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 The fact that the institutions you mentioned feel threatened by ETH means it is taking money out of the hands of the middle men/gov in a way that Bitcoin clearly hasn't managed to. I think PoS actually makes ETH more resilient to 51% attacks than PoW because of UASF/HF mechanisms
@PierceARK "taking money out of the hands of middle men" which is a reasonable description of the promise of defi is different from "taking money out of the hands of government" which is where bitcoin is competing
@PierceARK government(s) have been trying to figure ways to hobble bitcoin from the start the promise of the network is that, even with a nation-state's resources against--see China declaring it illegal to mine for example due to the threat it imposes on the money monopoly--bitcoin persists
@PierceARK here, the point I'm making is that proof of stake makes the network more presumable and their are entities with much cleaner and more direct motives to pressure policy against it (than there are entities incentivized to maintain the gov'ts monopoly on money.)
@wintonARK Pressure motives may be more direct in PoS vs PoW, but if the gov does pressure inst. to censor tx and the inst. comply, theyll be slashed out. Short term turmoil, yes. Long term failure I dont think so. PoS was thoughtfully designed to prevent this arxiv.org/pdf/2003.03052…