Contrasting Philosophies of Bitcoin and Ethereum

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36 - The DeFi Blockspace Cycle | Nic Carter

Nic Carter recently released an article titled "Public Blockchain Fee Cyclicality and Negative Feedback Loops"...

... simplified "transaction fees get higher, and that incentives people transact less, and then that lowers transaction fees and that incentives people to transact more"

According to Nic, there's no equilibrium found upon public blockchains with inflexible block size; the demand to purchase blockspace will always be volatile, across all time frames.

Another perspective: constraints on blockspace availability dramatically impacts the kind of usage that is feasible to happen on the base-layer blockchain.

Transactors who are transacting large transactions will pay for higher fees! This severely impacts the markets that are supported by public blockchains! Constraints on block space are constraints on market participants!

David, Ryan, and Nic go through Nic's process is disecting the data that created these conclusions. Nic gives his perspective as to the ultimate pattern that emerges from this data.

David reads Nic's article aloud on the Bankless YouTube! Useful for listening to the episode! https://www.youtube.com/watch?v=RZ1X_3I5KrI&t=666s

Actions & Resources:

Read Nic’s articles Ethereum’s Fees Mean Choosing Between a World Computer and a Financial Network https://www.coindesk.com/ethereums-fees-mean-choosing-between-a-world-computer-and-a-financial-network

Public Blockchain Fee Cyclicality and Negative Feedback Loops https://medium.com/@nic__carter/public-blockchain-fee-cyclicality-and-negative-feedback-loops-1620141a8a87

The Adaptive Markets Hypothesis Robert Low https://blogs.cfainstitute.org/investor/2017/12/18/the-adaptive-markets-hypothesis-a-financial-ecosystems-survival-guide/

https://www.alphasimplex.com/wp-content/uploads/2004/09/The-Adaptive-Markets-Hypothesis.pdf

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