Can anybody explain the future ETH 2.0 / EIP 1559 issuance model / variable interaction in simple layman's terms? As I understand it:
- As usage on the network increases, fees (in terms of the amount of ETH required to transact) increase.
- Fees are paid by users in ETH to the network. ~70% of those fees will be "burnt" and ~30% will be paid to stakers.
- Stakers earn yield in the form of (i) the portion of fees paid to stakers, and (ii) newly issued ETH.
- As the # of ETH stakers increases, staking yield from new issuance decreases. As the # of ETH stakers decreases, staking yield from new issuance increases. (Technically the amount of new ETH issuance increases as the # of stakers increases, but the new ETH issuance per staker decreases.)
- Staking yield is also a function of transaction fees. If the # of ETH stakers is flat, but network usage increases, then fees will increase, and therefore staking yield will increase.
- As a result, staking yield is a function of both network usage and the # of stakers.
- Currently, the Ethereum network is costly and slow (high fees / long transaction times), but as rollups and sharding are implemented, fees will be reduced and transaction times will decrease.
- In theory, scaling would reduce the amount of fees "burnt" and reduce fee yield to stakers, but the lower fees and faster transaction times will improve UX, increase the # of viable use cases, and enhance the value proposition... (More)