It’s difficult to talk about economics in the Ethereum ecosystem.

Since its inception, Ethereum has fostered a culture where financial discussions are often treated with suspicion—seen as distractions from the mission, or worse, invitations to speculation. This sensitivity has shaped the ethos of the community, and to an extent, that idealism has helped Ethereum avoid some of the pitfalls of short-termism.

But idealism has its limits.

Today, Ethereum’s greatest product-market fit—by far—is financial. Decentralized exchanges, stablecoins, lending protocols, MEV infrastructure: this is where Ethereum has traction, revenue, and users willing to pay for security. In short, Ethereum’s economics matter. And recent decisions—especially in 2024—have shown a worrying disconnect between Ethereum’s technical evolution and its economic sustainability.

2024: The Year Scalability Won—But at a Cost

No one questions the success of Ethereum’s recent scalability upgrades. Danksharding, blobs, and EIP-4844 have significantly reduced costs for rollups and paved the way for a truly modular architecture.

But this technical progress came with a blind spot: ETH’s value capture.

Many of the design choices prioritized minimizing Layer 1 fees, often without a rigorous analysis of how those changes would impact ETH’s monetary premium. At times, concerns about token price were brushed off as speculative noise. But price matters—not as a number on a chart, but as a reflection of demand, sustainability, and security.

Today, the consequences are surfacing. ETH is underperforming. Core contributors and even the Ethereum Foundation are beginning to feel financial pressure. It’s not because the tech didn’t scale—it did. It’s because the economics were left behind.

Can This Momentum Be Reversed?

Yes. But it won’t be easy, and it won’t come overnight. It requires a cultural shift—one that acknowledges that token economics are not a distraction from Ethereum’s mission—they are part of how that mission is sustained.

Let’s look at three concrete proposals that could help realign ETH’s economics with its real-world utility.

1. Activate EIP-7762 & EIP-7691: Restore Minimum Economic Density

The introduction of blobs and cheaper data availability has slashed L1 gas consumption. That’s great for scalability—but disastrous for ETH fee revenue.

EIP-7762 and EIP-7691 aim to introduce a minimum base fee for blobs, ensuring Ethereum doesn’t subsidize blockspace to the point of self-harm. However, these proposals still lack rigorous economic modeling.

My suggestion: calibrate the blob base fee so that blob usage contributes at least 4% annualized revenue relative to ETH’s monetary base.

That 4% becomes Ethereum’s “economic floor”—a way to anchor demand and maintain ETH’s monetary premium. And as Layer 1 capacity expands, this base fee could be adjusted downward, keeping revenue constant without compromising scalability.

Scalability and sustainability are not mutually exclusive.

2. Ethereum as a Digital Bond: Align Staking Incentives

Recent proposals that disincentivize staking are, in my view, economically dangerous.

ETH can become a digital bond—a yield-bearing asset backed by real economic activity (fees and inflation). But to do that, Ethereum needs to reward the right kind of holders.

Proposal: redirect part of the base layer fees to guarantee a minimum 4% yield to stakers. This creates a predictable economic incentive aligned with long-term holders and validators.

More ambitiously, Ethereum could explore human-based staking incentives—mechanisms that prioritize rewards for validators operated by individuals, not industrial-scale actors. This would enhance decentralization, reduce systemic risk, and reinforce ETH as a sovereign-grade monetary asset.

This is where ETH can outshine BTC: programmable, adaptive, and able to align economic forces with governance principles.

3 Retroactive Grant Commissions: Fund What Works

Innovation needs funding. And the Ethereum Foundation, while crucial, cannot (and should not) be the sole allocator of capital.

Let’s shift to retroactive funding mechanisms—grants awarded to projects and teams that prove, in retrospect, to have created measurable value for Ethereum.

This could be governed by the Foundation, or better yet, externalized to neutral platforms like Gitcoin. The key is defining clear, transparent metrics that correlate ecosystem growth with ETH value capture.

If you build something that makes Ethereum more useful, secure, or efficient—it should feed back into the token’s value.

Let’s stop funding potential, and start funding proven impact.

Conclusion: Embracing Economic Maturity

Ethereum has grown up technically.

Now it must grow up economically.

We must move beyond the false dichotomy between speculation and sustainability. Token price is not just about market hype—it’s about whether the ecosystem can fund itself, defend itself, and thrive long-term.

Ethereum doesn’t need to become Wall Street. But it does need to face economic reality with the same courage and clarity it brings to decentralization and privacy.

By implementing thoughtful upgrades, aligning staking with real incentives, and funding real value creation, Ethereum can reclaim its economic power—without compromising its soul.