with anything)
- it is productive (i.e. it can generate a native staking yield)
As mentioned, would love to discuss this publicly to sharpen my own thinking.
Also: never put all your eggs in the same basket. Even if one asset has the best "properties", it doesn't mean that the chance for success is 100% - there are always risks involved.
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Thank you Sergey! I agree, though I wonder whether this is just a temporary issue (next 2-5 years) or a longterm challenge?
At the same time, Bitcoins reluctance to change also bears risks, or what do you think?
At the same time, Bitcoins reluctance to change also bears risks, or what do you think?
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@sergeyshemyakov what's your view on the issues regarding Bitcoin's security budget?
x.com/web3_data/stat…
x.com/web3_data/stat…
How do you think Bitcoin will pay it's miners once the block rewards are gone?
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Supply inflation doesn’t preclude an asset from being a SoV
Gold supply inflates @ ~1.5%
ethereum:native supply inflates @ ~0.8%
Gold supply inflates @ ~1.5%
ethereum:native supply inflates @ ~0.8%
If $ETH is a store of value, why does it keep inflating? Doesn’t that make it just like the inflationary fiat it was designed to escape?
Maybe the solution to all our problems is a bitcoin L2 after all
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@grok thank you. What would a single transaction cost the user?
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Mhh seems like Grok got tired. Here is chatGPTs answer.
@bellnatalie101 I totally get your point, but as of right now, no one can know whether this will work out. The numbers we have so far aren't super optimistic and paying $50++ for a transaction is steep for normal users.
And especially with so much Blockspace avaains like Ethereum.
@bellnatalie101 I totally get your point, but as of right now, no one can know whether this will work out. The numbers we have so far aren't super optimistic and paying $50++ for a transaction is steep for normal users.
And especially with so much Blockspace avaains like Ethereum.
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Transaction fees will eventually become miners’ main income as block rewards decrease, especially as Bitcoin adoption and network activity grow.
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@grok how high are Bitcoin's transaction fees per month? What's their share of current miners revenue? Will transaction fees alone be enough to pay miners? Do you think Bitcoin might ultimately have to tweak it's supply cap to keep the network secure?
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To make it clear
I’m not saying inflation is a problem
I’m not even saying ETH is a bad investment or will not go to $10k
I’m simply saying it *isnt* a productive asset
Printing tokens and handing them out to stakers isn’t productivity
I’m not saying inflation is a problem
I’m not even saying ETH is a bad investment or will not go to $10k
I’m simply saying it *isnt* a productive asset
Printing tokens and handing them out to stakers isn’t productivity
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ETH staking rewards are attractive, but Bitcoin’s predictable supply and scarcity make it more appealing to me for long-term value. I prefer monetary certainty over relying on staking to offset inflation.
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I agree it’s needed to pay for security but calling inflation ‘productivity’ is factually wrong
ETH is not a productive asset when it generates ~zero revenue
It used to be a productive asset
ETH is not a productive asset when it generates ~zero revenue
It used to be a productive asset
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Not sure if I'd call $30-50M in chain fees per quarter zero?
And I'll stand by choice of words here.
If you stake your ETH, you gain more than the tiny inflation that is currently happening.
Also, what other asset doesn't have inflation?
- Gold is at roughly 2%
- Bitcoin is at 0.8%
- Fiat is somewhere between 2-6%
Why is it an issue if unstaked ETH has 0.86% inflation? I have a hard time understand this argument.
And I'll stand by choice of words here.
If you stake your ETH, you gain more than the tiny inflation that is currently happening.
Also, what other asset doesn't have inflation?
- Gold is at roughly 2%
- Bitcoin is at 0.8%
- Fiat is somewhere between 2-6%
Why is it an issue if unstaked ETH has 0.86% inflation? I have a hard time understand this argument.
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How is it ‘productive’ to print tokens and hand out inflation. That’s literally the opposite of productivity by definition
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It's an unnecessary worry, and not directly related to how we define SoV.
It's like saying your house isn't worth its market value because of fire risk.
It's like saying your house isn't worth its market value because of fire risk.
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Yes, I'd argue real estate has more risks to loose it's value than gold (because of things like fire).
And at the same time I'd argue real estates SoV properties are more robust when it comes to AI/PQ threats than when it comes to digital assets like BTC and ETH.
And at the same time I'd argue real estates SoV properties are more robust when it comes to AI/PQ threats than when it comes to digital assets like BTC and ETH.
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Why are we doubting that eventual solution?
The whole world will move to post-quantum, not just Ethereum. It’s a given.
The whole world will move to post-quantum, not just Ethereum. It’s a given.
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I'm not doubting that we will pull it off. I hold ETH.
But it wouldn't be very honest imho to act like the chance of quantum attacks is 0%.
The risk-reward ratio will obviously shift once quantum proof cryptography is in place.
But it wouldn't be very honest imho to act like the chance of quantum attacks is 0%.
The risk-reward ratio will obviously shift once quantum proof cryptography is in place.
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Had a great week at Devcon in Mumbai - but it also feels really really good to be back :)
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There’s something so enjoyable about chopping wood. I look forward to it when I go camping.
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Why is the quantum related to SoV? It shouldn’t. It’s a challenge ahead that will be solved. It doesn’t directly relate to ETH’s properties because it doesn’t change them.
Is ETH a Store of Value? Yes & No.
No, in the traditional sense, but Yes, in the non-traditional view. Here’s why.
ETH is not a traditional store of value because:
1. Severe price volatility risks short-term capital.
2. Mutable monetary policy lacks a fixed supply cap.
3. No physti-century track record.
Yet, ETH successfully functions as a modern, non-traditional store of value:
1. Productive Capital & Endogenous Yield: Through Proof-of-Stake, ETH generates native staking yields (~3%). This baseline cash flow structurally offsets token dilution and provides programmatic returns without lending to centralized intermediaries.
2. Pristine Collateral of Decentralized Finance: In smart-contract finance, ETH acts as the primary, censorship-resistant reserve asset. Tens of billions back lending markets, stablecoin minting, and cross-chain settlements with minimal credit risk. Trillions in flows across the various players and instruments.
3. Technological Deflation & Computational Command: As Layer-2 scaling expands through data blobs, the cost of blockspace drops. Rather than losing value, 1 ETH commands drastically more computational throughput over time, preserving its internal purchasing power over the world’s largest decentralized computing platform.
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Imo it's very related as long as it isn't solved. Gold doesn't have to fear quantum or new-math attacks. Ethereum at it's current stage does have more attack surface here.
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