TimRobinson,HeadofCryptoResearchatBlueYardCapital,hasunveiledgroundbreakingsimulationsindicatingthatEthereum’simplementationof“blobs”couldbeexceptionallybullishforthelong-termpriceofETH.InaseriesofpostsonX,RobinsonhighlightedhowblobscouldrevolutionizeEthereum’sscalabilityandeconomicdynamics.
“Manypeoplearguingaboutblobs,butsofarnoonehassimulatedhowtheyrespondtodemand…untilnow,”Robinsonstated.“TL;DR:BlobsareinsanelybullishforETHlongterm.”
WhyBlobsAre‘InsanelyBullish’ForEthereumPrice
Blobs,introducedinEthereumImprovementProposal(EIP)-4844,arelargedatastructuresdesignedtoenhancethenetwork’scapacitybyefficientlystoringandprocessingdataoff-chain.ThismechanismispivotalforLayer2(L2)scalingsolutions,enablingthemtoofferlowertransactionfeeswhilemaintainingsecuritythroughEthereum’sconsensus.
Robinson’ssimulationprojectsEthereumoperatingat10,000transactionspersecond(TPS),burning6.5%ofitstotalETHsupplyannually,withL2transactionscostinganaverageof$0.06.Thisscenarioinvolves16MBofblobsperblock,aligningwithEthereumco-founderVitalikButerin’smedium-termgoalsoutlinedinhislatest“TheSurge”post.
“Yes,that’sEthereumoperatingat10kTPS,burning6.5%ayearwhileL2transactionscostanaverageof$0.06,with16MBofblobsperblock,”Robinsonelaborated.“YouthoughtL2’swereparasiticandVitalikdidn’tthinkthisthrough?Ah,sweetsummerchild,littledoyourealizehowinsanethiswillgetwhentheEthereumecosystemreallykicksintohighgear.”
AkeyinsightfromRobinson’sresearchistherapidescalationofETHburningasblobusageincreases.“It’sinterestinghowquicklyblobsgofrombeingfreetoburningatonofETH.Itseemsalmosteveryonedoesn’tunderstandthistippingpoint.Italsomakesmethinktheremightbeabetterpricingmechanism,”heobserved.
RobinsonprovidesasimulationtoolillustratingtheETHburnrate‘sexponentialgrowthasTPSscalesfromthecurrent~180TPSto400TPS.ThedatashowsburnedETHincreasingfromroughly4ETHperdayto1,832ETHperday.
It’sinterestinghowquicklyblobsgofrombeingfreetoburningatonofETH.Itseemsalmosteveryonedoesn’tunderstandthistippingpoint.Italsomakesmethinktheremightbeabetterpricingmechanism.
Here’swhatitlookslikeincreasingfromtoday’s~180TPSto400TPSpic.twitter.com/fjuK19NL6y
—TimRobinson(@timjrobinson)October29,2024
ThescalabilitypotentialisfurtherenhancedbytheimplementationofPeerDataAvailabilitySampling(PeerDAS),whichallowsblobcapacitytoscalewiththenumberofvalidators.“Becausetotalblobcapacityscaleswithtotalvalidators,afterPeerDASisimplemented,blobscanscaleashighasneeded,”Robinsonexplained.“Thereare10k+nodestoshardtheloadbetweenthem.Whileotherecosystemsstruggleunderload,Ethereumwillsupplytheworldwithcheap,abundantblock-spacewhilebeingextremelydeflationary.”
AnintriguingfeedbackloopidentifiedbyRobinsonistheinverserelationshipbetweenETHpriceandtheburnrate.“AnotherinterestingfeedbackloopisthelowertheETHprice,thehighertheburn!Astransactionpricesarelower,moretransactionsaremade,andtheburnsoars,”henoted.“SeehowdifferenttheburniswithETHat$2kvsETHat$10k”.
AnotherinterestingfeedbackloopisthelowertheETHprice,thehighertheburn!Astransactionpricesarelower,moretransactionsaremade,andtheburnsoars.SeehowdifferenttheburniswithETHat$2kvsETHat$10k:pic.twitter.com/tbSbC6unwM
—TimRobinson(@timjrobinson)October29,2024
AddressingthequestionofvalueaccrualforETH,Robinsonstated,“SohowwillETHaccruevalue?Beingthemostuseful,scarce,deflationaryassetwith10,000+teamsusingEthereumtogrowtheirproductswillprobablydoit.Longterm,ETHhasthebestfundamentalsintheworld;itjusttakestimeforthemtoplayout.”
TheresearchsparkedenthusiasmanddiscussionswithintheETHcommunity.Mat(@materkel)commentedonX:“Willbeextremelyinterestingoncewehitblobcapacity.MyguessisalotofL2sstillneedtofigureouthowtohandlethiscaseandproperlyfeetheirusers.Therewillbealotofinefficienciestofix;wejustdidn’treallyhavemultiplecompetingL2sinthisscenariobefore.Oncethedustsettles,we’llhaveproperpricediscoverybothforfeesonL2stogetherwithblobsonL1.”
Robinsonresponded,emphasizingtheimportanceofproactiveanalysis:“Yeah,absolutely!I’mtryingtobringthedatasowecansolveanyproblemsbeforewegetthere.Themarketbecomesmorestablewithmoreblobs,butintheearlydays,feescouldbequitevolatile.”
Atpresstime,ETHtradedat$2,638.
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