Report warns of the destruction of Ethereum by the “George Soros scenario”

  • The Amber Group has presented a scenario that could ruin the Ethereum economy.
  • The strategy is based on a program by billionaire George Soros.

The investment firm Amber Group has presented a strategy in a report that could endanger the DeFi sector of Ethereum and the entire network. Bernstein’s strategy, similar to that of billionaire George Soros in the 1990s when he made billions of dollars short of the British pound, is essentially to increase the scarcity of an asset or a coin for the benefit of an individual.

In its report, the Amber Group highlights how transaction fees on the Ethereum network have increased in recent months. Data from the Gasnow platform cited by Amber Group shows that the standard transaction fee on the Ethereum network has risen to $ 4.50 and 482 Gwei, an all-time high. Although it has dropped to almost half that number at the time of writing, fees and congestion on the Ethereum network remain a major concern.

With this in mind, the Amber Group has confirmed that the average block utilization on the Ethereum network is 95%, an increase of more than 30% compared to the beginning of the year. The current state of the network can create a “positive feedback loop” in which rates can continue to rise. This could occur if a company takes advantage of the situation and purchases large amounts of token gas, according to the report.

Tokenized gas and its role in the destruction of Ethereum

Amber Group states that gas tokens are “essentially tokenized block space”. You benefit from a mechanism on the Ethereum network called storage refund. “This way, the token user can reserve that space when the transaction fees are at a certain price and release it when the fees are higher. In this way, the token user saves gas:

This is especially useful for chain arbitrage, smart contract provisioning, and any type of batch transaction that would otherwise use a lot of gas. Active network subscribers can mint / buy brands of gas when they are cheap and release them at high prices to offset the average fee spend over time.

Within this positive feedback loop scheme, as mentioned above, an entity or individual could accumulate a large amount of block space in gas tokens. As a result, the block space becomes scarcer and the token prices increase significantly for the benefit of an actor.

As fees continue to rise, demand for gas brands increases, which drives prices higher, which in turn leads to more coinage. The coin process uses more block space … resulting in higher gas charges … and so on.

The most liquid gas token is currently 1 inch (CHI), followed by GasToken (GST2). The investment firm predicts that the prices of these tokens could rise if current activity on the network is maintained or if the ETH price drops significantly. With a market cap of less than $ 5 million, gas brand prices, as the Amber Group claims, are relatively easy to manipulate. In addition, the Amber Group draws another dangerous scenario:

However, as more aggregators, arbitrageurs, and protocols hit the market, the use of gas tokens will only increase. Now imagine if the income farms added $ GST2 or $ CHI as LP assets for the depletion of liquidity. Things could get completely out of hand here …

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