With EIP 1559 Activated, Ether's Economic Model Became Similar to That of Tech Stocks

With EIP 1559 activated, Ether's economic model became similar to that of tech stocks, while Bitcoin BTCUSD solidified its "store of value" status.

"The biggest mistake was changing the social Overton window of EIP1559 burns as revenue/stock buybacks instead of ‘ETH is digital gold/silver/oil like BTC & some of the commodity gets used up every block as part of the design.’"

The price of Ether (ETH) keeps disappointing its community despite the promising tech updates of the largest smart contracts platform. As this journey continues, it's important to highlight that it has nothing to do with the token's economic model, Frax's Sam Kazemian says.

"This is going to sound crazy but I think a big part of why ETH has struggled is that it never fully recovered the 'digital silver/oil' narrative after EIP-1559. It instead pivoted to a narrative more similar to tech stocks," Kazemian explained in a recent post on X.

The Frax and Everipedia founder explains that, if an EIP 1559 analogue was implemented in Bitcoin (BTC), the "digital gold" narrative of BTC maxis would also be damaged.

"It feels like everyone is in agreement that EIPs 1559 and 3670 would be a good thing for Bitcoin if they were implemented, but they'd also damage the narrative of BTC as digital gold/silver/oil that we'd be consuming every block (which is part of the design!)."

Thus, with its P/E DCF (price-to-earnings discounted cash flow) valuation model, the ETH cryptocurrency fails to benefit from the battle-tested utility of its underlying blockchain.

As covered by U.Today, EIP 1559 with its fee burn events was the most radical upgrade of Ether tokenomics ever. It launched on August 5, 2021 with the aim of making the cryptocurrency more scarce and valuable.