2. Optimizing for ETH as fee-burning token would demand compromising decentralization and capture resistance If we decide we actually want to optimize ETH for burning fees to…
Original source excerpt
2. Optimizing for ETH as fee-burning token would demand compromising decentralization and capture resistance If we decide we actually want to optimize ETH for burning fees to justify a present-day ~$…
2. Optimizing for ETH as fee-burning token would demand compromising decentralization and capture resistance If we decide we actually want to optimize ETH for burning fees to justify a present-day ~$270B market cap, then Ethereum would essentially be functioning as a world-scale major corporation - it would be somewhere around L'Oreal (#55). Now, what do *real* major corporations have to do in order to maintain their positions in the long term? 1. They spend. AI estimates L'Oreal as spending ~0.58% of its market cap per year on R&D. This would bankrupt the EF almost immediately. So this would require in-protocol funding to the tune of ~700k ETH per year, with all the political issues that it entails (so validator revenue would get cut by 2/3). And that's just R&D. Corporations have to spend on all kinds of things beyond just cranking out more units of their pre-existing product. 2. They govern. To survive new waves of technology and culture, you have to make highly opinionated choices to go after new markets, make new kinds of products with new features to appeal to people who think in new ways and use the newest technologies. Ethereum would need to have highly interventionist governance, for the long term. Needless to say, both of these are far from conducive to optimizing capture resistance and decentralization. On top of this there is another concern: optimizing for fee burning means optimizing for high gas prices to some degree. This may price out users, including some users who may need privacy and security the most. The price that maximizes price * usage leads to less usage than the price that allows as much usage as possible subject to safe blockchain resource limits.
AI context is not available for this statement. The original source can be read independently.