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Users get value out of sending tokens, holding stablecoins, and interacting with smart contracts. The price can go up or down but who cares, if they are using s
by zeroclip 4y ago
Users get value out of sending tokens, holding stablecoins, and interacting with smart contracts. The price can go up or down but who cares, if they are using stable tokens or just using ETH to pay gas fees. They might be happy to part with a small amount, paying whoever is facilitating the transfers and helping run the network.
Just like how payment processors work like PayPal. They take a cut on each transaction. The difference with validators in a blockchain is that it’s permissionless.. Anybody in the room can participate and capture a % of these transaction fees.
- chx 4y agoThis is smoke and mirrors. Focus on how much money the totality of current and past coinholders have. It'll be the negative sum of the transaction fees paid. This is all there is.
- zeroclip 4y agoI don’t understand your logic. Users pay 0.01 ETH for gas fees to perform some action like transfer USDC from A to B. Majority of that fee is burned but some small percentage goes toward a validator for their services. The price of Eth may even depreciate in the days or weeks that follow, leaving the validators with less fiat value than they had when this whole exchange began, and parties A and B are no worse off. What is negative sum in this example?
- chx 4y agoLet's presume no one has any coins yet. A has mined some coins which B buys for 100 USD. Now A has less than 100 USD because the transaction costed something and B has 0 USD. Together they already lost money. This will only get worse. Let's say B can convince C to buy his coin for 1000 USD from, say, an interest free bank loan. Aye, B has 1000 USD minus transaction fee so they made a profit but C has -1000 USD. Altogether they are short on money.
- zeroclip 4y agoTake PayPal or Wise. User A sends $100 USD to User B, and the payment network takes a $1 fee. User A now has -$100 USD and User B has $99 USD. If you add -100 + 99 it might seem like money disappears, but that remaining $1 of value has gone to the network as a fee for services rendered, and it was something that both parties were willing to pay. Even here, both users are short USD, but it is not a "negative sum" system as the users gain some positive value by having the payment processor transfer and secure their funds. If the only metric is how much USD a buyer has left, every visit to the bakery would be a negative sum game. In the above example, PayPal and Wise are User C. In a permissionless blockchain, User A and B can both also opt to be validators and receive these protocol rewards, so there may not even be a User C that extracts rent on each transaction.
- chx 4y agoNah, PayPal or Wise has the money. It didn't disappear from circulation.
- zeroclip 4y agoI assume you are not talking about the minority fee that goes to the validators for their services, but the majority fee that is burned in ETH after EIP1559. When a limited supply token is burned, the total supply is reduced, and assuming that does not decrease the demand, then the value will diffuse to all token holders. If 75% of all PayPal or Wise fees were burned such that all users of PayPal had their account slightly appreciate in value whenever there is significant transactional volume in the network, a lot of users would be pretty into that. Besides, this is just one way. Bitcoin does not burn fees, so it’s much more like the PayPal and Wise approach, no money leaving circulation.