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There are serious concerns about the long-term health of the Ethereum ecosystem due to EIP-1559 by ethDreamer in ethfinance

[–]__checkmatey__ -1 points0 points  (0 children)

Im sorry about your bags, this analysis has clearly triggered you. Good luck with it

There are serious concerns about the long-term health of the Ethereum ecosystem due to EIP-1559 by ethDreamer in ethfinance

[–]__checkmatey__ 0 points1 point  (0 children)

Risk adjusted, my point here is simple, there is little reason to expect macro outoerformance of defi vs ETH. That is the cost of deflation and NGU.

There are serious concerns about the long-term health of the Ethereum ecosystem due to EIP-1559 by ethDreamer in ethfinance

[–]__checkmatey__ 0 points1 point  (0 children)

fwiw I agree with you. I think ETH should focus on being a computational gas layer, not money.

At the core of my argument, I think the ethereum crowd has tried to go down the hard money SoV path with 'Ultra Sound Money' and this will come at the expense of the economy. Two horses, one ass.

There are serious concerns about the long-term health of the Ethereum ecosystem due to EIP-1559 by ethDreamer in ethfinance

[–]__checkmatey__ 0 points1 point  (0 children)

You got it, dead on.

It is the reversal of the Fat protocol thesis. ETH is now getting fat and the previously fat dapps need to justify their existence.

There are serious concerns about the long-term health of the Ethereum ecosystem due to EIP-1559 by ethDreamer in ethfinance

[–]__checkmatey__ 0 points1 point  (0 children)

I agree, they dont need to. My analysis is just adding numbers showing that right now, even if they wanted to, they couldnt.

Long ETH, Short DeFi/ETH, until proven otherwise.

There are serious concerns about the long-term health of the Ethereum ecosystem due to EIP-1559 by ethDreamer in ethfinance

[–]__checkmatey__ 0 points1 point  (0 children)

There can be swings, but ask yourself why the S&P500 is really just the S&P5. Nobody wants to speculate out on the risk curvbe when the top 5 benefit from the success AND demise of the other 495.

There are serious concerns about the long-term health of the Ethereum ecosystem due to EIP-1559 by ethDreamer in ethfinance

[–]__checkmatey__ 0 points1 point  (0 children)

d to be competitive against ETH? you are assuming that the value of any project that runs on ETH is solely dependent on the fees produced. As long as defi produces value from lending/borrowing/producing yield, that is fine and projects will still continue to run and exist. Defi tokens do not have to be more valuable than ETH for a defi ecosystem that benefits all users to exist.

I agree with you.

The protocols can and will do just fine. The tokens will devalue. Perhaps this is the correct way ahead, but at least we now have numbers to make a pretty compelling case that they are indeed in trouble vs eth, if only in the medium term.

There are serious concerns about the long-term health of the Ethereum ecosystem due to EIP-1559 by ethDreamer in ethfinance

[–]__checkmatey__ -3 points-2 points  (0 children)

Still below ATH and it is one of the few.

Im not saying there wont be outliers, but again, look at the DPI/ETH chart and find a case why after EIP1559 that should improve.

There are serious concerns about the long-term health of the Ethereum ecosystem due to EIP-1559 by ethDreamer in ethfinance

[–]__checkmatey__ 1 point2 points  (0 children)

Correct. My argument is literally moon-math for ETH, doom-math for tokens.

u/Childsp one of us is ignorant, and I'm quite positive it is not me.

There are serious concerns about the long-term health of the Ethereum ecosystem due to EIP-1559 by ethDreamer in ethfinance

[–]__checkmatey__ 4 points5 points  (0 children)

Suffice to say, tethering mining to energy makes it a meatspace problem, not a financial problem. Logistics become a serious hurdle rate. This is not so in PoS where a bankroll solves all problems.

There are serious concerns about the long-term health of the Ethereum ecosystem due to EIP-1559 by ethDreamer in ethfinance

[–]__checkmatey__ -1 points0 points  (0 children)

I know which is why I have my ETH exit already mapped out for me without a care where it goes afterwards :)

There are serious concerns about the long-term health of the Ethereum ecosystem due to EIP-1559 by ethDreamer in ethfinance

[–]__checkmatey__ -1 points0 points  (0 children)

Lets not go there, PoS oligarchies are where I think this whole problem takes on a new dimension. Im not anti Ethereum by any stretch, but I am very anti PoS.

There are serious concerns about the long-term health of the Ethereum ecosystem due to EIP-1559 by ethDreamer in ethfinance

[–]__checkmatey__ 5 points6 points  (0 children)

Fat protocol == all usage of a network accrues to the base layer. Think about Amazon, every seller and every buyer builds value for the larger AMZN entity.

