What is the theory of ETH appreciation? What should the ETH Foundation do when the funds are exhausted?

The 12th ETH Foundation AMA is in progress. As usual, I will summarize and interpret some key points for everyone.

**1. In addition to Layer2, does Ethereum have any further plans to scale Layer1?

In this issue, both Justin and Vitalik have answered, and the answer is yes, so it shows that Ethereum does not rely entirely on Layer2 for scaling, but is also trying to scale itself. The scaling methods mentioned in the answers mainly include precompilation of Virtual Machine execution, speeding up proofs with ZK, reducing Node burden with Verkle, etc., and Dankrad mentioned that the scaling of Layer1 and Layer2 are parallel, not conflicting.

2. What is the theoretical basis for the future appreciation of ETH? Do you think the appreciation of ETH is important?

This issue should be the most concerning to everyone, after all, the price of ETH is too depressing. Justin directly answered “ETH is money” and indicated that the appreciation of ETH is very important for the success of Ethereum. He believes that the value of ETH supports three points, namely, the economic bandwidth to support trillions of dollars of decentralized stablecoins, the economic security to provide undeniable security, and the economic vitality to attract the attention of all major economic participants.

3. Because the Layer2 strategy makes the gas of many apps very low, which leads to almost no value-added use cases for ETH. How to solve it?

This issue is also considered by everyone to be an important reason for the drag on the price of ETH at present. Dankrad said he does not think Layer2 will take away fees and MEV from Ethereum, ultimately parasitizing and sucking blood from Ethereum, he believes that high-value transaction scenarios will continue to exist on the Mainnet, and Layer2 is only providing sufficient expansion space for the Mainnet to accommodate a larger volume of transactions. The Mainnet should originally provide cheaper data availability to Layer2 in order to allow more Layer2 to survive. Justin’s point of view is not to focus on the amount of a single transaction, but to find ways to increase the overall transaction amount. For example, the most successful goal of Ethereum is to achieve 10 million transactions per second, even if the price of each transaction is very low, it can provide a daily income of one billion US dollars. Therefore, the main problem at present is that the demand on the Application Layer is not sufficient, the volume is not enough, rather than the issue of the amount of each transaction being too small.

4. What measures is Ethereum taking to ensure the neutrality of the network as governments around the world exert pressure to scrutinize transactions?

The Ethereum Foundation believes that the trustworthiness of Ethereum is crucial, and it is essential to ensure that the validators set is decentralized. There are also many validators from entities such as businesses and governments. Therefore, the Ethereum Foundation is also trying to make improvements at the consensus level, such as allowing Decentralization validators to forcibly package transactions into Blocks.

5. How much is the Ethereum Foundation’s fund reserve? What happens if the money runs out?

First of all, the Ethereum Foundation spends $100 million a year and currently has $650 million, most of which is in ETH. Therefore, the Ethereum Foundation has a strong motivation to find ways to pump ETH, otherwise they won’t have enough money to spend. In addition, it was mentioned in the AMA that the Ethereum Foundation currently has over 300 people. To be honest, I think this structure is too bloated. I don’t know how many people are on salary and how many are only doing non-productive work such as research and discussion.

**6.If BTC achieves OP_Cat and develops a strong Layer2 ecosystem, what other unique value can ETH Square provide? **

This question was answered by Vitalik himself, and he said there are mainly four points. First, ETH has a larger data availability (DA) space to support the development of Layer2, and because POS has stronger Decentralization capability. This seems to be a point that many people disagree with. They may feel that POW is the safest, and POS is not secure. However, Vitalik believes that POS is safer than POW. In addition, ETH has its own community, culture, values, and so on. How should I put it, I feel that after reading Vitalik’s answer, it’s still inconclusive. I don’t know if Vitalik himself hasn’t thought it through.

Most of the other content is a discussion of specific technical issues. To be honest, I was relatively disappointed after reading this AMA. I didn’t see any clear and inspiring answers to the issues that everyone is most concerned about, such as the lack of innovation in the Application Layer and the value of Layer2 offloading ETH. I didn’t see any practical measures proposed. Vitalik, please wake up and don’t get lost in love.