_bfarmer

The argument that REV doesn't matter because Bitcoin has no REV is a bad one.

But there's a good argument that current REV is a bad proxy for expected future REV (and future aggregate economic value on a chain).

Objectively, we can see this has been true for Ethereum and Solana. Ethereum monthly REV peaked at $21.6 billion annualized (!) while Solana peaked at $6.6 billion annualized. Solana is down 85% while Ethereum is down, uhh, a bit more than that.

There are two interpretations of this. The first is that Ethereum is dying as Solana takes over, due to lack of execution on Ethereum and brilliant execution on Solana, or the Rollup-Centric Roadmap, or whatever.

The second is that short-term REV is primarily a function of:
- the wealth effect of the L1 token,
- the volatility of assets issued on the chain,
- the immaturity of MEV infra.

In 2024, Solana had all 3, and Ethereum had none. This doesn't imply that Ethereum as an economy had died. In fact, the opposite is true. Etherum still has 10x the stablecoin market cap, 3x the DEX TVL. L1 and L2s combined have much higher DEX volumes than Solana.

Certain forms of activity (gambling on highly volatile assets) disproportionately generate MEV and REV.

When Solana peaked in REV, there was a 40x delta between the median and average transaction fees. This indicates an extreme right-hand skew and high levels of MEV.

The problem is that this form of activity doesn't appear to be sustainable. MEV infra matures. Wealth effects level off. Issuance of memecoins and memecoin-like assets migrate elsewhere.

REV is an interesting thing to optimize for, but not at the expense of user growth. MEV infra should mature, tx fees should come down (Dencun was a huge drop in REV), even if it means that REV decreases in the short term.