In this episode, we invited Mike Neuder, a researcher at the Ethereum Foundation, to explore the evolution of Ethereum's monetary properties. Mike began by reviewing the significant changes in Ethereum's monetary policy since its genesis in 2015, including multiple adjustments to block rewards and the burning mechanism introduced by EIP-1559. He particularly emphasized how The Merge's transition from Proof of Work to Proof of Stake profoundly impacted Ethereum's economic model.

Regarding Ethereum's current 28% staking ratio, Mike analyzed the multiple factors behind this relatively low percentage, including historical path dependency, opportunity costs from DeFi, and validator entry barriers. He suggested that maintaining a moderate staking ratio is crucial for preserving ETH's monetary properties, as an excessive staking ratio might lead to over-reliance on staking derivatives within the ecosystem.

Discussing Ethereum's deflationary characteristics, Mike pointed out that "ultrasound money" is more of an interesting meme rather than Ethereum's core value proposition. He emphasized that Ethereum's true goal is to establish a monetary system with reasonable inflation control and flexible adjustment mechanisms. When discussing the upcoming Proto-Danksharding upgrade, Mike explained how this technical evolution enhances ETH's properties as a settlement layer currency by expanding data availability.

At the end of the episode, Mike emphasized the fundamental importance of "permissionlessness" for Ethereum. He argued that without censorship resistance and trustworthy decentralization, blockchain technology would struggle to meaningfully differentiate itself from traditional financial systems. This insight provided a unique perspective on understanding Ethereum's development direction.

Mike Neuder (Twitter)
Michael (Mike) Neuder is a researcher and engineer focused on blockchain technology, particularly the Ethereum ecosystem. He currently serves as a researcher in the Applied Research Group (ARG) at the Ethereum Foundation. Neuder holds a Master of Science in Computational Science and Engineering from Harvard University and dual Bachelor of Arts degrees in Computer Science and Mathematics from the University of Colorado.

In academic research, his work spans blockchain mechanism design, financial technology, and climate science. He has published multiple papers in prominent conferences such as AFT (Advances in Financial Technologies), researching topics including exit queue optimization for proof-of-stake blockchains and strategic liquidity provision in Uniswap v3.

Before joining the Ethereum Foundation, Neuder worked as a software engineer at Google, where he contributed to projects including Cloud Storage. He is actively involved in the open-source community and has made significant contributions to the Ethereum ecosystem, including the development of proposals such as EIP-7547 (Inclusion Lists) and EIP-7251 (Increase MAX_EFFECTIVE_BALANCE).

Neuder frequently speaks at major blockchain conferences and has authored numerous articles on Ethereum's technical development, covering topics such as proof-of-stake, MEV (Maximal Extractable Value), and liquid staking. His work has played an important role in advancing and improving Ethereum's technology.

22:38 Why ETH stake ration is much lower than Solana and other PoS chain.

25:50: Why maintain the low stake rate is important to ETH

28:09: The data shows staking growth has outpaced issuance. Could you explain how this dynamic affects ETH's monetary properties?

35:20: Looking at the validator queue and current trends, where do you see the equilibrium staking ratio settling? What are the implications?

39:23: Ethereum has what the report calls 'dual supply change mechanisms' - issuance and burning. Could you break down how these interact?

45:06: During high network activity, we've seen periods of negative net issuance or 'ultrasound money' as some call it. How important is this narrative for ETH's monetary status?

49:42: There's ongoing discussion about potentially adjusting issuance parameters. What factors should be considered when evaluating such changes?

57:09: How might upcoming changes like proto-danksharding affect Ethereum's monetary properties?

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Disclaimer: All views expressed are solely the personal opinions of the hosts for sharing purposes and do not constitute investment advice. Cryptocurrency investments carry substantial risks. Before making any investment decisions, please conduct thorough research and consult relevant professionals. This podcast is for informational purposes only. Nothing herein should be construed as financial or investment advice. All investments in cryptocurrencies involve significant risk, and you should conduct your own due diligence and consult with a qualified financial advisor before making any investment decisions.

Ep.58E ETH is Permissionless Money - A talk with Mike Neuder

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