Viewing a single comment thread. View all comments

hokumbafflegab t1_j24bg99 wrote

Appealing to your "finance degree" is pretty sad and just tells me you're most likely an insecure new grad or someone who is doing nothing with their finance degree. I've been in the ethereum space for ~6 years now. Demand for ETH comes from demand to use applications or contracts on the network which has continued to grow steadily every year. Every few years there is a new innovation which brings a huge spike in usage due to these applications (and all the get rich scams that come with it). Supply/new issuance is intentionally dynamic, depending on the usage of the network. At times of low usage, supply becomes inflationary and directs this value to the 500k+ validators. At times of high usage, the supply becomes deflationary due to the EIP-1559 base-fee burn.

As long as there is demand to transact or use an application/contract on ethereum, the price will never go to zero. In the long term, after the network and market matures, the price will stabilize.

Note that fiat USD and all modern fiat currencies are also backed by nothing. Their demand comes from two places: the government requires tax payments in their flavor of fiat and their relative stability/utility compared to other assets.

1