hey Sam, great write-up -- I agree with the decreasing ETH sell pressure post merge, but I don't think blockchain value is derived from "profitability," but rather the demand to use the network
so while the merge will likely increase token price by lowering supply (token value = network value / tokens), I'd argue it doesn't directly impact network value
Demand to use a network does drive value. Profitability is simply a measure of converting the demand into economic value. I believe Ethereum needs to create economic value for its token holders. The network is reliant on validators. Validators do their role to receive token rewards. If those tokens are valuable because of the greater fool theory, the network is less secure. If the tokens are valuable because they create economic value for token holders, the network is more secure.
Ah I think you're referring to the staking yield? But isn't the value of the yield first dependent on the value of the token's utility (demand for ETH)?
I agree it'll create a more attractive token for validators to hold (less inflationary), but not sure ETHs value was previously tied to greater fool theory (was tied to demand to use the network).
I walk through my thinking in the post below, would love your thoughts!
hey Sam, great write-up -- I agree with the decreasing ETH sell pressure post merge, but I don't think blockchain value is derived from "profitability," but rather the demand to use the network
so while the merge will likely increase token price by lowering supply (token value = network value / tokens), I'd argue it doesn't directly impact network value
Hi David. Thanks for the kind words and comment!
Demand to use a network does drive value. Profitability is simply a measure of converting the demand into economic value. I believe Ethereum needs to create economic value for its token holders. The network is reliant on validators. Validators do their role to receive token rewards. If those tokens are valuable because of the greater fool theory, the network is less secure. If the tokens are valuable because they create economic value for token holders, the network is more secure.
Ah I think you're referring to the staking yield? But isn't the value of the yield first dependent on the value of the token's utility (demand for ETH)?
I agree it'll create a more attractive token for validators to hold (less inflationary), but not sure ETHs value was previously tied to greater fool theory (was tied to demand to use the network).
I walk through my thinking in the post below, would love your thoughts!
https://omnida.substack.com/p/why-do-tokens-have-value