Conversation

Keone
@keoneHD
Everyone is watching for the slope of the below line to be consistently negative for Ethereum to be 'ultra sound money' I argue that this is an overly strict requirement, using math to prove it 1/7
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Keone
@keoneHD
Ethereum provides computation and transaction ordering as a service Users and searchers pay for that service; the total revenue is an exogenous variable defined by demand 3/7
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Keone
@keoneHD
Revenue (yield) is distributed among stakers and nonstakers; the split is determined by network policies (block rewards and fee burn) These policies divert more or less yield to stakers, but overall amount of yield is fixed 4/7
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Keone
@keoneHD
There are some clear takeaways The goal of net Ether deflation (Ultrasound Money) is a stricter cond than network profitability/sustainability Its great to make Eth net deflationary (positive real yield for nonstakers) but note the network is already profitable! 6/7
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Keone
@keoneHD
This framework also gives a way of reasoning about other proposals like "Burn all the MEV so it can accrue to tokenholders" If we want more value to accrue to tokenholders there are other simpler ways to do it like cutting block rewards 7/7
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Keone
@keoneHD
Replying to
@tarunchitra
and
@ks_kulk
Cool! What was special about liquidation MEV vs whatever other reasons searchers are paying tips? And yes a deflationary block schedule would be cool, theoretically possible if enough MEV
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Tarun Chitra
@tarunchitra
Replying to
@keoneHD
and
@ks_kulk
Liquidations have a natural feedback loop with prices (e.g. MEV revenue goes up when asset price goes down, which means that the MEV + staked asset numéraire value is higher than just staked asset exactly at the times the staked asset value goes down)
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