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In its relationship to Ethereum it's not fundamentally different from that of Tron. It uses the EVM, it has a bridge for Ethereum assets... The difference is th

In its relationship to Ethereum it's not fundamentally different from that of Tron. It uses the EVM, it has a bridge for Ethereum assets... The difference is that one is marketed as a replacement for Ethereum while the other is marketed as complimentary but behind this veneer they're both essentially direct competitors. It's hilarious how many people in the Ethereum community who would otherwise jump at the throat of any competitor keep falling for this trick ("hard spoon!", "sister network!").

nootropicat 5y ago
Is it really a trick? Crypto is overwhelmingly about narratives. Currently adoption only matters as a way to market the token. Imagine that ethereum wins, and the global economy runs mostly on rollups on eth2 shards. How much is that worth on a PE basis? Let's assume $100M in daily fees. At PE of 20 that gives a nice valuation of $730B - or about $6300 per eth. Maybe 60x - premium for being the only big yield asset that doesn't rely on law to enforce property rights (ie. eth replaces offshore banking). This means eth is already priced for success. The alternative is worse for everyone in crypto, because if the long-term future is multi-chain (ie. pushed out usecases don't go back to ethereum once it's scalable enough, and activity spreads everywhere looking for low fees) then the whole space has almost no ability to extract rent. That would mean the stable fee level is some small margin over actual running costs. Which means total crypto market cap <$10B. Bitcoin, of course, has no fundamental value at all - all it does is make btc buyers poorer because of mining, as a group. Yet it's still the largest crypto. Why? Because it's all about narratives to make people buy the token, thinking they are going to sell it higher to other people that buy for the same reason. Back to matic - what this means in practice is if the project successfully markets itself as a 'small helper' to ethereum, it's going to be valued like that. Eventually, the narrative premium is likely to disappear, and I think at that point either ethereum is valued at 1T-2T in today's dollars, or crypto as a whole collapses >100x. The latter would completely destroy PoW security and make PoS questionable. Is a chain safe if coordinating validators can make 10x by stealing pegged funds even at the cost of destroying their stake? Simple game theory says no, but in practice it may work because stealing is illegal and most validators aren't anonymous - ie. de facto law-based consensus.
- tromp 5y ago
  > or crypto as a whole collapses >100x. The latter would completely destroy PoW security I don't see why. Security depends on the ratio between amounts traded and amounts spent on mining. A 100x price reduction equally affects both. Yes, it becomes 100x cheaper to rewrite history, but the proceeds of any such rewrite are also 100x less, so security is not impacted much. To wit, when Bitcoin was worth only $30, its PoW security was not the least bit destroyed.
- yourabstraction 5y ago
  How come you've completely left out the store of value use case in your price analysis, do you not believe in it? I think there will always be desire for individuals, corporations, and countries to keep a non government store of value on their balance sheets, which should drive a monetary premium for both BTC and ETH.
  - nootropicat 5y ago
    Because store of value must be backed by something, and bitcoin is backed by nothing, so it can't ever become one. It's a meme designed to entice people to buy - the narrative thing. It's a negative sum game, so people who mistakenly think it has value continue to lose wealth in aggregate. This can last for years but not indefinitely. For eth, it's possible, because it's going to generate income, but it's what I meant by the "premium for being the only big yield asset that doesn't rely on law to enforce property rights" bit. In the short run it can go much higher, but I doubt the ability to sustain >100x PE ratios over decades. The likely reply to this is "gold", so let me preempt it. Gold is sustained mostly by jewelry demand (cultural reasons mostly in Asia) and industrial demand. Speculation pumps it on top of that, but without the non-speculative demand gold would collapse during market crashes, killing future speculative demand too. Even with that it appears to be going out of fashion among speculators - gold isn't money for several decades now and the 'gold is money' meme is finally losing power. That's after literally thousands of years when gold was used as money, showing how weak even the strongest meme 'backing' is. https://goldbroker.com/media/image/cms/media/images/global-gold-demand-2019.jpg https://goldbroker.com/media/image/cms/media/images/global-g...
- 5y ago

nootropicat 5y ago

Is it really a trick? Crypto is overwhelmingly about narratives. Currently adoption only matters as a way to market the token. Imagine that ethereum wins, and the global economy runs mostly on rollups on eth2 shards. How much is that worth on a PE basis? Let's assume $100M in daily fees. At PE of 20 that gives a nice valuation of $730B - or about $6300 per eth. Maybe 60x - premium for being the only big yield asset that doesn't rely on law to enforce property rights (ie. eth replaces offshore banking). This means eth is already priced for success. The alternative is worse for everyone in crypto, because if the long-term future is multi-chain (ie. pushed out usecases don't go back to ethereum once it's scalable enough, and activity spreads everywhere looking for low fees) then the whole space has almost no ability to extract rent. That would mean the stable fee level is some small margin over actual running costs. Which means total crypto market cap <$10B. Bitcoin, of course, has no fundamental value at all - all it does is make btc buyers poorer because of mining, as a group. Yet it's still the largest crypto. Why? Because it's all about narratives to make people buy the token, thinking they are going to sell it higher to other people that buy for the same reason. Back to matic - what this means in practice is if the project successfully markets itself as a 'small helper' to ethereum, it's going to be valued like that. Eventually, the narrative premium is likely to disappear, and I think at that point either ethereum is valued at 1T-2T in today's dollars, or crypto as a whole collapses >100x. The latter would completely destroy PoW security and make PoS questionable. Is a chain safe if coordinating validators can make 10x by stealing pegged funds even at the cost of destroying their stake? Simple game theory says no, but in practice it may work because stealing is illegal and most validators aren't anonymous - ie. de facto law-based consensus.

tromp 5y ago
> or crypto as a whole collapses >100x. The latter would completely destroy PoW security I don't see why. Security depends on the ratio between amounts traded and amounts spent on mining. A 100x price reduction equally affects both. Yes, it becomes 100x cheaper to rewrite history, but the proceeds of any such rewrite are also 100x less, so security is not impacted much. To wit, when Bitcoin was worth only $30, its PoW security was not the least bit destroyed.
yourabstraction 5y ago
How come you've completely left out the store of value use case in your price analysis, do you not believe in it? I think there will always be desire for individuals, corporations, and countries to keep a non government store of value on their balance sheets, which should drive a monetary premium for both BTC and ETH.
- nootropicat 5y ago
  Because store of value must be backed by something, and bitcoin is backed by nothing, so it can't ever become one. It's a meme designed to entice people to buy - the narrative thing. It's a negative sum game, so people who mistakenly think it has value continue to lose wealth in aggregate. This can last for years but not indefinitely. For eth, it's possible, because it's going to generate income, but it's what I meant by the "premium for being the only big yield asset that doesn't rely on law to enforce property rights" bit. In the short run it can go much higher, but I doubt the ability to sustain >100x PE ratios over decades. The likely reply to this is "gold", so let me preempt it. Gold is sustained mostly by jewelry demand (cultural reasons mostly in Asia) and industrial demand. Speculation pumps it on top of that, but without the non-speculative demand gold would collapse during market crashes, killing future speculative demand too. Even with that it appears to be going out of fashion among speculators - gold isn't money for several decades now and the 'gold is money' meme is finally losing power. That's after literally thousands of years when gold was used as money, showing how weak even the strongest meme 'backing' is. https://goldbroker.com/media/image/cms/media/images/global-gold-demand-2019.jpg https://goldbroker.com/media/image/cms/media/images/global-g...
5y ago