hadalj.eth.hl

3. Optimizing for ETH as SoV is aligned with decentralization and CROPS Whenever I ask what people appreciate the most about Ethereum (as opposed to either other blockchains, or anything outside the blockchain world), the most common answer is: decentralization and CROPS (censorship and capture resistance, open source, privacy and security). Decentralization and CROPS have a lot of value, even to institutions. For individuals, privacy is often viewed as an abstract ideology. For institutions, it's prudent risk management, data protection law compliance, and a number of other things. Likewise for security. And likewise for running your own node (enterprise buzzword: "on-prem deployment"). But what about for the ETH holder? Well, it depends why you're an ETH holder. If you want ETH to optimally chase financial trends and collect fees from them, then you want a Fearless Leader™ who bravely shouts on the socials that Ethereum loves [insert opportunity here] and will pragmatically reconfigure itself to give it explicit protocol support. But if your primary reason to hold ETH is as an SoV, then you will be judging ETH by SoV-ish metrics. And what is the first and most important SoV-ish metric? To survive. That's what a big chunk of this last Devcon was about ("post-quantum and post-AI"). You want a chain that is taking conservative tradeoffs ("hash-only security, all formally proven, >3x more rounds than known to be necessary for security"). You want a chain that is aiming for at least partial ossification, where the great balance of work will move to higher levels of the stack once the core is complete. You want a chain that aims to minimize protocol politics, by having a very high bar before it accepts either precompiles that bloat the protocol or new kinds of in-protocol rewards that could get captured. What other SoV'ish metrics? The ability to easily hold it safely (hence, work on multisigs). The ability to hold it privately (hence, kohaku work). The ability to hold it privately *and* safely (hence, 8288 and private-AA workstreams already starting). The guarantee that if you have coins, you can send them, and block builders can't stop you (FOCIL) Minimized infrastructure dependence (basically the whole decentralization roadmap, including the fact that I am able to currently run a node on this laptop, and it synced in < 6 hours and takes up only 1/8 of my hard drive - better stats than in 2019!) Now, are there "adoption" goals that are highly synergistic with SoV? Very much so. The more assets there are natively issued on L1, including both RWAs and native decentralized assets, the larger a set of things you can "do" with your ETH, the better. Being able to easily (including safely, trustlessly) convert back and forth between ETH and other assets, use ETH as collateral to do things with other assets, etc, all forms part of the utility of holding ETH. There are still some conflicts between serving these use cases and decentralization (eg. we want to be careful about fast slots and impact on centralization), but on the whole much less than what you get if you maximize fees. Conclusion: The best social reason to care about Ethereum is because it makes decentralization and CROPS properties a reality for more people and uses. The best private reason to hold ETH is its SoV properties, which are a direct consequence of that decentralization and CROPS.

Expanding on why I believe "ETH as store of value (SoV)" makes much more sense to focus on than "ETH as fee-burning token". Three primary reasons: 1. ETH as fee-burning token never was as strong as it seemed 2. Optimizing for ETH as fee-burning token would demand Ethereum and ETH function in ways that are very hard to make compatible with decentralization and capture resistance. 3. Meanwhile, optimizing for ETH as SoV is aligned with Ethereum focusing on its unique strengths (decentralization and CROPS) EIP-1559 (including its burn) is fine and good, we should keep them. But we should not feel sad if fee burn is < 10% of breakeven indefinitely; the value of ETH comes from elsewhere. The core idea: the big thing that people appreciate about Ethereum is decentralization and CROPS. The main pragmatic benefit that these things translate into is stability. SoV is the category where that is not an unneeded extra we merely put effort into for ideological reasons, but rather a pragmatic strength from the perspective of people putting in their assets. And in the era of AI disruption, stability will be highly valued.