๐ช๐ฒ ๐๐ต๐ผ๐๐น๐ฑ ๐๐๐ผ๐ฝ ๐ท๐๐ฑ๐ด๐ถ๐ป๐ด ๐ฏ๐น๐ผ๐ฐ๐ธ๐ฐ๐ต๐ฎ๐ถ๐ป๐ ๐ผ๐ป๐น๐ ๐ฏ๐ ๐๐ต๐ฒ๐ถ๐ฟ ๐บ๐ฎ๐ฟ๐ธ๐ฒ๐ ๐ฐ๐ฎ๐ฝ.
Instead, we should also look at their profit & loss statement.
That’s because P&L is the right metric indicating the maturity of the chain.
And how far it is from breaking even and achieving long-term sustainability.
Here’s how the top 3 chains are faring so far:
โก๏ธ ๐๐๐๐๐๐๐๐ ๐๐จ ๐ฉ๐๐ ๐ค๐ฃ๐ก๐ฎ ๐ข๐๐๐ค๐ง ๐๐๐๐๐ฃ ๐ฉ๐๐๐ฉ’๐จ ๐ฅ๐ง๐ค๐๐๐ฉ๐๐๐ก๐.
It has reached a certain stage of maturity and became deflationary in Nov 2022, after the Merge upgrade.
This means that:
Burned ETH transaction fees > ETH block rewards
Resulting in a profit of $369m with a 27% profit margin in Q1 2024.
Not bad at all.
And it’s not surprising given that Ethereum has the largest and most mature ecosystem of L2s, DeFi protocols, NFTs, dApps, etc.
โก๏ธ ๐ฝ๐๐๐พ๐๐๐, ๐ฉ๐๐ ๐๐๐ ๐๐, ๐๐จ ๐จ๐ฉ๐๐ก๐ก ๐ฉ๐๐๐๐ฃ๐๐๐๐ก๐ก๐ฎ ๐๐ฃ ๐ฉ๐๐ ๐ง๐๐.
It’s primarily compensating its miners by issuing new Bitcoin and inflating the existing supply.
However, there’s a hard cap on the total supply.
And the block reward is being reduced every 4 years, with the last Bitcoin halving happening 10 days ago.
So how can the Bitcoin network remain secure if block rewards will gradually decrease in the future?
The primary bet is on building a thriving Bitcoin DeFi, NFT and meme coins ecosystem in the future.
This can dramatically increase transaction fees and compensate for shrinking block rewards.
Ordinals (Bitcoin NFTs) and Runes (Bitcoin fungible tokens) protocols have already started this trend and contributed to a huge increase in fees.
Bitcoin DeFi is also booming, so the future here looks bright.
So while still in red, Bitcoin seems to have a solid future.
โก๏ธ ๐๐๐๐ผ๐๐ผ ๐๐จ ๐๐ฃ๐ค๐ฉ๐๐๐ง ๐ก๐ค๐จ๐จ-๐ข๐๐ ๐๐ฃ๐ ๐๐๐๐๐ฃ.
But it’s also the youngest one (beta mainnet Mar 2020), so it’s still early in its journey to achieving maturity.
While it’s burning around half of the fees that it is generating, it’s by far not enough to compensate for the block rewards given to validators.
At the current rate, its fees burned would need to increase around 18x for the chain to become profitable.
Meanwhile, the primary incentive for validators to secure the chain is the block rewards, which inflate the total SOL token supply.
Also, like Ethereum and unlike Bitcoin, Solana doesn’t have a hard cap on the total token supply.
So its roadmap to profitability lies in fostering and growing the Solana ecosystem of protocols, dApps, NFTs, etc.
With the expectation that in the long run it will start generating and burning more fees as it matures.
And ultimately go deflationary, like ETH.
