Adam Cochran: Reconstructing Staking Incentives Based on Rollups

By Adam Cochran

Compiled by: Pzai, Foresight News

Based Rollups will directly impact the monetization of ETH by making fundamental changes to the incentive structure - which could easily increase the long-term demand for ETH by 100x.

Here’s how it works:

Although different Based RollupsXiaobai Navigation There will be different models (like random selection, auctions, pre-configured slashing, etc.), but the core idea will still be the same:L2 Instead of just paying for DA, existing L1 validators are leveraged for processing.

What we are learning aboutBlockchainOne thing about economics is that processing is "by far" the most profitable part of the process.

While I think ETH’s DA is undervalued (a lot), I can’t deny this processing flow comparisonmake money.

Validators who choose to help validate and process these Based Rollups will earn rewards from them in addition to general network inflation benefits.

Two important things are done here:

1) It increases the value of the stake in a way that is independent of the amount of ETH staked.

If there are many Based Rollups, validators may be able to earn a yield of 15% even if a large amount of ETH is locked up, causing a supply shock.

2) It opens up new avenues for the monetization and value capture of ETH.

For example, the MEV auction requires validators to bid in ETH to become the validator of the block and obtain a one-time profit.

We are in the current L2 No relevant competitive measures are seen in the DA solution.

Other models may include:

• Pre-confirmed staking：The ETH staked by the validator must be more than the value of the transaction they pre-confirmed for the pre-confirmation to be valid.

• Proof of Destruction：ETH needs to be destroyed to select a new one L2 verify.

In addition, since Based Rollup can interoperate across Rollups, it increases liquidity access and the number of cross-market settlement transactions, thereby increasing total Gas demand.

Therefore, Based Rollups help increase the value of ETH in two core ways:

1. They make regular ETH staking more valuable, thereby increasing demand for ETH.

2. They allow for competitive bidding for idle processes that exist in the Ethereum network without increasing L1 Gas.

When we combine this with Ethereum’s deflationary mechanism, we get a very interesting picture.

Ethereum’s minimum viable issuance could reach 0%, while due to value capture from Based Rollups and MEV, the yield as a validator could still be 4%-8%.

If the interest rate for new issuance is 0%, but your return on staking ETH is still higher than US Treasuries, how do you think Ultrasound Money will perform?

Not only are we improving the Ethereum UX, L2 modularity, and eliminating liquidity fractures with Based Rollups — but we’re also fundamentally changing Ethereum’s economic model without any issuance updates as we align incentives between L2 and L1 validators.

This will be the first time that the “incentive” for staking Ethereum will be driven by overall EVM usage rather than by the ETH issuance rate.

This fundamental separation will make $100k ETH a reality within the next decade.

While there is a critical economic problem to solve in terms of value capture, we are already halfway there by simply improving usability in a way that aligns with the goals of every ecosystem participant.

The article comes from the Internet:Adam Cochran: Reconstructing Staking Incentives Based on Rollups

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