Looking Forward - The Daily Gwei #423
We just have to keep moving forward.
Alright so we all know that the crypto market isn’t doing too hot right now and the macro environment isn’t doing us any favors either. But who cares - does the short to medium term price action really matter if you’re a long-term fundamentals-based inveestor? Of course it doesn’t and nothing has fundamentally changed when it comes to Ethereum’s value prop - in fact, it’s only gotten stronger.
I want to break down Swagtimus’ tweet above because it’s a really good one - let’s focus on the first about how ETH is going to head into net deflationary territory once The Merge happens in about 6 months. Of course, issuance of ETH has already had periods of deflation under the current PoW regime and sometimes we’ve had a whole week where more ETH was burned than was issued. Post-merge, and assuming the current network demand stays the same as it is now, ETH will be net deflationary all the time. Oh and validator withdrawals won’t be enabled until around 6 months after The Merge so there will be no new issuance hitting the market for at least this amount of time. I don’t think I have to spell out why this is very bullish for ETH and Ethereum.
Next up, Swagtimus mentions all of the metrics that are still heading up and to the right even though the markets are quiet. Layer 2’s in particular continue to see healthy growth with both Arbitrum and Optimism processing record level of transactions over the last week and continuing to onboard plenty of apps. The NFT ecosystem still seems to be doing very well and it also seems to be mostly detached from the wider market and has a mind of its own - this probably has to do with the fact that the NFT audience is very different to those who play in DeFi.
And finally, we can reflect on how this is all very very different to 2017 and 2018. Back then, DeFi was an extremely niche field within crypto with only a very small number of people building products or even caring about it (Maker, 0x, Uniswap etc). The biggest NFT project was CryptoKitties (which was tiny by todays standards) and scaling Ethereum was mostly considered a “nice-to-have” rather than an urgent need (because fees were very cheap 99% of the time). Oh and ETH was no where near deflationary nor were many people taking ETH’s monetary properties very seriously (that came later - mostly in 2019). We’ve come a pretty long way huh?
No matter which way you slice it, the future is extremely bright for the Ethereum ecosystem. It really doesn’t matter what the price does in the short to medium term - it’s all noise - what matters is that the value of the Ethereum network trends up over time based on how useful it is to an increasing number of people. This has always been the case and will always be the case - so if you want ETH to go up in value, it might be time to start building!
Have a great day everyone,
Anthony Sassano
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All information presented above is for educational purposes only and should not be taken as investment advice.
I'm a fundamentals-based too. The on-chain metrics / network health still looks good for many projects.