In the beginning, there was nothing. And then there was plenty. And then there was a cataclysmic event where humans were casted from a paradise. And then there was not not enough.
This is a very religious way to introduce this but I have found this tale to have large scale implications in the way that I view human behavior. Adam & Eve lived in the land of plenty. Every resource that was needed was present in unending supply, until they were removed. When they were removed there was scarcity.
Without scarcity, there is no need for sin. If all can be done whenever, wherever, & however, how might coveting take place? What makes wealth desirable when it is plentiful and infinite? There is no need for status.
But then they were casted out and you don't have to flip too many pages before you meet Cain and Able, where jealousy can fuel murder.
My father often pushed me to answer the question, "How much is enough?" For the average human, this is a tough question to answer. Even I admit to never having a clear answer to this.
What is the cost of doing business? This is something that every individual must contend with. Whether the business is making a Neapolitan Pizza (the proper way) or running an airline that recently purchased faulty aircrafts, people have to wonder is it worth it. The scarcity of our own monies dictate our actions. If we had infinite money or the asset in question is every declining in price, then there would be unending consumption and unlimited decisions.
Money is a function of scarcity & time. In the case of labor, the skill of a person is directly priced this way. A doctor spends 10 years honing their craft. Every patient they see and case they solve they become more skillful & wise. As a result their labor, being scarce & requiring much time to replace, is worth a lot in money terms.
Scarcity and Time govern all decision making. Within the Garden of Eden, with infinite time (immortality) and infinite supply, demand is not a factor in the market. All can be accomplished in any amount of time without fear of supply running out. Currently, we have none of these existing factors in space, and when they exist they are immediately abused.
I think the first time I witnessed an environment with unlimited supply was my very first analysis of the Solana blockchain. Honestly, I was amazed that the blockchain worked at all, being so biased to the EVM at the time. Unlimited Block Supply.
Around January 2023, I imagine that there was very little interest in blockchain. Even Ethereum was affordable to use. Solana was the perfect place to play around and find new things. I thought Ethereum was left behind in the dust by a superior model, until the market began to pick up. When transactions begin increase on Ethereum, the prices of these transactions do too. We don't see this on Solana.
The infinite block supply was met with growing block space demand. I wondered how it might effect the chain. It led me to think further about the concept of infinite demand without the influence of scarcity to increase the cost of the commodity in question. After watching the Solana blockchain over the last few weeks, I have learned a lot of things.
The infinite supply of block space is relative rather than absolute. There is a maximum on the blockchain and when the instantaneous maximum is reached, all other transactions fail. Without a price mechanism to stack up transactions, transactions are collected on the basis of order. These failed transactions have to line back up for the next block.
The incentives then switch to spamming the network. Rather than paying with money to get your transaction included you pay with your time and your labor. People have to spam these transactions. Value is determined by scarcity and time, so in the absence of scarcity, time is thrown out of whack to correctly price value.
Ethereum has had many different meme coin manias in its history but none has been as incredibly offensive as Solana's recent mania, at least since I've been on Ethereum. I wondered initially if Ethereum people just tend to be more peaceable, something I've noticed at conventions. But I often turn to economics to answer these questions.
The transaction costs on Ethereum are maybe 1,000 times that of Solana on a good day. I may be inaccurate but that is how it feels. When someone develops a coin on Ethereum the costs are likely 1,000 times that of Solana coin development. This upfront costs will always encourage less chicanery than the Solana counterpart.
EIP-4844 went into effect and I witnessed the prices of Base, Optimism, Zora, ZK Sync and shortly after Arbitrum drop below or at Solana level transaction costs. I then paced back and forth in my living room pondering whether the symptoms of free blocks would come to affect the Layer 2's. I know in my heart that it is possible, but my mind offers me an explanation as to why it is different.
The first line of defense is the the limited space in a given blob. When the blobs begin to fill up prices skyrocket infinitely to attempt to reduce demand. All transactions on All Layer 2's would compete for this limited amount of space. Transactions likely won't fail but will have to wait until they are picked up.
This does not absolve the possibilities, but it does help me sleep better at night.
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