I have heard ETH being compared to oil. If oil goes up too high, those, who can, will cut back its use. If ETH goes to some stupid high prices, wouldn't people cut back on its usages and help prices go lower. Wouldn't higher prices also encourage the production of more ETH… the old the solution to high prices is high prices. Please explain to me where the flaw is in my reasoning.
Total newbie question… doesn't a high ETH price stifle the underlying tokenized economy which in turn acts as a mechanism to drive ETH prices lower?
byu/NashDaypring1987 inethereum
Posted by NashDaypring1987
3 Comments
It’s not bad reasoning. That’s why there is so much focus on increasing transactions per second, as the transaction scarcity is what increases the friction of high gas costs.
They are increasing TPS by adding layer 2s with their own separate transaction capacity, by increasing the gas limit per block which allows for more transactions per block, and by lots of other improvements that I can’t recall before my morning coffee kicks in,
A high ETH price doesn’t stifle Ethereum the way high oil prices stifle oil use because ETH isn’t consumed like a raw commodity and its supply doesn’t expand in response to price; users pay for gas (which adjusts independently of ETH’s dollar price), activity can move to Layer-2s that still settle on Ethereum, and higher usage actually burns more ETH rather than creating more,so instead of high prices reducing demand and increasing supply, a higher ETH price tends to strengthen security, trust, and settlement demand, reinforcing usage rather than choking it
Fees are so so cheap. I think a lot of people haven’t used main-net since 2022 lol. Plus you have a plethora of L2’s to move to if necessary.