1.

Ether could be a store of value: peak supply of eth (120m units), a drop of 2% per year
will follow, leading to a deflationary supply
2. Ether may be viewed as a consumable commodity, within different DApps and smart
contracts

Halving

• Derived from the bitcoin protocol - consistent reduction in the reward paid to bitcoin
miners over time (bitcoin rewards are cut in half every 4 years)
• Contributes to a supply-demand dynamics that play out in real time marketplace
• Miners will sell most of the bitcoin they earn from the mining process to cover expenses
(inelastic supply)
• If demand stays stable, the supply from miners will reduce - indication that prices may be
pushed upwards
• Upcoming events on the Ethereum network could have the same effects as bitcoin
"halving"

Adoption of the Narrative

• Price rises through supply/demand dislocation

• After that, narrative begins to spread as more newly convinced HODLers replace elastic
investors
• Process where halving increases the inelasticity of supply and drives up demand

Structural Illiquidity Catalysts

• PoW – miners need expensive computer resources and to solve problems

o Supply liquidity and have no choice to depress price to pay for expenses
• PoS – stakers put an amount of ether at risk to gain the ability to verify transactions
o Drains liquidity and aligns stakers w/ investors
• Defi – developers are creating more apps on the Ethereum network
o Ether will be used to gain yields from Defi products
• EIP 1559 – 70% of transaction fees will be burned, 30% to stakers as rewards
o More supply is removed from already inelastic HODLers

Store of Value

• Supply will start to reduce resulting in a negative stock to flow

• Ether will always have value because it provides incentives – backed by a thriving
community
o Use value to get a loan, collect yield, pay bills, etc.
• Narrative: Both scarce and useful
• Layer 2 solution – accumulates scalability by improving transaction process times
o Gas fee decreases, demand increases
• Easier onramps for retail investors – Robinhood, PayPal, Venmo to be onboarded