In this interview, David Hoffman of Bankless is joined by ETH Foundation Researcher Justin Drake, who discusses the ultra-sound money narrative, the effects of EIP-4844 on ETH, how ETH as an asset changes moving forward, and what he’s excited about outside of ETH.
Read our notes below to learn more.
Justin Drake background
Researcher at ETH Foundation since Dec 2017.
Pioneered the ETH ultrasound money narrative.
Involved with Ultrasound.money website.
Ultrasound Money
Narrative started as a meme in 2021 by Justin. Clear narrative emerged only 6 weeks ago when merge caused large reduction in ETH supply.
Improved ultrasound.money website metrics - before merge, 3k visitors a day. After merge, 10k. Now, 20-30k.
Envisions it to be a 1 stop shop for ETH and to digest things for mainstream audiences.
Wants to include total value secured, burn per rollup in the future
Website has open position available for front-end developer.
ETH as an asset
Aspect of taboo associated with ETH as an asset is slowly dissolving, was partly due to regulatory uncertainty about ETH as a security.
Believes that the narrative is growing because everyone wants ETH to succeed, which requires ETH as an asset to succeed, because as the price of ETH grows, utility increases due to 2 reasons:
Economic security - more valuable ETH is, more secure Ethereum network is.
DeFi - requires economic bandwith which requires an asset as collateral. Can use real world assets but has counterparty, contract, oracle risks.
“Deflation is bad” is a valid criticism, but not for ETH.
2 types of money:
Debt money: money that is given when someone puts forward collateral and takes out debt. Inflation makes it easier to pay off debt.
Collateral money: money used as collateral to take out debt money. You want this money to be deflationary, so it grows in value over time.
If use case is hot money, ETH can move in and out quickly. If use case is currency, ETH will play a large role for a couple of reasons:
DeFi money blocks, developers will choose most pristine/robust APIs.
People could use stablecoins as currency, but ETH is optimal.
David
Historically, developers focus on ETH Network and not ETH as an asset, Justin leading the charge on focusing on ETH as money too.
Effects of EIP-4844 on ETH
EIP-4844 will not instantly crash the fee market; requires adoption just like rollups.
Will be additional friction to move away from call data to EIP-4844.
Moving from Proto-Danksharding (EIP-4844) to full Dank Sharding increases blob data, which will lead to instant crash of fees.
Fees will gradually increase following crash.
ETH Changes Moving Forward
Scalability: In the next decade, ETH will be able to go from 10 TPS (transaction per second) to 10M TPS.
As a result, it dramatically decreases transaction fees.
Create much more value and the notion of induced demand; as you improve things it leads to more utility.
What Excites Justin Outside of ETH
He is worried about bugs and security, extremely complicated circuits that can be broken by 1 bug.
Thinks there is opportunity for security experts to join and solve issues.
ZK-EVMs (zero-knowledge rollup tech that can be used on any EVM chain); So much tech in 1 black box.
Rollups won’t be fully permissionless from day 1, will gradually ramp up. One good idea would be a one hour safety buffer.