36 - The DeFi Blockspace Cycle | Nic Carter

Exploring the cyclicality between blockspace and fees and the incentives it creates
Oct 26, 20201 min read

Nic Carter recently released an article titled "Public Blockchain Fee Cyclicality and Negative Feedback Loops"...

Simplified "transaction fees get higher, and that incentives people transact less, and then that lowers transaction fees and that incentives people to transact more"

According to Nic, there's no equilibrium found upon public blockchains with inflexible block size; the demand to purchase blockspace will always be volatile, across all time frames.

Another perspective: constraints on blockspace availability dramatically impacts the kind of usage that is feasible to happen on the base-layer blockchain.

Transactors who are transacting large transactions will pay for higher fees! This severely impacts the markets that are supported by public blockchains! Constraints on block space are constraints on market participants!

David, Ryan, and Nic go through Nic's process is dissecting the data that created these conclusions.

And Nic gives his perspective on the ultimate pattern that emerges from this data.


Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.

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