The main value proposition of a Public Blockchain is its blockspace, a resource whose price is determined by market supply and demand. This demand experiences occasional spikes that we can observe at certain times on the network, and an average price that used to fluctuate within ranges that gradually shifted depending on the market conditions.

The significant demand for Ethereum's space has allowed this protocol to lead the revenue of the entire crypto ecosystem, generating over $10 billion in fees for using its smart contracts. This, of course, justified a valuation for the project that had at least a base value grounded in these revenues.

The EIP 4844 has been able to slash those revenues by more than 90%, introducing us to an environment with extreme gas price fluctuations.

The impact has been so surprising that we’ve had to revisit all of its valuations, especially the assumptions that were being made. Are fees really that important? How do value capture models for these projects scale? What are the economics of the Ethereum ecosystem (the main network and its layers)?

Perhaps the models are not as established as we might have thought. A negative environment that has plunged us into a new reality, where in the short term it seems unlikely that Ethereum will recover its fee revenues. Therefore, the conceptualization of Ethereum as a Triple Asset ultimately seemed to fade into just its value as a monetary asset. A tough battle to win against #Bitcoin, although it makes sense if we see it as the currency of an economic zone (the Bitcoin ecosystem).

In summary, reality had led us to assume that

                 **we will always have the monetary premium.**

I think this tweet by Ignas DeFi suggests a surrender to the reality of the numbers. “Ultrasound money is dead” since the deflation that this theory argued was based on these Ethereum usage fees.

In this environment where gas has dropped to around 1 or 2 gwei, we suddenly find in recent days a surge to 20 gwei without finding a solid reason for this increase.

The model that best explained this environment was to assume that all those fees had migrated to the L2s, in a relationship that seemed parasitic. Not only did it fail to contribute as expected, but it also drained Ethereum of both activity (revenue) and users.

In this environment, suddenly the revenue reappears as gas prices jump from 1 or 2 gwei to an average of 20 gwei. All of this happens without being able to find a solid reason for these variations.

There doesn’t seem to be a significant variation, nor any new player that could be affecting the low gas cost levels. However, the gas increase occurs in an environment with the same contracts. It’s true that one could perhaps argue for a higher level of activity in recent days, but we can’t really point to a similar change in Uniswap’s activity

This makes us consider the following scenario: if demand in terms of volume is more or less the same, then the explanation for this price increase lies in the auction mechanism. The same participants have faced a more competitive bidding process, and all have been forced to raise the price they are willing to pay.

This leads us to a complex conclusion: the economic design of the protocol places us in the hands of the main space demanders, who could develop a certain coordination that could either collapse or drive up the revenues.

The problem would be even greater if, in the end, the largest consumers are a group of L2 projects that could easily coordinate with each other.