Author：Token Analyst

We will fundamentally change the economic model of Ethereum through Based Rollups.

Author: Adam Cochran

Compiled by: Pzai, Foresight News

Based Rollups will directly impact the monetization of ETH by fundamentally changing the incentive structure, which could easily increase the long-term demand for ETH by 100 times.

Its working principle is as follows:

Although different Based Rollups will have different models (such as random selection, auction, pre configured reduction, etc.), the core idea remains the same: L2 is no longer just paying for DA, but utilizing existing L1 validators for processing.

One thing we are learning about blockchain economics is that processing is by far the most profitable part of the process.

Although I believe that the DA value of ETH is underestimated (by a lot), I cannot deny that this processing flow is more profitable.

The validators who choose to help validate and process these Based Rollups will benefit from them in addition to the general network inflation gains.

Two important things have been done here:

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

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

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

For example, MEV auctions require validators to bid in ETH and become validators of the block, thereby earning a one-time profit.

We have not seen any competitive measures in the current L2 DA solution.

Other models may include:

• Pre confirmation of pledgeThe ETH pledged by validators must exceed their pre confirmed transaction value for pre confirmation to be valid.
• Destruction certificateETH destruction is required to select a new L2 verification.

In addition, due to the interoperability of Based Rollup across Rollup, the number of liquidity access and cross market settlement transactions has increased, thereby increasing the total demand for Gas.

Therefore, Based Rollups helps ETH increase in value through two core methods:

1. They make regular ETH staking more valuable, thereby increasing the demand for ETH.
2. They allow competitive bidding for idle processes existing in the Ethereum network without the need to increase L1 Gas.

When we combine this with Ethereum's deflationary mechanism, we discover a very interesting aspect.

The minimum feasible issuance of Ethereum may reach 0%, while the yield as a validator may still be 4% -8% due to the value capture of Based Rollups and MEVs.

If the newly issued interest rate is 0%, but the yield of your mortgage ETH is still higher than that of US treasury bond bonds, how do you think Ultrasound Money will behave?

We have not only improved the user experience and L2 modularity of Ethereum, but also eliminated liquidity fractures through Based Rollups - and we will fundamentally change Ethereum's economic model without any issuance updates, as we have adjusted 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 ETH issuance rate.

This fundamental separation will make $100000 ETH a reality in the next decade.

Although there is a critical economic issue that needs to be addressed in terms of value capture, we have already succeeded halfway by improving availability in a way that aligns with the goals of each ecosystem participant.