Crypto twitter seems very very excited about the Ethereum proof of stake transition. (A triple-halvening! ETHBTC flippening! Earn free yield on your ETH!) Makes me leery.
Sure supply and liquidity shifts could mechanically lever price. But the tornado cash sanctions bold-faced the importance of decentralization. Cheerleading an "upgrade" that discontinuously centralizes Ethereum's security model within that context seems weird (to this observer).
Is your view of Ethereum's likely addressable market in the steady state higher or lower than it was last month? (Leave aside the supply mechanics)
The tornado cash sanctions demonstrated that the administrative state will act arbitrarily, and that ecosystem centralization-vectors within its reach will immediately cater to the state's whim.
Sure tornado cash today, but who's to say they won't demand that ethereum validators censor any uniswap transaction that involves an unregistered security? In the face of such a demand do you expect that staking as a service providers will simply ignore the request?
The more centralized the defi ecosystem becomes the smaller its opportunity-set. Centralization will result in a larger share of associated revenue accruing to regulated facilitators at the expense of the underlying protocol(s).
Goldman is not going to simply sit back and watch its structured product desk get eaten alive by Defi. Nor will brokers, exchanges, custody-banks. Proof-of-stake makes the ethereum ecosystem more pressurable. And the pressure will push finance towards the status quo ante.
@wintonARK What's the DeFi opportunity of Bitcoin? What is the innovation opportunity of Bitcoin? Would we would be shouting about the risks of investing in Tesla if the US Government decided it wanted to regulate FSD usage to only certain roadways?