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SotN #44: Modeling Ultra Sound Money | Justin Drake

Bankless
268K subscribers
19K views 4 years ago State of the Nation
Justin Drake is a researcher at the Ethereum Foundation and is leading the charge of applied cryptography to the Ethereum network. This is the third time Justin has come on the podcast. If you haven't yet, dive into our first two episodes with Justin, 'The Bull Case for Cryptography' and 'Ultra Sound Money.' This episode rolls out how we can understand Ultra Sound Money using data-driven models. ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ 🎖 CLAIM YOUR BADGE: https://newsletter.banklesshq.com/p/-... ------ BANKLESS SPONSOR TOOLS: 💰 GEMINI | FIAT & CRYPTO EXCHANGE https://bankless.cc/go-gemini 🔀 BALANCER | EXCHANGE & POOL ASSETS https://bankless.cc/balancer 👻 AAVE | LEND & BORROW ASSETS https://bankless.cc/aave 🦄 UNISWAP | DECENTRALIZED FUNDING http://bankless.cc/uniswap ------ 📣 DHARMA | From Dollars …...more
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SotN #44: Modeling Ultra Sound Money | Justin Drake
577Likes
19,103Views
2021Apr 28
Justin Drake is a researcher at the Ethereum Foundation and is leading the charge of applied cryptography to the Ethereum network. This is the third time Justin has come on the podcast. If you haven't yet, dive into our first two episodes with Justin, 'The Bull Case for Cryptography' and 'Ultra Sound Money.' This episode rolls out how we can understand Ultra Sound Money using data-driven models. ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ 🎖 CLAIM YOUR BADGE: https://newsletter.banklesshq.com/p/-... ------ BANKLESS SPONSOR TOOLS: 💰 GEMINI | FIAT & CRYPTO EXCHANGE https://bankless.cc/go-gemini 🔀 BALANCER | EXCHANGE & POOL ASSETS https://bankless.cc/balancer 👻 AAVE | LEND & BORROW ASSETS https://bankless.cc/aave 🦄 UNISWAP | DECENTRALIZED FUNDING http://bankless.cc/uniswap ------ 📣 DHARMA | From Dollars to DeFi in a Tap! https://bankless.cc/dharma ------ State of the Nation #44: Modeling Ultra Sound Money Guest: Justin Drake This is Justin's third appearance on Bankless. His first, The Bull Case for Cryptography, went in-depth into cryptographic hashes and digital signatures, the basic tools used to build blockchains. The second, Ultra Sound Money, presented a thematic overview for the Ethereum economic engine. In this episode, we model Ultra Sound Money and what upcoming upgrades to Ethereum mean for issuance, supply, and staking vs. mining. Justin recently released four models cover the granular data-driven details of what Ultra Sound Money Means. These models deal with Ether's three main cashflows: Issuance, Supply, and Collateral. Justin argues that with the massive efficiency improvements to the Ethereum Network with Proof-of-Stake, Ether issuance will decrease by upwards of 90% and will proportionally reduce sell pressure from miners. He posits that ETH's peak supply will be 120M total Ether, and EIP-1559's burning mechanism will eventually reduce the total supply of ETH down to 100M. Justin also expects the APR for staking Ethereum to be 25% following the Ethereum 2 merge. We visualize what these numbers mean by combining the Ethereum Economic Engine metaphor, Triple Point Asset thesis, and viewing capital as having an inherent temperature. Cold ETH means that it is locked up, securing the network and/or reducing total liquid supply. Hotter ETH is that which is actively available for use, but much of this ETH is vaporized through EIP-1559's fee burn mechanism. Therefore, on both ends of the temperature spectrum, supply & issuance are optimized via staking and fee burn. Every episode with Justin is a deep exploration of the technicals that back Ethereum's memes of being a Triple Point Asset and Ultra Sound Money. However, understanding the models Justin lays out is cause for optimism on Ethereum's future as a vastly improved economic system. The State of the Nation this week is 'Ultra Bullish' – dive in to find out why. ------ Topics Covered: 0:00 Intro 6:30 The Bankless Hat Trick 9:30 Ether the Triple Point Asset 11:45 The Temperature Metaphor 16:45 A Balanced Ecosystem 22:35 A Model for Understanding 24:51 Three Cashflows 27:37 Understanding the States 32:20 The Four Models 38:25 Model 1 - Supply 49:25 Model 2 - 100M Total ETH 55:27 Model 3 - Reducing Sell Pressure 1:05:00 Model 4 - Staking APR 1:17:10 How soon could this happen? 1:22:30 Estimating the Merge 1:26:00 Mach Speed ETH 1:31:40 Closing & Disclaimers ------ Resources: Model #1: ETH peak supply model https://docs.google.com/spreadsheets/... Model #2: The road to 100m ETH supply https://docs.google.com/spreadsheets/... Model #3: Net buy pressure https://docs.google.com/spreadsheets/... Mode #4: staking APR with EVM fee rewards https://docs.google.com/spreadsheets/... The Bull Case for Cryptography https://shows.banklesshq.com/p/-moon-... Ultra Sound Money https://shows.banklesshq.com/p/-ultra... Justin on Twitter https://twitter.com/drakefjustin?s=20 ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/b...
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State of the Nation
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Bankless

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