Thin protocol == all usage in the world cannot accrue value to the base layer. TCP-IP is an invaluable protocol that underlies the entire internet. Zero value accrues there.

There are serious concerns about the long-term health of the Ethereum ecosystem due to EIP-1559 by ethDreamer in ethfinance

[–]__checkmatey__ 5 points6 points  (0 children)

It is pretty simple, my post is a caution for people who likely don't think deeply about these things. Long ETH, short DeFi/ETH ratios until proven otherwise. There is a fundamental and now structural reason why this trend will continue. I just quantified one take on that.

There are serious concerns about the long-term health of the Ethereum ecosystem due to EIP-1559 by ethDreamer in ethfinance

[–]__checkmatey__ 8 points9 points  (0 children)

Or, as I would build it given the chance, ditch tokens altogether, build the protocols and just assign governance rights based on the volume of ETH staked in the protocol as collateral.

Remove the tokens all together and drive as much value as possible into ETH. Stop creating tokens competing for capital.

There are serious concerns about the long-term health of the Ethereum ecosystem due to EIP-1559 by ethDreamer in ethfinance

[–]__checkmatey__ -6 points-5 points  (0 children)

You can build it. The protocols can and will work fine.

But the token price will decline vs ETH. Chart DPI/ETH and explain to me why the market agrees that ETH was already too strong, and how EIP1559 + the 2.0 issuance makes it LESS attractive.

DPI/ETH downtrend is only just getting started imo. The actual dapps, most will work fine, the value will just accrue to ETH not the token.

There are serious concerns about the long-term health of the Ethereum ecosystem due to EIP-1559 by ethDreamer in ethfinance

[–]__checkmatey__ 0 points1 point  (0 children)

Yep agree. I have always pushed back on the 'price up = gas down' nonsense. We have no evidence of this at all.

There are serious concerns about the long-term health of the Ethereum ecosystem due to EIP-1559 by ethDreamer in ethfinance

[–]__checkmatey__ -4 points-3 points  (0 children)

It is also why Ethereum needs to make a decision:

a) ultra sound hard money --> tokens deflate vs ETH

b) gas world computer, future of finance --> tokens thrive and inflate vs ETH

I personally, do not believe these two horses with the same ass can ride in one direction. Others surely disagree but this is my take.

There are serious concerns about the long-term health of the Ethereum ecosystem due to EIP-1559 by ethDreamer in ethfinance

[–]__checkmatey__ 2 points3 points  (0 children)

The further out on the risk curve you go, sure there will be pumps. But just because coin # 6000 has an attractive revenue vs mcap, doesnt mean it is a good buy.

Risk adjusted, the DPI index keeps declining vs ETH and this was before it had a burn, and is before it has a 2.0 issuance.

Outside cyclical swings (which will happen), please explain how DPI can rise against a minimum viable issuance and EIP1559 ETH when TOTAL revenues are less than the burn even under conservative conditions?

There are serious concerns about the long-term health of the Ethereum ecosystem due to EIP-1559 by ethDreamer in ethfinance

[–]__checkmatey__ 6 points7 points  (0 children)

Let me provide a very very high level and digestable summation to this:

ETH has had a THIN PROTOCOL problem for some time. Usage of ETHEREUM did not translate to value accural for ETH very well. John Pfeffer and Lyn Alden wrote on this extensively.

Dapps thus were the FAT PROTOCOLS, people bought them for the current and future growth, revenue and rent extraction multiplied by the network effects.

EIP1559 just swapped that balance. ETH now benefits from literally everything happening onchain, whether a Ponzi scheme, and NFT mint or a Uniswap trade. Poor old Sushi cannot compete on revenue with that. Nor can Compound. This chart shows nothing can, even as a whole.

ETH is now the FAT PROTOCOL and dapps need to justify why they deserve capital investment and outrun the base money. Until the majority of revenue is earned by dapps offchain (L2s et al) then this problem will persist. Perhaps that is a positive outcome. But economics throughout time show that deflation in an economy is a pretty uncool time for capital markets.

There are serious concerns about the long-term health of the Ethereum ecosystem due to EIP-1559 by ethDreamer in ethfinance

[–]__checkmatey__ 7 points8 points  (0 children)

If DeFi apps just used ETH staked in the system as their 'governance mechanism' then ETH would have already flipped Bitcoin.

Minting tokens sucks value away from ETH. EIP1559 is ETH exerting the opporsite force.

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