‘Pomp’ goes on in an attempt to debunk this theory with the caveat that he applauds experimentation to drive innovation and all teams should be encouraged to keep building. His first argument is that Ethereum is no different to a fiat currency because they have no fixed supply, an inflationary supply schedule, and monetary policy decisions that are decided by a small group of individuals. The monetary policy of Ether is driven by something called the “minimum issuance to secure the network”. This is explained in depth in the Monetary Policy documentation. He added that the good news is that every change to the supply schedule so far has reduced the new issuance rate, but the bad news is that the option is always available to increase it. Current fiat monetary policy allows the same thing; those in charge able to alter the issuance rate of new money entering the system. He added that the two assets that do not have this issuance rate manipulation potential are bitcoin and gold. Naturally there was argument to this take with industry heavyweights such as ShapeShift chief Erik Voorhees adding; “Pomp this is just wrong, man. Fiat has value by decree of the State. Ethereum, like Bitcoin, gold, and pork bellies, has value by bids and offers in an open market. You can hate on ETH for a number of reasons, but it ain’t fiat.” Evolution of DeFi To solve this, better forms of ‘money’ can be created that are compatible with Ethereum based DeFi. Pomp uses the dollar pegged stablecoin Dai as an example of how this is already happening. Bitcoin based monetary policy on Ethereum is also now possible with wrapped BTC (wBTC) and tBTC. The entire DeFi movement is growing at an unprecedented rate which brings up these discussions in the first place. Pomp concluded that DeFi will likely become an incredibly important part of the global financial system over time, but remained true to his believe that bitcoin is the only form of money; “My general position is that the mechanics of the decentralized finance services will eventually be built around truly sound money (Bitcoin).” Is ETH really the same as fiat? Add your comments below.
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