At the Bankless Summit, Ethereum Foundation researcher Mike Neuder shared a compelling vision of Ethereum’s native asset, ETH, as a cornerstone of a permissionless financial future. His argument: ETH isn’t just a cryptocurrency; it’s a permissionless form of money that revolutionizes ownership, programmability, and economic security. Here's how.
ETH: Permissionless at Its Core
Mike Neuder emphasized that ETH embodies the ideals of permissionless property rights. On Ethereum’s Layer 1, anyone can store, send, and program ETH without intermediaries or gatekeepers. This aligns with the foundational principle that true ownership of money should be inviolable and accessible to all.
“What our generation has forgotten is that the system of private property is the most important guarantee of freedom.”
– Friedrich Hayek
This principle extends seamlessly to Ethereum’s scalability layers. Rollups, for example, not only scale Ethereum’s transaction capacity but also maintain the permissionless ethos by enabling seamless bridging of ETH across ecosystems. Even on non-Ethereum data availability (DA) chains, ETH preserves its property rights, ensuring trustless usability as long as the DA layer is operational.
ETH as Money
Neuder’s presentation explored ETH’s unique properties that make it "money" in every sense of the word:
- Stable Supply: Unlike fiat currencies that are susceptible to inflationary pressures, ETH’s supply is stabilized by its deflationary mechanisms, including burns from Layer 1 and Layer 2 transaction fees.
- Low Inflation: With an annual inflation rate of approximately 0.9%, ETH’s monetary policy is one of the most sustainable in the crypto ecosystem, especially compared to SOL’s 4.7% and BTC’s 0.8%.
- Burn Mechanisms: Fee burns, especially through Layer 2 blob fees, further enhance ETH’s deflationary profile, making it resistant to inflation while keeping transaction costs low.
- Medium of Exchange: ETH is indispensable for paying gas fees and is increasingly used in decentralized applications (dApps), cementing its role as a critical instrument of commerce.
- Unit of Account: Within the Ethereum ecosystem, ETH serves as the default measure of value, pricing services, and providing economic security across dApps and protocols.
Neuder also underscored ETH’s resilience against external pressures, quoting John Maynard Keynes to highlight how ETH protects against the confiscatory effects of inflation often wielded by centralized institutions.
The Unique Value Proposition of ETH
ETH’s programmability, security, and interoperability position it as an unparalleled form of money in the digital age. It is not just a transactional asset but a foundational layer for a permissionless, decentralized future. Unlike fiat or centralized stablecoins like USDC, ETH offers true ownership rights and programmability without compromise.
The Takeaway
Mike Neuder’s presentation at the Bankless Summit was a rallying call for understanding ETH’s profound role in shaping a permissionless financial system. ETH isn’t just money—it’s the future of money, embodying the ideals of freedom, transparency, and trustlessness that Ethereum was built to uphold.
As Ethereum continues to scale and evolve, ETH’s position as permissionless money will only strengthen, making it an indispensable asset for the new global economy.