ETH's Downfall

+-----------------------------------------------------------+
|                    ETH DOWNFALL                            |
+-----------------------------------------------------------+
|                                                           |
|   Supply-side: POS removed floor price mechanism          |
|   Demand-side: No new assets priced in ETH                |
|                                                           |
+-----------------------------------------------------------+

Main narrative should be L2 and Restaking
        ↓
But:
├── L2 ecosystem projects highly overlap with mainnet
├── Can't trigger explosive trading activity
├── PointFi and Restaking lock ETH reducing liquidity
└── Major restaking pricing power at exchanges (USDT denominated)

ETH's main function: Settlement layer
        ↓
Major DeFi settlement happens on mainnet
        ↓
L2 functions highly overlap with mainnet
        ↓
Lots of demand diverted to L2
        ↓
Burns are a fraction of before

Miner ETH acquisition cost:

Fixed cost (one-time, non-refundable):
└── ETH mining machine cost

Variable cost (grows over time):
├── Electricity cost
├── Hosting cost (facility, staff, maintenance)
└── Accident cost (penalties, disasters)

Key: Fiat-denominated cost, non-refundable sunk cost

Market price < Acquisition cost (shutdown price)
        ↓
Miners won't sell
        ↓
Forms price floor

Validator cost:
└── Infrastructure (staff, servers)

Staker cost:
├── Staked ETH opportunity cost
└── Validator fees

End of 2018 ICO era:
├── Massive ETH-denominated ICO projects dumped chaotically
├── Crashed to below $100
├── No DEX for ETH-denominated exit
├── Projects could only dump for USDT
└── ICO Beta returns plummeted → Davis Double Kill

2018 lessons too painful
        ↓
Vitalik and Foundation constantly emphasized:
├── Roadmap
├── Main narrative
└── Legitimacy
        ↓
Formed "core circle" of developers, VCs
        ↓
DeFi Summer success reinforced institutional rigidity
        ↓
Chips concentrated in Eth Aligned coordinated actors

"Build for V"
"Orthodox = High valuation"
        ↓
Split rate too low: Devs and schemes that can capture liquidity plummeted
        ↓
Market Beta can't beat competitors: High valuations make Beta returns weaker than other chains

ETH problem = Demand-side shrinkage + Supply-side costless selling pressure

Demand-side:
├── No new assets ETH-denominated
├── L2 diverts burn demand
└── ETF allows selling

Supply-side:
├── POS eliminated shutdown price
├── Acquisition cost near zero
└── Infinite mine and dump

Historical lessons:
├── Dividend schemes need fiat-denominated costs
├── Need to continuously raise cost floor
└── If you don't know how, study BTC cost model