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1) If all the tokens on Ethereum are worth more than $ETH by a wide margin it creates an opportunity for a massive financial institution or central bank to take over the network. I don't think it will work but it will be interesting to watch tradFi learn crypto & what they try.
2) You can say the same in the scenario that more BTC is moving on ETH. The security issue isn't ren holding PKs it's that the network transactions pay for security & if its all on Ethereum then it causes security concerns for BTC & also requires users to act selflessly (nope).
3) This is really bullish on $ETH being worth more than $BTC if it happens causing gas fees to be prohibitive for it to continue. A proof of staking model fixes the fees & the price issue. Fees go down, price goes up. $BTC is still fucked in this scenario due to opportunity cost.
4) Long term, or after the 1st network attack, companies like Chainlink & Uniswap (maybe Tether) will want to hold reserves of $ETH along with other industry leaders to prevent this. It's almost like holding insurance on your books in a c-corp. It's not sexy but necessary.
5) As more companies/projects hold these reserves, it will make the network near impossible to hack but will make $ETH more scarce. You can multiply this by 10x if tradFi moves into the space (they'll eventually pay attention when junior analysts realize degens are making more).
6) Eventually when tradFi moves in, central banks will pay attention. In order for them to put their reserve currency on Ethereum they will need reserves of $ETH making it even more scarce. We aren't talking about $ETH as a $10k asset at this point. Think Ft. Knox.
7) I said a year or two ago it took me a while to figure out why $ETH is worth $1 & now I cannot figure out why $ETH isn't worth $10k. That was when Maker only had $100m in TVL and Uniswap had done $10m in swaps. It's only grown. And do has the need for these reserves.
8) The reason these projects don't hold these reserves as a collaborative at an industry level (they will) is it isn't worth it for a multinational to tarnish their name putting up $100b to hack $40b. But eventually they will try. Money is war and it would be completely legal.
9) As whatever billion in TVL we are at now grows to $100b or $500b (historically capital always chases yield so I expect TVL to grow), our industry which has become increasingly self regulating will cause projects to band together to hold $ETH reserves.
10) If you needed a bull case for $ETH as a trillion dollar asset (putting it damn near $10k at $1t) outside of "I'm bullish number go up), you can start to see how a network that holds tradFi and central bank reserves will as a matter of fact need to be worth trillions, not one.
11) Further it won't take 1 actor to get there. It will be a conglomeration of many many companies & governments slowly taking insurance positions, making the asset more scarce/driving the price up. I disagree with @VitalikButerin that high gas fees make a less secure network.
12) But even if he is right & I am wrong, $ETH reserves will happen... and that is bullish for both a +$10k price as well as a more secure network. If you don't think it will happen study gold reserves and understand why companies and countries hold physical gold and not paper.
13) Lucky number 13.. $ETH will go up in price or it won't work as a network and therefore an asset. People in tradFi who don't understand this industry may not realize it yet but they'll eventually own $ETH for more than just bullish speculation.
14) There is a very high likelihood that tradFi doesn't move into $ETH as a speculative bet (albeit I hope that the @barn_bridge Smart Alpha tranches encourage this). It will be because they realize that the yield on Ethereum right now is due to efficiency in smart contracts.
15) Rent seeking middlemen essentially cannot compete with smart contracts. Full stop. So when more & more traditional loans come onto the market this will absolutely cause $ETH to go up unlike it has during the defi boom (because we are degens & don't think about risk enough).
16) TradFi DOES focus on risk & governments most certainly do. They play war games & tradFi runs simulations. All of this points to massive reserves = low circulating supply = upward pressure on price, making the network more secure, even if gas fees are low.
Tldr: buy $ETH.
Tldr: buy $ETH.
17) As a PS: you don't need the Fed to create Fed bucks for the US to hold $ETH reserves because if enough loans go on chain it's an AIG scenario where $ETH is too big to fail, they'll also pass on some of the risk to retail by uplifting regulations. You're talking TRILLIONS now.
18) If you think governments who just spent $20t printing cash to retroactively protect against too big to fail scenarios, they'll also hold trillions to protect US banks proactively. Again, you're talking trillions now in reserves, $1t = $10k.. multiple trillions, well multiply.
