Grayscale Research Director: ETH Issuance Mechanism Similar to "Fiscal and Monetary Policy", Core Controversy Lies in Security and Inflation Trade-off

According to TechFlow, on August 15, Grayscale Head of Research Zach Pandl posted on X stating that Ethereum is like a "small country," and ETH has only one core "government function": protecting property rights and value exchange within the system. Unlike traditional countries that provide public services through taxation, Ethereum mainly relies on "seigniorage," i.e., issuing new ETH to fund network security.

Under this framework, stakers responsible for maintaining network security are equivalent to groups providing public services, and they receive rewards through newly issued ETH. Therefore, Ethereum's staking mechanism and ETH issuance policy essentially constitute both the network's fiscal policy and monetary policy simultaneously; more security guarantees usually mean stronger property rights protection, but at the cost of higher ETH issuance volume and potential other risks.

Some community members believe that the design of Ethereum's monetary policy and fiscal policy should consider the security trade-offs brought by these key ratios, but the current mechanism has not fully incorporated these factors. Zach Pandl added that the above analogy may not be entirely accurate, as it does not yet involve other important factors such as the ETH burn mechanism, MEV, governance, etc. How the future ETH issuance policy will be adjusted still depends on observing community governance results.