A signaling theory model of cryptocurrency issuance and value

[jamesray1]

@vbuterin

In pure proof of stake, even if no coins are burned, a weaker version of the model still exists: a coin is a tool that you can use, with some further effort, to get a share of transaction fees; it is like a virtual mining pick. As long as the effort is less than the reward, the tool takes its share of the difference as its value.

Theoretically, a cryptocurrency world where cryptocurrencies are primarily valued as shares of future burned transaction fees, or as tools that can be used to access transaction fee revenues, is a much healthier one; putting aside outright scamming or tricking people, the only way to earn money is to build (or, by holding tokens, financially support) a blockchain that people actually use.

I agree. In addition to obviously favouring proof-of-stake and usage with transaction fees, this also favours reducing issuance (in the form of block rewards to miners/validators), which is not directly explicated in your post, but which you have touched on elsewhere.