Ethereum EIP 1559 - The Key to $10,000+ ETH?

in Threespeak27 days ago

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I want to talk about an exciting development in the works for Ethereum called EIP 1559.

In this video I'll explain what it is, and why it could potentially launch the price well beyond $10,000 in the future.

Link to David's article: https://medium.com/@TrustlessState/eip-1559-the-final-puzzle-piece-to-ethereums-monetary-policy-58802ab28a27

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I hate the bid system. It's one of the biggest downsides of using cryptocurrencies as media of exchange. That Ethereum gets rid of that is great news. Also, thank you for bringing the proposal to burn the fees to our attention. This will certainly have an impact on my investment decisions going forward.

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Yeah the proposition of burning the fees is certainly a big deal. My pleasure!

The EIP 1559 will turn Eth into the biggest value investment ever, warren buffet style.

Basically, businesses on eth will compete for blockspace. This will increase gas price and will increase the amount of burnt ETH.

This in turn will reduce the Eth supply (deflation) and push the price up. Once this starts happening, business will pay higher and higher prices in dollars, even if fees stay the same in terms of ETH.

This is key, because rising prices of fees will kill the weakest business (games, social medias, etc), while DeFi business will probably survive.

Once businesses start to die, it will free up some blockspace and reduce the amount of coins burned. This will stop the deflation and stabilize prices, probably with a 0% inflation, if businesses have a low turnover.

Now the key question is, at what price will the inflation be 0%? We know that if we had the EIP with today's use, Eth would be burned net. So that price is higher.

To calculate that price, one must know and understand the business model of the biggest players on ETH, and then estimate how much they would be willing to pay in fees per year.

Interesting to see how the market will treat this opportunity.

Interesting indeed!

Good information, I wasn't aware of this development.

Personally I think the streamlining of the UX is more important than deflationary pressure.

Deflation in economics can stunt growth rather than increasing valuation because potential new users see it as a bad deal to enter the game "late", turning it into a Greater Fool's Theory scenario.

That being said this whole deflationary thing seems to be a backbone of most crypto economics so who knows how it will actually turn out.